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Insurers Looking to Cut Compensation To Hospitals in Massachusetts As Contracts Come Up for Renewal

Posted May 24 2010 9:32am

Not too long ago the Department of Justice was looking at how hospital contracts worked in the state of Massachusetts and Blue Cross is now looking to find some image relief.  Some of the insurers in the state are non-profit, different than how it functions in many states with for profits leading the way. 

Right now this is not a popular issue with hospitals and providers at all with pinches in budgets coming from so many other directions.  We have seen enough of this in the news with mergers, acquisitions and closures of hospitals around the US.  Some hospitals in the Boston area are sitting on some large cash reserves, while others such as Caritas were purchased by a private equity firm in order to stay in business. 

As you can see from the Caritas agreement, the private equity firm has some interesting options here with the ethics and religious past and present with the Catholic management. 

Partners and UMass Memorial Health Care have been asked to reopen their contracts and accept cuts.  The cuts range from 3 to 10% with contract negotiations.  More financial pressure and feeling of unknown as the future of how healthcare and insurance contracts continues to mount.  In Massachusetts the hospital compensation rates with some receiving much higher rates has been up for discussion for a while now and has popped in and out of the news.  With the Department of Justice involved now as an additional player, who knows what the outcome will end up being.  BD 

Massachusetts health insurers say they want to freeze or slash payments to some hospitals and large physician groups this year, setting up the toughest contract negotiations in memory and creating the potential for disruptions in where patients get their care. Other providers would get small increases, at most.

Blue Cross Blue Shield of Massachusetts, the state’s largest insurer, this month sent letters to hospitals and large physicians groups “putting them on alert that the world has changed,’’ said chief executive William Van Faasen. Blue Cross recently began negotiations with 25 hospitals whose contracts expire in October, about one-third of its network.

Two other large insurers, Harvard Pilgrim Health Care and Tufts Health Plan, also have sent letters in recent weeks, requesting rate rollbacks from some hospitals and doctors groups.

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