1199SEIU Members Advocate at State House for Legislation that Would Boost Community Hospitals

September 25, 2015

On Tuesday, September 22nd, local healthcare workers and members of 1199SEIU came to the Massachusetts State House for a hearing to speak out in favor of new bill to protect community hospitals. At the same time, 1199ers are launching a drive to collect signatures for a ballot initiative that takes similar steps to protect healthcare in our communities. This legislation and ballot initiative would rein in expensive hospitals and provide a boost to local community hospitals. The measures would save the state an estimated $267 million in reduced healthcare spending.

“Community hospitals deliver excellent patient care to Massachusetts residents and are vital economic drivers in our cities and towns,” said Veronica Turner, Executive Vice President of 1199SEIU United Healthcare Workers East. “But our Commonwealth will continue to be at risk of more hospital closures as long as large medical centers are able to demand excessive prices.”

Tuesday’s hearing followed the release of Attorney General Maura Healey’s 2015 report on health care cost trends and cost drivers, which found that price variation between what large, expensive hospitals command from insurers and the amounts paid to community hospitals is a major driver of statewide healthcare costs. Healey’s office concluded that the state should consider direct regulation of price variation.

Many community hospitals suffer from the industry strength of healthcare behemoths like Partners HealthCare, which had $10.9 billion in revenues in 2014 and holds almost $7.5 billion in net assets. Because of its size, Partners is able to demand higher reimbursement rates for medical care. While reimbursement amounts from private health insurers are not available, publicly disclosed Medicare payments demonstrate the disparity between large academic medical centers and small community hospitals: on average, Partners-affiliated Brigham and Women’s Hospital receives more than $67,000 to treat a heart attack, while Signature Healthcare Brockton Hospital receives about $24,500 (based on Medicare’s 2012 Inpatient Data File showing Average Covered Charges).

Many of the most poorly compensated hospitals in the Commonwealth are community hospitals and/or disproportionate share hospitals, who serve large populations of seniors and low-income patients. The below-average commercial rates paid to these community hospitals, combined with the relatively low rates paid by Medicaid and Medicare, result in these important community-based providers struggling to survive financially.

The legislation, “An Act Relative to Equitable Healthcare Pricing” (S.B. 574), whose lead sponsor includes Senator Ben Downing (D-Pittsfield), would require private health insurers to negotiate new contracts with expensive providers, such as Partners HealthCare, to bring greater fairness to healthcare prices. Senator Downing filed the legislation to protect and better support community hospitals like North Adams Regional Hospital, which closed in 2014 under intense financial pressure – putting 500 residents out of work and leaving thousands of community residents scrambling to find accessible and affordable hospital care.

“I do not want to see another community lose their community hospital. We must work together to do more to protect community care,” said Mike O'Brien, who spent 36 years as a Registered Respiratory Therapist at North Adams Regional Hospital. “We have the responsibility to act in the best interest of our residents and make sure we are leveling the playing field for community hospitals. This bill is a solution. North Adams Hospital surely would have benefited from fairer rates from insurers.”

Meanwhile, on the same day as the hearing, 1199SEIU members will begin the process of gathering signatures across the state on Tuesday from Massachusetts residents who want to protect their community hospitals.

“Quincy Medical Center closed because the disparities in payments are too great and we could not keep up,” said Jane Oneto, who spent nine years at Quincy Medical Center working as a financial counselor and moved to Dorchester’s Carney Hospital upon QMC closure. “The combination of caring for a disproportionate amount of patients on Medicaid and Medicare and receiving reimbursement lower than other hospitals were a recipe for failure. It is clear to me that if we keep going on this path, so many communities will face the same situation.”

How the bill and ballot initiatives would work: The legislation and ballot initiatives backed by 1199SEIU would prohibit healthcare providers and private health insurance companies from entering into contracts that would pay hospitals more than 20% above the average amount paid to similar healthcare providers for the same healthcare services. Coupled with the state’s rate cap of 3.6% annually, caregivers say creating a ceiling for payments to wealthy hospitals will help create the longer term market conditions necessary to curb increasing consumer premiums and preserve community hospital services.

The measures also prohibit contracts that pay hospitals less than 90% of the average amount paid to similar healthcare providers. Specialty, disproportionate share and geographically-isolated hospitals would be explicitly exempted from the initiative’s price cap, although some will benefit from the bill’s price floor. All insurance company contracts with hospitals that are new or renegotiated after July 1, 2016 will be required to implement these provisions.

- See more at: http://www.1199seiu.org/1199seiu_members_advocate_at_state_house_for_legislation_that_would_boost_community_hospitals#sthash.x6ow3yAo.dpuf