Hospitals face levy to fund coverage

By Kay Lazar
Globe Staff / May 15, 2010

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Many Massachusetts hospitals would be required to make a one-time contribution to a fund to help small businesses pay for health insurance, under legislation that the state Senate will vote on Tuesday.

Senate President Therese Murray inserted the measure yesterday into a more sweeping bill she unveiled last month because almost no hospitals answered her call for voluntary contributions — other than Partners HealthCare, which pledged $40 million.

Murray, who formally filed the bill yesterday, hopes to raise $100 million to help small employers, who have faced double-digit health insurance rate increases. She said the money would reduce their premiums by about 2.5 percent.

“This bill will have an immediate and positive impact on small businesses that cannot be ignored,’’ Murray said in a statement. “It is not a permanent fix, but the shared sacrifice from both providers and insurers will bring necessary relief in the short-term as we continue to work on complicated, long-term cost-control measures.’’

The Massachusetts Hospital Association expressed reservations yesterday about the proposal, saying it is “concerned about the impact of the mandatory assessments this legislation levies on hospitals and how those assessments would be implemented.’’

The association said it will “continue to advocate to ensure that there is shared responsibility in addressing the healthcare cost issue that involves all stake holders — hospitals, insurers, employers, consumers, and state programs.’’

Partners HealthCare, whose Boston teaching hospitals have been blamed for helping to drive up medical spending, may end up owing more than the $40 million the health care giant already pledged, because Murray’s bill provides an exemption for small and financially struggling hospitals.

The complex formula requires hospitals that have more than a 2.5 percent profit margin to contribute money based on their patient population, with facilities that mostly treat patients who have private insurance kicking in more than those that typically care for lower-income patients on Medicaid.

Murray’s bill requires hospitals to deal directly with the health insurers, who would then distribute the refunds to small businesses over a two-year period, to be completed by September 2012. The state Division of Insurance would have to issue a public report by Oct. 1 that lists the names and the amounts to be contributed by each hospital.

Murray’s bill also includes a so-called transparency provision, which would require insurance companies to report annually to the state the rates it pays each of the hospitals for their services.

Partners, the parent organization of Massachusetts General and Brigham and Women’s hospitals, has come under scrutiny by the attorney general’s office and other regulators because it is among providers paid far higher rates than their competitors for similar services — payments Partners has been able to negotiate because of its market clout, regulators said. Partners says its higher rates reflect the complexity of the care its hospitals provide.

Kay Lazar can be reached at