Health Law

The Massachusetts provider-payor ultimatum: deja vu all over again

By David Harlow

Today's Boston Globe reports that Tufts Medical Center will not accept Blue Cross Blue Shield of Massachusetts insurance after the end of this month, saying the rates and contract offered would yield continuing losses.  The Blues say it's a negotiating tactic. 

Thanks to recent press the Blues and Partners have been getting (see HealthBlawg post on Partners and Blue Cross issues, with link to Globe spotlight team story) the tactic has a better chance of working than it did eight years ago, when Tufts CEO Ellen Zane was in the Partners camp, and Tufts Health Plan (no relation) said it would not accede to Partners demands for higher rates.  See the Boston Globe story on the previous negotiation here (subscription or archive fee required) or here, courtesy of Harvard Pilgrim Health Care, which was eager to scoop some Tufts subscribers at the time. 

Excuse the Molière-like aside from an aside, but it's also worth noting that Harvard Pilgrim CEO Charlie Baker, who would have welcomed the Partners-Tufts rift in 2000, and would certainly now prefer not to have to meet the Blue Cross-Partners price increases, got into state health care policy-making positions partly on the strength of his think-tank work calling for the abolition of state-run hospital rate-setting regulation.  (The Massachusetts Division of Health Care Finance and Policy is fondly known around these parts to some of us as the Agency Formerly Known as the Rate Setting Commission; Charlie held a number of positions in Republican administrations in Massachusetts, including Secretary of Health and Human Services.)  While much has happened in the intervening years (deregulation of other aspects of the health care marketplace, consolidation of providers into systems such as Partners, among other things), rate deregulation is one of the factors leading to current higher reimbursements to providers, which translates directly into higher health care insurance premium costs.

The invisible hand hasn't been doing too well by the health care marketplace.  The question of the moment -- to mix some metaphors -- is whether the Obama administration (or, on a local level, the Patrick administration) will be able to turn that supertanker around without breaking it up.  

David Harlow
The Harlow Group LLC
Health Care Law and Consulting

Full post as published by HealthBlawg on January 06, 2009 (boomark / email).