Business & Tech

Mass. House seeks $450 million to prop up struggling community hospitals

Brockton Hospital, here, and other community hospitals would benefit under the Mass. House bill.
David L Ryan, Globe Staff
Brockton Hospital, here, and other community hospitals would benefit under the Mass. House bill.

The Massachusetts House of Representatives on Tuesday will take up legislation that would slap $450 million in new assessments on the health care industry to prop up struggling community hospitals but largely avoids tackling the rising costs of care.

The House bill aims to extend a lifeline to smaller hospitals without a direct hit on taxpayers. It would impose $120 million in assessments on large hospitals, while health insurers would be charged $330 million. The money, collected over three years, would go into a trust fund for community hospitals.

In addition, the bill would impose a $75 surcharge on professional licenses for doctors, dentists, nurses, pharmacists, and other providers, generating another $46 million over three years.

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House leaders said community hospitals — which are large employers in such cities as Brockton, Lowell, and Lawrence — desperately need help so they can stay sustainable for years to come.

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“If you’re living and breathing in medicine today, and we can find you, we assessed you,” House majority leader Ronald Mariano, a Quincy Democrat, told reporters Monday. “We felt that it was important to keep these hospitals afloat — important enough that we look at all the revenue we could generate.”

Asked whether the legislation aims to contain costs, Mariano said: “I never said it was a cost-control bill. The goal is to create a foundation in which health centers and community hospitals can survive.”

Community health centers would receive an additional $15 million per year if the bill is enacted.

House Speaker Robert DeLeo called the legislation “a smart mechanism” and said “the next conversation we have may be a little bit more about cost control than it is right now.”

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Their leaders argue that independent community hospitals are underpaid for the care they provide because they lack the market clout of larger competitors. They have lobbied for legislation to set a “minimum wage” for the payments they get from commercial health insurers.

Ellen Murphy Meehan, a lobbyist and consultant who represents Holyoke Medical Center, Brockton Hospital, and other community hospitals, said the House bill is “a big, bold three-year reprieve from a dysfunctional marketplace.”

“The House leadership’s decision to impose an assessment that brings an immediate remedy to provide critical funding speaks to how much they felt there was a need to fix the inequities in the market,” she said.

Certain hospitals in Massachusetts have long been paid more than others for performing the same medical services. Last year, a state commission that studied price variations agreed that community hospitals should get a raise. But the issue has been controversial, because big wealthy hospitals don’t want to take a pay cut in order to help smaller community hospitals.

“It’s a really comprehensive bill,” Steve Walsh, president of the Massachusetts Health & Hospital Association, said of the House measure. “It takes extraordinary steps forward to stabilize our community providers.”

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Walsh said hospital leaders have some concerns about the bill that they hope to address as lawmakers debate the legislation. The assessments in the House bill would be charged to hospitals with assets of more than $750 million.

Health insurers would pay the bulk of the new assessments. Insurers are required to keep a certain amount of money in reserves so they can stay solvent.

“We are having ongoing conversations with the House about our concerns relative to the reserves assessment in the bill and its impact on our members,” Lora Pellegrini, president of the Massachusetts Association of Health Plans, said in a statement.

A spokeswoman for Blue Cross Blue Shield of Massachusetts, the state’s largest health insurer, said the company is “carefully reviewing the lengthy House bill.”

The House takes a different approach than the Senate, which passed a health care bill in November that would penalize some hospitals.

The Senate bill would mandate that community hospitals be paid at least 90 percent of the average price of a medical service. It also would require some large hospitals to pay hefty penalties if hospital spending rises too quickly.

Partners HealthCare strongly opposed the Senate bill, saying the legislation unfairly would hurt its largest hospitals, Massachusetts General and Brigham and Women’s. Partners declined to comment on the House bill Monday.

The House and Senate ultimately will have to settle the differences between their two bills. The legislation would also need the signature of Governor Charlie Baker.

The Baker administration did not take a position on the House bill Monday, although administration officials previously told the Globe that any legislation to address price variation should include cost-control provisions.

“The administration will carefully review any final legislation that reaches the governor’s desk,” Brendan Moss, a spokesman for the governor, said by e-mail Monday.

Both the House and Senate bills avoid making significant changes to the state Medicaid program, called MassHealth, which provides health coverage for poor and low-income residents and accounts for the largest chunk of the state budget. Baker has sought to move 140,000 adults off MassHealth and onto other subsidized health plans as a mechanism for curbing costs, but lawmakers have so far rejected this plan.

Representative Peter Kocot, who chaired the Joint Committee on Health Care Financing, began crafting the bill before his death from an illness in February. Mariano and other lawmakers finished writing the legislation.

The 127-page bill includes a range of new provisions, including new rules around telemedicine and out-of-network billing. It also requires pharmaceutical companies to answer more questions about their drug prices and sets up a process for potentially expanding the scope of practice for some health care providers.

Priyanka Dayal McCluskey
can be reached at priyanka.mccluskey@globe.com. Follow her on Twitter @priyanka_dayal.