Attorney General Martha Coakley’s office is quietly circulating a proposal to more tightly regulate hospitals and doctors and the prices they are paid to care for patients.
Coakley’s staff has drafted legislation and has briefed providers, business leaders, key legislators, and the governor’s office on the plan to contain health care spending.
Providers and insurers would have to provide detailed price information to patients before they undergo a test or treatment, and the Division of Insurance and Department of Public Health would have new authority to limit the prices and market power of providers under Coakley’s proposal.
Coakley declined to comment on her plan, a copy of which was obtained by the Globe.
Legislative leaders have been promising for months to file cost-control legislation, but the timing and details are still unclear. Governor Deval Patrick filed a bill more than a year ago to reign in health care costs and has since urged the Legislature to take up the issue quickly.
Coakley’s office appears to be nudging lawmakers, and urging concrete action to address the role of highly-paid providers in driving up costs. For the past two years, her staff has found wide disparities in the prices paid to providers that are not based on quality but on market clout.
“We have shared our ideas with various stakeholders and will continue to be active participants in efforts toward meaningful health care reform,’’ said Brad Puffer, a spokesman for Coakley, in a written statement to the Globe. “ . . . In order to best control costs, we believe it’s critical to address the market dysfunction in which costs are driven by the market power of providers, not by quality of care. We also must provide more transparent cost information to consumers and ensure a fairer and more competitive marketplace.’’
Most of the groups briefed by Coakley’s staff declined to comment in detail about the plan. The Massachusetts Hospital Association said in a statement that the “proposals raise concerns regarding their complexity, cost, and expansiveness,’’ but that it wants to discuss the issues fully with the attorney general’s office before commenting publicly.
The Massachusetts Medical Society, which represents doctors, said it “does have some concerns with the attorney general’s proposals. However, we would like to share those first with the attorney general.’’
Lora Pellegrini, chief executive of the Massachusetts Association of Health Plans, said members are reviewing the attorney general’s proposal. “We are pleased it includes a provision that deals with provider market power,’’ she said. “Any final bill will not lower costs unless we deal with this issue.’’
Unlike the governor’s proposal, Coakley’s plan would give patients specific information in advance about how much they would be required to pay out-of-pocket for a particular test or treatment. They generally would not be responsible to pay more than the disclosed amount.
Similar to the governor’s plan, Coakley wants to give the Division of Insurance the explicit authority to review the prices insurers pay to providers and reject them if they are “excessive, inadequate, unreasonable, or predatory.’’ After Jan. 1, 2015, rates that are more than 15 percent above or 15 percent below average would be disapproved; after Jan. 1, 2017, the range would decrease to 10 percent above or 10 percent below average.
While insurers in Massachusetts already are heavily regulated, Coakley wants to increase provider regulations. The public health department, for example, could initiate a market impact review if it believes a provider is engaged in unfair competition.