Community Hospital Update August 2010
The formal session of the 2009-2010 legislative session ended on July 31, 2010. MCCH was successful with several of the MCCH initiatives listed below being approved and signed into law. Senate 578, a study of anti-competitive behavior in the market place was initiated by the Division of Insurance and Attorney General early in 2010, and led to significant disclosures regarding the inappropriate use of market power to gain advantage in pricing with payers. This outcome received significant coverage in the press as a result of hearings conducted by both DOI and the Division of Health Care Finance and Policy. Regulatory actions were codified in Senate 2585 that have a bearing on minimizing certain behaviors deemed anti-competitive as a result of this review.
Included in Senate 2585, are Senate 554 and Senate 579 (essentially the same bills), which establishes a moral bond program for community hospitals and, by subsequent amendment, extends the program to community health centers. This bill makes Massachusetts the second state in the nation with a moral obligation bond program for private not-for-profit healthcare providers. If implemented properly, this program should provide these facilities with the lowest cost of capital available, and for many hospitals and health centers access to capital currently unavailable to them.
Senate 555 was included in Senate 2585 and provides for establishment of a Commission to study the capital needs of community hospitals. The Moscovitch Report (2010) determined that Massachusetts community hospitals employed fixed assets per discharge 34% less than the national average for community hospitals. Our community hospitals need a significant infusion of funding to support mandated IT requirements, as well as to meet the rising needs of an increasingly elderly population. Hopefully the work of this Commission will put a spotlight on this issue leading to improved rates of payment to these facilities.
Senate 855, also included in Senate 2585, is a Commission to study the factors leading consumers to select more expensive, but not necessarily higher quality, facilities. In Massachusetts, the excess cost of secondary care provided in the more expensive teaching setting exceeds $1B annually (Moscovitch 2010). Current insurance product design and the decisions of both employers to offer, and employees to select, products that channel consumers to the most cost effective and high quality providers, are factors that need to be better understood if we are to make near universal coverage sustainable in the Commonwealth.
In September 2010, MCCH will begin the process of determining what structural changes are needed to allow the community hospital sector to better contribute to health reform. New legislation will be prepared for introduction in January 2011
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