Health care pricing panel starts work with split views
The variation in prices paid to hospitals for providing similar care is either one of the biggest problems plaguing the Massachusetts health care industry or is no problem at all. It depends on whom you ask.
That was clear Tuesday at the first meeting of a special commission assembled to study price variation over six months and make recommendations for addressing it. The panel was created through legislation passed earlier this year to avoid a controversial ballot question that would have attacked price variation by redistributing money from higher-paid hospitals to their lower-paid competitors.
Several reports from the Globe’s Spotlight team, the attorney general’s office, and the state Health Policy Commission have shown that large teaching hospitals get paid more than smaller community hospitals for providing the same services and procedures. Many experts consider this a problem because the most expensive hospitals also tend to see the most patients, driving up medical costs. Community hospital leaders also argue that price disparities put them at a competitive disadvantage.
One recent study said that spending on low-risk pregnancy care, for example, ranged from less than $10,000 at some Massachusetts hospitals to more than $18,000 at others.
“Unless we specifically address unwarranted price variation on this commission, I’m concerned that the amount of the care delivered in higher cost settings is going to continue to escalate,” said Dr. Howard Grant, chief executive of Lahey Health in Burlington. “The consequence of that is that more community-based health care providers will continue to close.”
Karen Tseng, head of Attorney General Maura Healey’s health care division, said she hopes the commission issues concrete recommendations to resolve price variation, which she described as an urgent issue contributing to rising health care costs for consumers and employers.
“I think we all know what the problem is,” added Tyrek Lee, executive vice president of the Service Employees International Union, Local 1199. Lee’s union proposed the ballot question earlier this year that would have taken $440 million a year away from Partners HealthCare, the state’s highest-priced hospital system, and increased payments to other health care providers.
But Dr. David Torchiana, chief executive of Partners, the parent company of Massachusetts General and Brigham and Women’s hospitals, questioned the premise of other commission members and said the “fact base” about price variation is incomplete.
“Commercial price variation is not the cause of financial challenges for community hospitals,” Torchiana said in an interview after the meeting. “Commercial price variation is not a unique Massachusetts phenomenon; it’s a national phenomenon.”
He added that he worried about the potential of “sanctions” on Partners, which trains doctors, conducts scientific research, and is a major employer.
The commission’s first meeting ended after less than an hour, but State Representative Jeffrey Sánchez, a Democrat from Jamaica Plain who is cochairing the group, laid out an aggressive agenda that includes eight more commission meetings, various subcommittee meetings, and a public hearing. The commission must issue a report by March 15.
He acknowledged that finding consensus among the group’s 23 members — which includes hospital and insurance executives, state officials, economists, and business leaders — will be a challenge.
“We have 27 hours to go through this subject,” Sánchez said, referring to the commission’s scheduled meetings. “It’s complex and it’s controversial. . . . We’re going to have to do some real collective soul searching on where we’re going.”
This is not the first group in Massachusetts to study health care price differences. Stuart Altman, an economist at Brandeis University who sits on the new commission, recalled chairing a panel with a similar charge more than two decades ago. Altman is also chairman of the state Health Policy Commission, an agency created in 2012 to monitor health care costs.
“The question is whether the price variation here in Massachusetts is excessive,’’ he said. “We really don’t know that yet.”