Flash! MA has rate-setting!

It's just that we don't call it that.

Many months ago here and often in private with my hospital colleagues, I have advocated for a formal rate-setting process for hospital reimbursement rates. (To the best of my knowledge, only Maryland currently has such a system.)

The reaction from the industry has been uniformly negative. "How can we let faceless bureaucrats in the state government decide on the fees that hospitals could charge for care?"

My answer is that for years we have let unaccountable insurance companies do the same thing. This has led to the current disparities in pricing in the Massachusetts market, a phenomenon that the Attorney General found to be partially responsible for the growth in health care costs and insurance premiums in the state.

Now, the state insurance commissioner has expanded the power of insurance companies to do more of the same. By enforcing arbitrary rate limits on certain policies, the commissioner has, in essence, directed the insurance companies to take money out of the hands of the hospitals and doctors. And, sure enough, it is happening, as noted in this Boston Globe story.

As I have mentioned, this approach serves mainly to increase the current disparities in payments.

So, on the one hand, we hospitals oppose rate-setting. On the other hand, we let it happen to us. But instead of having an administrative state agency whose hearings would be open to public scrutiny and whose determinations would be subject to judicial review, we now have insurance company personnel making these decisions in private sessions. Their rate-setting decisions are not public and are made without accountability.