The AG’s Report (i.e., Stating the Obvious)

The Massachusetts AG has released a preliminary report indicating:

Massachusetts insurance companies pay some hospitals and doctors twice as much money as others for essentially the same patient care, according to a preliminary report by Attorney General Martha Coakley. It points to the market clout of the best-paid providers as a main driver of the state’s spiraling health care costs.
The yearlong investigation, set to be released today, found no evidence that the higher pay was a reward for better quality work or for treating sicker patients. In fact, eight of the 10 best-paid hospitals in one insurer’s network were community hospitals, which tend to have less complicated cases than teaching hospitals and do not bear the extra cost of training future physicians.

This is from a piece by the Boston Globe (click here for the full story).  Readers of this blog may remember this post about one of the community hospitals that has struggled partially due to low reimbursement rates, despite competitive quality and clinical outcomes performance.

Let’s face it, we cut the amount of regulation in this industry years ago assuming that free market forces would help reduce costs… and now that some have made good decisions and executed properly based on the rules we all set up, it’s not exactly surprising that those systems have used their resulting market clout to drive up their reimbursement rates.

According to the Globe:

Dr. JudyAnn Bigby, secretary of Health and Human Services, said switching to global payments could help control price increases if it is done right. One option is to have an oversight authority set parameters for the prices paid to providers.

We’ve been there, done that.  Remember the Massachusetts Rate Setting Commission?  Public policy (like public opinion) tends to swing from side to side and it’s not surprising that some are calling for a return to a greater degree of governmental oversight and regulation.

Ideally, in Massachusetts, we need the benefits of large, coordinated systems of care because those systems will better manage across the full spectrum of health needs of large populations and be able to make critical investments in supporting clinical workflows and information systems. 


But we need more than one system able to accomplish that.

Otherwise, the free market approach fails.