Bill AIDS 2 Hospitals That Assist Poor
By Christopher Rowland, The Boston Globe
Apr. 11–Two hospitals that provide care for the most low-income patients in Massachusetts won strong market protections in the state’s healthcare reform bill, saving them from a potentially crippling loss of funding.
The hospitals lobbied intensely for the special provisions, which are buried in the 145-page measure awaiting Governor Mitt Romney’s signature. They guarantee Boston Medical Center and the Cambridge Health Alliance hundreds of millions of dollars in Medicaid funding and market rights to a large segment of new insurance business for three years.
Without the state help, the hospitals could lose money as the state’s $800 million free care pool is phased out.
The pool — which pays the medical bills of uninsured patients but has been a source of virtually unchecked overcharges by the two hospitals — will be dramatically reduced.
The protections added by lawmakers would restrict competition and limit consumer choice for about 207,500 uninsured residents targeted for coverage under the expansion plan. State officials said they want to be sure Boston Medical Center and the Cambridge Health Alliance are not hurt financially in the transition.
“As the largest providers of free care, these hospitals are sometimes the only link to healthcare services for those struggling to make ends meet,” said Senate President Robert Travaglini. “During the transition we want to be sure there are no holes in our new safety net.”
Under the legislation, the hospitals and Medicaid managed-care insurance plans they operate are guaranteed to collectively receive $287 million annually, or $891 million over the first three years of the plan. That’s comparable to what they now receive for Medicaid managed-care programs.
The hospitals’ insurance plans also will share with two other insurers the exclusive rights to cover an estimated 207,500 people who earn less than 300 percent of the poverty level, but earn too much to qualify for Medicaid.
That group, which will receive subsidies from the state to help pay insurance premiums, represents one-third to a half of the new insurance business that will be generated by the plan to cover 95 percent of the state’s 500,000 to 600,000 uninsured residents within three years.
In addition to Boston Medical Center and Cambridge Health Alliance, two other insurers offering Medicaid managed-care plans — one run by Neighborhood Health Plan and the other by Fallon Community Health Plan — will share in the three-year protected market.
Romney’s administration has previously supported the market exclusivity provisions as a way of making up for the loss of the free-care pool, but his proposals have not included a guaranteed flow of Medicaid money. A spokesman for Romney’s Health and Human Services secretary, Timothy Murphy, said the administration was studying the provisions and was not ready to commit to a position.
Elaine Ullian, chief executive of Boston Medical Center, said the hospital’s history of covering disadvantaged populations through its managed-care plan justifies the special provisions.
“We have an established track record that says we can really make a difference with this newly enfranchised group,” Ullian said. “Our core mission with our health plan has been developing plans and services for people who are poor or working poor.”
The market protection measures represent a missed opportunity for Massachusetts’ three largest health insurers — Blue Cross and Blue Shield of Massachusetts, Harvard Pilgrim Health Care, and Tufts Health Plan — which are prohibited from competing for the same business with the Medicaid HMO plans.
“We did express that we would like the opportunity for any plan to participate,” said James Roosevelt Jr., Tufts Health Plan chief executive. “I always think that having more players in the market, and more choices for members, is good for both cost and coverage.”
But Roosevelt added that he understood the legislators’ desire to create a transition period.
Harvard Pilgrim did not lobby to be allowed to compete for the Medicaid HMO business, said spokeswoman Sharon Torgerson, but “if the state were to put that out to bid, we would be interested.”
Blue Cross and Blue Shield did not respond to a request for comment.
The private plans, however, will be able to compete for an estimated 215,000 new customers who earn more than 300 percent of the federal poverty level and will buy insurance with high deductibles through a new state agency that would be created under the bill.
The federal government has threatened to withhold $385 million in Medicaid funds unless the state changes the way it distributes its Medicaid allotment. As the healthcare bill was negotiated, powerful politicians fought to prevent hospitals that relied primarily on Medicaid money from being affected by drastic and sudden changes in funding. In addition to Travaglini, whose district includes parts of Boston and all of Cambridge, Boston Mayor Thomas M. Menino joined the effort.
Without such facilities for low-income residents, “People would be dying in the streets,” he said Tuesday in the lobby of Boston Medical Center’s Menino Pavilion, which is named after the mayor. “This is a hospital of last resort.”
The healthcare bill would establish a system under which the state would wean hospitals off the free-care pool. It is expected to shrink every year as the state requires people to enroll in Medicaid, newly created subsidized insurance plans, or private health plans.
Even as it is phased out, the pool will be subject to regulatory changes in an effort to reduce excessive charges documented last year by state Inspector General Gregory W. Sullivan. Sullivan’s report in November detailed high billings for pharmaceuticals and lab tests, but did not allege any illegal activity.
Nonetheless, Attorney General Thomas F. Reilly’s office has said it is investigating to determine whether “healthcare funds are being used properly and efficiently.” Hospital officials have said their institutions acted appropriately.
The $287 million “hold-harmless” provisions in the legislation ensure that over the next three years they will receive the same amount of money they received this year, although a portion of the funding depends on how many people they move from the free-care pool into insurance plans.
Currently, the Medicaid managed-care plans in the state have about 345,000 beneficiaries. Health Net (run by Boston Medical Center) has 160,000; Network Health (run by Cambridge Health Alliance) has 75,000; Neighborhood Health Plan has 100,000; and Fallon Health Plan has 10,000.
Community hospitals have objected in the past to the market clout the Medicaid subsidies and Medicaid HMO plans have given Boston Medical Center and Cambridge Health Alliance, which includes campuses at Cambridge Hospital, Somerville Hospital, and Whidden Memorial Hospital in Everett.
Donald Thieme, executive director of the Massachusetts Council of Community Hospitals, said the changes could be beneficial. “To us, it looks like a new playing field, which we think can be positive,” he said. “Our concern is [the state] probably should have much more public oversight over how that happens.”
The chief executives of the two hospitals, who made personal appearances on Beacon Hill during the legislative debate, applauded the outcome.
“It would have been a travesty to underfund the institutions that care for the poor while moving them to a better system,” said Ullian, Boston Medical Center’s chief executive.
Cambridge Health Alliance chief executive Dennis D. Keefe said he impressed upon lawmakers the need to retain adequate care for the poor, including the many treated by Cambridge Health Alliance who have mental health and substance-abuse problems.
“The social needs are huge,” Keefe said.
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