Massachusetts Medical Society: MMS Testimony in Opposition to H.3931, The Massachusetts Fair Health Care Pricing Act

MMS Testimony in Opposition to H.3931, The Massachusetts Fair Health Care Pricing Act

Before the Committee on Health Care Financing

The Massachusetts Medical Society (MMS) would like to be recorded in opposition to H.3931.  This initiative petition would prohibit health insurers from reimbursing acute care hospitals for a provided service at a relative price that is more than 20% above the average relative price for that service, or that is more than 10% below the average relative price for that service, with an exception made for specialty hospitals, geographically isolated hospitals, or disproportionate share hospitals. H.3931 also adds new provisions to the Consumer Protection statutes that would prohibit hospitals from recouping or attempting to recoup amounts in excess of the amounts charged to health insurers by increasing charges to other health benefit plans or other payers.  If passed, the initiative would result in a significant redistribution of hospital payments and could have profound and potentially dangerous unintended consequences.  

Increasing variation in prices paid by insurance companies to hospitals is a growing concern.  Indeed, that reality is a priority of the Health Policy Commission (HPC), created by the Legislature in 2012 and charged with ensuring that health care costs stay within the state benchmark.  Other entities such as the Center for Health Information and Analysis (CHIA) and the Attorney General’s Office have also recently issued reports on price variation. No health care provider, insurer or facility wants to see dramatic cost differences between large and small hospital systems for providing the same service, where differences between quality and/or complexity do not exist.  The MMS supports the work of the HPC in investigating price variations.  We do not believe this issue should be addressed through the threat of a statewide ballot initiative, which is subject more to money and paid political advertisements than actuarial analysis of facts and complex policy proposals.  

Additionally, the MMS does not support state regulation of health care payments.  State cost controls for hospitals were in place until about 1991, dating back to the Commonwealth’s Rate Setting Commission.  The MMS is concerned that this initiative will amount to a step backwards and may reverse accomplishments brought about by fair market trade, provider/insurer negotiation, consumer education and transparency of health care data by both the HPC and CHIA. 

For these reasons, the MMS urges the Health Care Financing Committee to reject H.3931. Instead, we urge you to do exactly what this legislation is intended to do:  make all stakeholders work with the HPC and the state legislature to discuss and come to agreement on the appropriate mechanisms to reduce unwarranted price disparities.  

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