Coalition seeks higher payments to safety-net hospitals

An unusual alliance led by the state’s fastest-growing health care company and its largest health care union will press for higher payments to community and safety net hospitals, saying Massachusetts faces a widening gulf between the quality of care in affluent and low-income areas.

The group, the Massachusetts Healthcare Equality and Affordability League, is being launched Thursday by Steward Health Care System, a for-profit cluster of community hospitals, and Local 1199 of the Service Employees International Union, which represents about 47,000 workers in the state.

Its organizers warn that Massachusetts could end up with a two-tier health care system, based on what Steward’s chief executive, Ralph de la Torre, called “socioeconomic bias and bigotry.”

The group faces an arduous task, with federal and state officials and private insurers intent on cutting costs.

Nonetheless, organizers say they will lobby state and federal lawmakers to boost reimbursements for so-called safety net hospitals — those that mostly serve patients insured by Medicaid and Medicare, the government programs for low-income and senior patients. Those include most Steward hospitals.

They also want to pressure commercial insurers to end the disparity between what they pay health care providers in well-off communities and those based in lower-income cities and towns. Such disparity has been documented in several reports.

“Just because you’re poor, your hospital shouldn’t get half as much to take care of you as they get in the richer neighborhoods,” de la Torre said. “These are the issues we have to address, or else community hospitals are going to go extinct. And then health costs are really going to go up for everybody.”

The effort will include education, advertising, and possibly legislation aimed at closing the gap.

Organizers of the lobbying group described their campaign as a matter of fairness, but also said it could save money for the Massachusetts system by driving more patients to less-expensive community hospitals and keeping those institutions viable.

Veronica Turner, executive vice president of Local 1199, said her union ran a similar campaign in New York State that drew support from about 100 hospitals and succeeded in raising Medicaid payments and saving financially troubled institutions.

“What our [union] members are seeing is consolidation, downsizing, and outsourcing” by financially strapped hospitals, Turner said. “There only are so many services a hospital can cut.”

De la Torre and Turner said they will reach out to other safety net hospitals, such as Boston Medical Center and Cambridge Health Alliance, urging them to join forces with the new organization. They will also seek backing from community and rural hospitals across the state, other unions, and patients who are treated in community hospitals and safety net hospitals.

Last week, in a kind of trial run of the lobbying campaign, the state Senate passed an SEIU-backed budget amendment to channel $40 million to hospitals that draw the bulk of their revenue from treating patients on public health plans. The money is from a distressed-hospital fund set up under the cost-containment law. The amendment would override a provision of the law specifying that for-profit hospitals such as Steward’s weren’t eligible to tap the fund.

An alternative amendment, rejected by the Senate, would have spread the money more widely, including to the three hospital systems — Partners HealthCare, Boston Children’s Hospital, and Beth Israel Deaconess Medical Center — that the state assessed to create the fund.

The lobbying campaign takes place against a backdrop of anticipated government cuts in payments to health care providers, stemming from factors that range from state budget constraints to a reallocation of Medicare funds to the effects of federal sequestration mandates.

Under the cost-containment law in Massachusetts, the Patrick administration has been trying to tie total medical spending to growth in the state economy, projected to be 3.6 percent this year. As part of the law, a Health Policy Commission has been created to monitor progress in reining in costs.

But organizers of the lobbying group say moves by insurers to hold all hospitals to the same rate of premium increases do not address the yawning gap between lower- and higher-paid hospitals. The latter include teaching hospitals such as Massachusetts General, Brigham and Women’s, and Beth Israel Deaconess, specialty care centers such as Dana-Farber Cancer Institute and Boston Children’s, large regional providers such as South Shore Hospital, and rural hospitals with geographic monopolies.

Health payment disparities were detailed in a Globe Spotlight series in 2008 that showed insurers can pay twice as much to higher-cost hospitals than to safety net hospitals for common procedures such as imaging scans.

Aron Boros, executive director of the state Center for Health Information Analysis, said the difference in payment levels is a longstanding issue documented by his agency. Its next report is due in August.

“The disparity between the higher-paid and the lower-paid hospitals is wide and complicated, and we don’t see a clear trend that the gap is getting smaller,” Boros said.

Reports from state Attorney General Martha Coakley’s office also have documented continuing price variations among providers.

“It comes down to how you slice the [reimbursement] pie and where you slice it,” said Marc Bard, co-director of the Tufts Health Care Institute, a Boston educational group that helps doctors and hospitals improve the way care is delivered.

“There’s no question that hospitals are in tough shape, and they are going to have to reevaluate what services they can offer. The safety net and community hospitals don’t have the full range of options some other institutions have.”

Bard said providers are having to band together into larger systems, with each hospital, doctors group, or medical center providing different types of services. While community and safety net hospitals face a tougher squeeze, he said, tinkering with payments could risk slowing down the overhaul of the health care system set in motion by Massachusetts and federal laws in recent years.

De la Torre said his group isn’t calling for outright cuts in payments to academic medical centers but wants to slow the rate of increases they get, in comparison to what lower-paid hospitals get.

Rich Copp, vice president for Partners, which owns Mass. General and Brigham and Women’s, noted the system also owns lower-paid North Shore Medical Center in Salem.

“We agree that Medicaid rates do need to be addressed for all hospitals, including those that serve a disproportionate share of low-income patients such as North Shore Medical Center,” Copp said. “Over the past few years, the market was adjusted, with many hospitals, including Partners hospitals, renegotiating rates and lowering prices.”

Blue Cross Blue Shield of Massachusetts, the largest health insurer in the state, has been shifting more medical care providers to risk-sharing contracts, under which they are paid based on quality and outcome rather than for conducting unnecessary tests, said Jay McQuaide, senior vice president for Blue Cross. That has helped contain costs and “reduced the level of disparities” in payments to providers, he said.

“Our singular focus over the last couple of years is on affordability,” McQuaide said. “We recognize that differences exist in payments . . . And they exist all across the country. It’s a significant policy issue for the entire community.”