An Act Ensuring Protections for Physicians & Hospitals that Contract with Medicaid Managed Care Organizations
Joint Committee on Health Care Financing

The Massachusetts Health & Hospital Association (MHA), on behalf of our member hospitals, health systems, physician organizations and allied health care providers, appreciates the opportunity to submit comments in strong support of HB1172, “An Act Ensuring Protections for Hospitals that Contract with Medicaid Managed Care Organizations.”

HB1172 provides needed protections for hospitals contracting with MassHealth Managed Care Organizations (MCOs). MassHealth recently introduced a policy that limits reimbursements paid from MassHealth Managed Care Organizations (MCOs) to acute care hospitals. With only strictly limited exceptions, MCOs are not permitted to reimburse more than 100% of the MassHealth fee-for-service rates for in-network acute care hospital services. This policy took effect in March 2018.

Separately, the Executive Office of Health and Human Services (EOHHS) has proposed to implement payment limitations for hospitals and physicians in dual-eligible programs such as One Care and the Senior Care Options (SCO) program. These enrollees have both Medicare and Medicaid coverage. For hospital and physicians services, Medicare is the primary payer for services provided to dual-eligible patients. Currently, MCOs serving dual-eligible members negotiate payment terms with all healthcare providers. However, EOHHS is now proposing to intervene and set caps on how much dual-eligible program MCOs can reimburse hospitals and physicians.

These rate-setting policies have the effect of tilting the playing field to the imbalanced favor of the insurers, leaving providers with little ability to negotiate. In these managed care models, health plans request that many providers go beyond simply performing fee-for-service procedures and additionally support patient care coordination and management. Reimbursement for these additional services must be allowed to be negotiated. If a healthcare provider demonstrates added value to a health plan as a key network provider or through its care management efforts, the provider and health plan should be permitted to negotiate and mutually agree to contract terms. Providers must also factor in the added administrative costs of contracting with several health plans, including unique billing, prior authorization, reporting, credentialing, and utilization review requirements.

Direct government intrusion into private negotiations puts hospitals at a significant disadvantage in the negotiating process. The 100% Medicaid fee-for-service limitation in the non-dual eligible program unfairly interferes with the financing arrangements between hospitals, their Accountable Care Organization (ACO) partners, and MCOs. It also creates a significant problem for hospitals that care for out-of-network MassHealth patients at rates that fail to address the reasonable cost of providing services. For many ACOs, hospitals serve as key elements to their model and provide much of the financial backing. The ability of hospitals to negotiate with ACOs and MCOs is critical to ensure that the added value of a hospital is recognized in the care management that will be provided to ACO and MCO enrollees. The ability to negotiate is also needed to minimize the likelihood that they will be taken advantage of financially by non-network ACOs/MCOs. For both in-network and out-of-network services, this policy puts hospitals at a significant disadvantage.

An environment that attracts robust provider and MCO participation through fairness, flexibility, and financial stability will best allow these organizations to meet their common goal of ensuring care is accessible and delivered effectively to MassHealth enrollees. HB1172 will require the long-standing free market practice of allowing healthcare providers to freely negotiate with MassHealth MCOs for services. HB1172 will have no effect on the state budget as it does not affect the funding that MassHealth and Medicare pay contracted MCOs through capitation payments. It simply brings back some form of balance to the negotiation table between hospitals and MCOs for the reimbursement of hospital services. Given the significant concerns that our member hospitals and health systems have raised with these objectionable policy changes, we respectfully request the committee report favorably on HB1172.

Thank you for the opportunity to offer comments on this important matter. If you have any questions or concerns or require further information, please contact Michael Sroczynski, MHA’s Senior Vice President of Government Advocacy, at (781) 262-6055 or msroczynski@mhalink.org