House Healthcare Bill Includes Help for Hospitals

Following last week’s Massachusetts House vote on a complex healthcare bill, attention now turns to an as-yet-unannounced conference committee that will attempt to resolve differences between the House bill and legislation from the Senate passed last November.

A core pillar of both bills is the recognition that some community hospitals are in need of financial help.  Lacking the bargaining power of bigger systems and usually serving a larger percentage of poorer patients enrolled in Medicaid, these hospitals made a compelling case to both the House and Senate that they needed relief.

The House created funding support through a revised Community Hospital Reinvestment Trust Fund, weighted toward the lowest paid hospitals, funded by a broad base of assessments on hospitals, insurers, urgent care centers and unaffiliated clinics, and increased professional licensure fees. This was coupled with Division of Insurance review of warranted/unwarranted factors of price variation as part of the rate approval process, and a connected Performance Improvement Plan process overseen by the Health Policy Commission.

In his comments on the House floor, House Majority Leader Ron Mariano (D-Quincy) explained the rationale behind the hospital-relief component of the bill, saying, “[W]e are forced to take some extraordinary measures to ensure there is a minimum reimbursement rate for these hospitals in our gateway cities, since they are the economic engines of these cities.” Citing the changing care models now underway in Massachusetts, Mariano said, “It is our hope that over the three years of this bill, the dynamic in healthcare will change and I'm not going to say we won't be here three years from now making adjustments. But we will know we put these hospitals on a good footing. Probably the most important thing we do in this bill is to solidify these important hospitals.”

Hospital financials are publicly reported and the ongoing precarious financial condition of many facilities in the commonwealth is evident.   In 2016, for example, 14 hospitals in Massachusetts had negative operating margins. An independent analysis determined earlier this year that if a proposed ballot question to impose government-mandated nurse staffing ratios were to pass, its $1.3 billion cost would drive an additional 25 hospitals into the red.