Healthcare Equality and Affordability League

For the Media

FOR IMMEDIATE RELEASE
Contact: Kyle Sullivan
(617) 512-2169

Closure of North Adams Regional Hospital A Direct Result of Reimbursement Disparities Threatening Community Hospitals Across MA

First MA Hospital Closure in 11 Years – Inequitable Reimbursement System Threatens Community Hospitals and Access to Care for Middle-Class and Low-Income Communities

BOSTON, MA, March 28, 2014 —The Healthcare Equality and Affordability League (H.E.A.L.) today said the closure of the North Adams Regional Hospital should set off alarm bells statewide and merits immediate action by the state.

“This is a terrible loss for the people of North Adams and surrounding communities who need and deserve high quality and affordable health care close to home,” said Laura Dhooge, Executive Director of H.E.A.L. “Sadly this is a direct result of a ‘vicious cycle” of inequality within the Massachusetts health care financing system through which the payment gap gives large centers an unfair advantage, allowing them to use the excess dollars paid for every service provided in local communities to unfairly compete for the lucrative and mobile commercial population. Rich hospitals get paid more and are able to spend significantly more to attract commercial patients.”

“We are calling on state officials to improve Medicaid rates to disproportionate share hospitals like North Adams, and to put an end to the existing inequity in reimbursements among community hospitals and academic teaching hospitals which harms patient access to quality health care for all residents of the Commonwealth,” stated Dhooge.

According to reports, North Adams Regional Hospital – the only hospital in the Northern Berkshires – has more than 500 employees making it the largest employer in the town and the primary medical center for the vast majority of North Adams residents. The shutdown marks the first Massachusetts hospital closure in 11 years and means residents will be forced to travel as far as Pittsfield or Bennington, Vt. for care. The dire situation poses a significant burden on residents and jeopardizes treatment, particularly for those in need of emergency medical care.

Just last week a report titled “Health Care Inequality in Massachusetts: Breaking the Vicious Cycle,” found the current Massachusetts health care financing system “unsustainable” and damaging to middle- and low-income patients.

A copy of the report – a joint effort between H.E.A.L. and David E. Williams of Health Business Group – can be found here.

Some of the report’s findings include:

· “The rich get richer” as highest cost hospitals attract a greater proportion of patients with commercial insurance, which have higher reimbursement rates than Medicare and Medicaid.

· “The state must take immediate action” because Medicaid Managed Care Organizations (MCOs), which contract with the state to provide health insurance to low-income residents, are perpetuating the hospital reimbursement inequities observed in the commercial insurance market. Publicly available data shows that Medicaid MCOs reimburse Boston teaching hospitals at reimbursement rates that are more than 40% above their community hospital peers.

· “Patient migration” for routine care from community hospitals to high cost Boston teaching hospitals increases total medical costs and contributes to higher premiums for all individuals and families with commercial insurance (non-Medicare nor Medicaid). Additionally, low-income patients, forced to travel greater distances to receive routine care are more likely to forgo treatment until conditions become acute and require more expensive interventions.

· “The poor get poorer” as community-based hospitals are disadvantaged by a combination of large numbers of inadequately reimbursed Medicaid patients and lower commercial payment rates for their remaining commercially insured patients.

· “A tale of two households” exists where middle-class and low-income communities are effectively subsidizing the healthcare of individuals who live in wealthier communities. Higher-income communities generate greater medical expenses per person than lower-income communities but these costs are spread across geographies in the form of higher premiums for everyone.

About HEAL

Founded in 2013, the Healthcare Equality and Affordability League (H.E.A.L.) is committed to high quality, cost-efficient, and equitable health care system in Massachusetts. In order for community and safety net hospitals to provide high quality, affordable health care – as well as meet the mandates of health care reform – the payment disparities in the health care system must be addressed. Improvements in the provider payment system are needed to preserve access to affordable community-based care and to maintain essential health care jobs. Members of H.E.A.L. include Steward Health Care System LLC, 1199SEIU United Healthcare Workers East, and Boston Medical Center.

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FOR IMMEDIATE RELEASE
Contact: Kyle Sullivan
(617) 512-2169

New Report: Financing Disparities In MA Healthcare System Create “Vicious Cycle” of Inequality
Current System Threatens Viability of Community Hospitals and Access to Services for Middle-class and Low-income communities

Click here to download the full report.

BOSTON, MA, March 18, 2014 — A groundbreaking report released today by the Healthcare Equality and Affordability League (H.E.A.L.) finds that a vicious and unsustainable cycle exists in the current Massachusetts health care financing system. The report, “Health Care Inequality in Massachusetts: Breaking the Vicious Cycle,” is a joint effort between H.E.A.L. and David E. Williams of Health Business Group.

According to the report, the current system is driving significant annual increases in health care premiums across the state, making health care less affordable for middle-and lower-income families and compromising the viability of community hospitals to continue to provide access to services in lower-income communities.

“Hospital price disparities in Massachusetts have been well documented by the state government and news media,” said Williams, a consultant with the Health Business Group and lead researcher for the report. “This report analyzes publicly available data to lay out the implications of the disparities and offers clear, practical solutions to make the health care system fairer and more effective.”

Some of the findings of the report include:

  • “The rich get richer” as highest cost hospitals attract a greater proportion of patients with commercial insurance, which have higher reimbursement rates than Medicare and Medicaid.
  • The state must take immediate action” because Medicaid Managed Care Organizations (MCOs), which contract with the state for the provision of health insurance to low-income residents, are perpetuating the hospital reimbursement inequities observed in the commercial insurance market. Publicly available data shows that Medicaid MCOs reimburse Boston teaching hospitals at reimbursement rates that are more than 40% above their community hospital peers.
  • “Patient migration” for routine care from community hospitals to high cost Boston teaching hospitals increases total medical costs and contributes to higher premiums for all individuals and families with commercial insurance (non-Medicare nor Medicaid). Additionally, low-income patients, forced to travel greater distances to receive routine care are more likely to forgo treatment until conditions become acute and require more expensive interventions.
  • “The poor get poorer” as community based hospitals are disadvantaged by a combination of large numbers of inadequately reimbursed Medicaid patients and lower commercial payment rates for their remaining commercially insured patients.
  • “A tale of two households” exists where middle-class and low-income communities are effectively subsidizing the healthcare of individuals who live in wealthier communities. Higher-income communities generate greater medical expenses per person than lower-income communities but these costs are spread across geographies in the form of higher premiums for everyone.

“There are significant consequences if we do not act now,” explained Laura Dhooge, Executive Director of H.E.A.L. “We can fix long-standing disparities in our healthcare system by tackling the root of the problems.”

The report offers a number of recommendations to better address health care financing issues comprehensively across public and private payers, including:

  • Reduce Disparities in Hospital Reimbursement – The Commonwealth’s cost growth benchmark should be adjusted to account for providers’ relative price differentials, requiring high cost providers to hold cost growth below the benchmark as a first step in addressing the wide variation in reimbursement.
  • Consider Provider’s Payer Mix when Setting Medicaid and Commercial Insurance Reimbursement Rates – Health care providers that care for a high percentage of Medicaid patients should be compensated for Medicaid underpayment through higher Medicaid and/or commercial insurer reimbursement rates.
  • Implement a Medicaid Accountable Care Organization (ACO) – As the second largest payer in the state, the Commonwealth should use its $13 billion purchasing power to immediately implement a Medicaid ACO program, similar to the successful Medicare Pioneer ACO program, which rewards quality and cost containment.
  • Encourage Insurance Companies to Design Products and Plans that Reward Members Utilizing Lower Cost Community Providers – Insurance companies should introduce products that reward employers and employees who choose to receive their care within cost effective provider networks with lower premiums.

The full report can be viewed here.

About HEAL

Founded in 2013, the Healthcare Equality and Affordability League (HEAL) is committed to high quality, cost-efficient, and equitable health care system in Massachusetts. In order for community and safety net hospitals to provide high quality, affordable health care – as well as meet the mandates of health care reform – the payment disparities in the health care system must be addressed. Improvements in the provider payment system are needed to preserve access to affordable community-based care and to maintain essential health care jobs. Steward Health Care System LLC and 1199SEIU United Healthcare Workers East are founding members of H.E.A.L.

About David Williams, Health Business Group

David Williams is a healthcare business and policy expert with 25 years of professional experience. He is president of the Health Business Group, a consulting firm that helps health care companies, investors and non-profits research markets and develop robust business strategies. A sought after healthcare expert for media such as NPR, BusinessWeek, and US News, David is also the producer of the Health Business Blog, where he presents his analysis of healthcare business and policy.

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