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SPOTLIGHT FOLLOW-UP | unhealthy system

Patrick intensifies state’s push to curb soaring health premiums

The governor called the rise in rates unsustainable.

Patricia McDonnell for The Boston Globe

The governor called the rise in rates unsustainable.

Editor’s note: This story was originally published on Jan. 6, 2009.

Governor Deval Patrick yesterday accelerated his administration's efforts to control spiraling statewide healthcare costs, warning that rising premiums threaten to crush families and businesses and doom Massachusetts' groundbreaking experiment with universal insurance.

Patrick said officials are considering using state insurance regulations to block excessive healthcare premiums. He is also summoning leaders of insurance and hospital companies for meetings as soon as this week to ask for their "vigorous cooperation."

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In response to stories by the Globe's Spotlight Team about the role of Partners HealthCare and Blue Cross Blue Shield of Massachusetts in driving up costs, Patrick convened a panel of senior administration figures yesterday to coordinate new and existing state cost containment efforts, which he said should produce action by summer. He also said he expects to file new legislation.

"The increases at this rate over time [are] just not sustainable, not for families, not to business, not for government," Patrick said at a news conference after the summit.

Inspector General Gregory W. Sullivan also said he wants providers and insurers to delay signing new contracts until the administration has implemented new, as-yet-undetermined policies to limit premiums.

The Spotlight Team has reported, quoting officials directly involved in the negotiations, that the leaders of Partners and Blue Cross made a deal in 2000 in which Blue Cross significantly boosted its payments to Partners in exchange for Partners' insistence that all other insurers pay at least as much for the care of their members by Partners doctors. That prevented insurance companies from competing on price, and helped to drive up consumer prices statewide. Individual insurance premiums in Massachusetts have risen nearly 9 percent a year since 2000, twice the annual rate increase of the late 1990s.

The Spotlight Team has also reported that Partners hospitals are paid significantly more than other, comparable facilities.

Partners and Blue Cross say they did nothing improper. Both companies contend that payments to hospitals had been too low before the 2000 agreement, and Partners said its CEO promised only to treat all insurers equally.

Both companies also said yesterday that they look forward to participating in Patrick's discussions. Partners spokesman Rich Copp said in a statement that cost increases nationally "have been mirrored almost exactly" in Massachusetts. He also noted that Partners' latest contract with Blue Cross, settled over the summer, "resulted in rate increases well below those experienced in prior years." The contract calls for increases in payments of about 5 to 6 percent a year, roughly equivalent to medical inflation.

Blue Cross CEO Cleve L. Killingsworth Jr. expressed support in a statement for one proposal the administration is considering: reforming the payment system to compensate hospitals for patient outcomes, rather than for the number of procedures or visits.

Yesterday, Patrick declined to comment specifically on the role of either Partners or Blue Cross. He said he wants to examine cost containment from all angles. But he added: "We have to get at cost containment because these kinds of premium increases and the unevenness in the way various providers are compensated for similar services have to be addressed in order to assure the long-term viability of this grand experiment," a reference to healthcare reform.

Patrick also said that while a number of the cost containment measures he discussed yesterday have been underway for months, the Globe series "made me feel like I ought to make sure we're all on the same page, that we're taking account of all of the contributors, real or perceived, to cost increases. And I'm satisfied from the conversation we had that there's a lot of good work and it will come to fruition soon."

Among the ongoing efforts to examine costs Patrick cited are a study commissioned from the RAND Corporation, a think tank, on the feasibility of various reforms, and work by the state Health Care Quality and Cost Council, a body created by the healthcare reform law.

Patrick also highlighted the healthcare cost containment bill he signed in August, which was championed by Senate President Therese Murray. It created a payment reform commission, which he said will hold its first meeting next week.

However, Murray said yesterday that she is frustrated that Patrick has been slow to appoint members to that commission, which she said was supposed to start meeting Sept. 15. "I don't think the governor needs to reinvent the wheel," said Murray. "We established this commission on healthcare payment reform because it was already evident to us that Massachusetts had higher healthcare costs than everybody else."

State Senator Richard T. Moore, Senate chairman of the committee on healthcare financing, also wrote to Patrick last week, after the Globe reported the plan for yesterday's meeting, commending him for examining the role of Partners on the cost of healthcare. But Moore said that no official with recent ties to Partners should be part of the review team. Patrick's secretary of health and human services, Dr. JudyAnn Bigby, previously worked at Partners affiliate Brigham and Women's Hospital, and attended yesterday's meeting.

Jeffrey Krasner of the Globe staff contributed to this report.
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