Business & Tech

Special panel recommends regulating hospital rate increases

Boston, MA., 02/13/15, David Torchiana made remarks at Mass General Hospital awards ceremony. Photos are for profile of Torchiana, the new Partners HealthCare CEO. Suzanne Kreiter/Globe staff

Suzanne Kreiter/Globe staff/file 2015

Dr. David Torchiana, chief executive of Partners HealthCare, said hospitals should be able to charge more if they have high patient satisfaction and quality scores.

In an effort to tackle one of the biggest challenges to the Massachusetts economy, members of a special state commission on Tuesday called for regulating the growth in hospital rates to contain health care costs.

Commissioners said the Division of Insurance should have greater authority to oversee hospital-insurer contracts, including the amount hospital rates can increase each year. The controversial proposal comes after months of discussions at the commission, which was convened to study the wide variation in prices at Massachusetts hospitals. Studies have shown that price disparities contribute to higher health spending because the most expensive providers also tend to have the top reputations and attract the most patients.

Advertisement

The panel is scheduled to submit its final recommendations in a month, and divisions among members of the group — especially between hospitals and insurers — still have to be hashed out. Hospitals have typically opposed any kind of rate regulation, while insurers have called for a greater government role in controlling hospital prices.

The commission’s proposal to boost regulation of hospital payments follows a similar plan from Governor Charlie Baker last month. Baker included hospital rate caps in his annual budget, which still needs approval from legislators.

Get Talking Points in your inbox:
An afternoon recap of the day’s most important business news, delivered weekdays.
Thank you for signing up! Sign up for more newsletters here

Tuesday’s discussion became so heated at one point that the commission’s co-chairman, state Representative Jeffrey Sanchez, chided members to “to stay away from pointing of fingers.”

Earlier, some commissioners wondered aloud whether price variation is really a problem, which prompted a perplexed House majority leader Ronald Mariano to say, “That’s sort of why I show up to the meetings.”

The commission — which includes state officials, academics, employers, and representatives of the hospital and insurance industries — first met in September. It is due to reach a consensus about how to tackle price variation and submit a report by March 15.

Advertisement

In addition to discussing possible regulation, commission members have debated what factors should be allowed as justification for higher prices. Dr. David Torchiana, chief executive of Partners HealthCare, said hospitals should be able to charge more if they have high patient satisfaction and quality scores. Partners, the parent company of Massachusetts General and Brigham and Women’s hospitals, is the state’s largest and highest-priced health care network.

“Brand insofar as it is simply identified as name and history and perhaps marketing of an institution and size . . . are not considered warranted reasons for price variation,” Torchiana said. “However, insofar as reputation represents a quality measure and is indicative of exemplary quality, we did not think that should be erased.”

Sanchez, the panel’s co-chairman, said in an interview that he was encouraged by the back-and-forth, even though it was testy at times.

“I felt like today was good,” he said. “You could see still where the challenges were.”

Priyanka Dayal McCluskey can be reached at priyanka.mccluskey@globe.com. Follow her on Twitter @priyanka_dayal.
Loading comments...
Real journalists. Real journalism. Subscribe to The Boston Globe today.