Wednesday, August 15, 2012

Massachusetts Law Changes Lay of Land for Hospital Funding

The Boston Globe reports that a new Massachusetts law will aid some, but not all, hospitals. Among the law’s provisions is one establishing a Distressed Hospital Trust Fund that will distribute $135 million over four years among some 35 community hospitals, who must compete for funding. The story says hospitals that do not qualify for funding include teaching hospitals, hospitals charging “very high prices,” and for-profit hospitals. According to the Globe, the law is intended to prevent health spending from growing faster than the Massachusetts economy through 2017, and to retard spending for another five years. The law is believed to offer savings of up to $200 billion in health costs over 15 years “by encouraging providers to use fewer expensive procedures, to better coordinate patients’ care to keep them healthier, and to steer patients to lower-cost hospitals and doctors.”

And whence comes the money for carrying out the law? A significant portion will be generated by a special tax on three hospitals. The story continues:

The cost-control law … targets three Harvard-¬affiliated hospital systems — Partners HealthCare, Boston Children’s Hospital, and Beth Israel Deaconess Medical Center — to pay a one-time $60 million tax to fund health programs.

Representative Steven Walsh is quoted as saying that lawmakers “created a formula we felt would only hit those hospitals that are healthy enough to withstand’’ it. That apparently means that the only hospitals being taxed are those few which are most profitable.

As one would expect, a target of this targeted tax is crying foul. The Globe quotes Partners HealthCare Spokesman Rich Copp:

“Imposing a tax on a very small number of hospitals is not a fair way to approach this issue, particularly when the money is being used to solve a problem the state created by underfunding the Medicaid program,’’ he said. “Burdening hospitals with more costs in a bill to reduce costs is a paradox, as well as bad public policy.’’



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