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Hospitals shun effort to cut insurance costs

Hospitals shun effort to cut insurance costs
Who cares for small biz?

By Jessica Van Sack

Tuesday, January 11, 2011 –

No Bay State hospitals joined a voluntary effort to help defray the cost of health care for small businesses last year – including the mammoth chain Partners HealthCare, which pledged $40 million – according to a report released by the Division of Insurance.

The report from Insurance Commissioner Joseph Murphy to the Legislature on Dec. 31 was supposed to detail hospital rebates given to insurers to lower health-care costs for small businesses, as required under a highly touted health-care cost containment bill. Instead, it lists all of the hospitals in the Bay State with a column of zeros next to their names. That includes Partners HealthCare, which has pushed the deadline for its pledge of $40 million back to the end of this year, despite posting $195 million in annual profits.

“The math was so simple even I could do it,” Murphy quipped, adding that the program was optional and praising Partners’ push to renegotiate contracts with insurers as part of its 2011 donation. Partners has said if those negotiations are unsuccessful, they will offer lump sum payments to insurers totalling $40 million.

“As we’re talking about the total cost of health care, more important than even the $40 million Partners has offered is the willingness to re-examine contracts,” Murphy said. “That’s where we can get the most savings.”

After eight months with little word on its $40 million commitment and facing questions from the Herald, Partners reaffirmed its pledge to Murphy last month but said it hoped to take the opportunity to renegotiate contracts with providers to include new global and bundled payment structures.

Murphy noted that Children’s Hospital reduced its charges to insurers by an estimated $80 million in 2010, but did not single out small businesses to benefit.

“It’s disappointing that hospitals haven’t done their part to help small businesses,” said Eric Linzer, spokesman for the Massachusetts Association of Health Plans. “The promise of $40 million was to help small businesses in 2010. That didn’t happen. Our hope is it’ll happen soon and not drag on to the end of 2011.”

In a statement, Massachusetts Hospital Association spokeswoman Catherine Bromberg took aim at insurers.

“Massachusetts hospitals are contributing and sacrificing to control health-care costs,” she said. “Hospitals across the Commonwealth are experiencing incredible financial pressures driven by the payment policies of insurers and government.”

Alan Sager, director of the health reform program at the Boston University School of Public Health, said the donation from Partners may signal the chain is “becoming more realistic that more money for business as usual can’t continue to flow into hospital care and health care, and that some things need to change.”

“The $40 million is partly something that is the right thing to do, and partly aimed at addressing a public relations problem,” Sager said. “Let’s hope it also speaks to a new realism on Partners’ part.”