The Inspector General expresses concerns

Most people think about the state's Inspector General in terms of preventing and detecting fraud, waste, and abuse in government. But Inspector General Gregory Sullivan is also a member of the state's Health Care Quality and Cost Council.

The Health Care Quality and Cost Council is mandated:

• To establish statewide goals for improving health care quality, containing health care costs, and reducing racial and ethnic disparities in health care;
• To demonstrate progress toward achieving those goals; and
• To disseminate, through a consumer-friendly website and other media, comparative health care cost, quality, and related information for consumers, health care providers, health plans, employers, policy-makers, and the general public.

So, in this capacity, the IG has certainly had a chance to become informed about many aspects of the health care system and to make policy judgments about the health care marketplace. For example, he has reached the conclusion that the dominant provider group in Massachusetts probably does not want its next insurance payment contract renewals -- scheduled for next year -- to be subject to recently proposed legislation that would control reimbursement rates. Recognizing that a retroactive review would be legally prohibited, he says, the company's goal would to be to beat the legislative calendar and sign new contracts ahead of schedule. He posits that these contracts would be inflationary.

This was all set forth in a letter to the Governor this week. I include excerpts below:

It is my understanding that while existing contracts . . . are not set to expire in the next 12 months, negotiations regarding new contracts are taking place now. There is a strong possibility that these new contracts would become effective well before the expiration of the contracts that they would replace, and, in any case, would almost certainly be signed before the implementation of any payment restrictions following the passage of reform legislation.

... New inflationary long-term contracts between insurers and providers would end any hope of controlling health care costs in the next five years.

It is very interesting that we live in a state in which most providers and insurers say that state rate-setting is anathema. But, the Governor has endorsed it in his proposed legislation; and now the Inspector General says that current authority exists within the Division of Insurance to control premiums and, indirectly, reimbursement rates.

To address this crisis, our state government must use all relevant existing authority to control costs prior to the implementation of reform legislation. As you are aware, the Office of the Inspector General has long advocated that the Division of Insurance already has authority to restrict provider payments through the review in insurance rate cases of the reasonableness of the underlying costs that make up the premiums proposed by insurers. Specifically, the Division can examine an individual insurer’s current contracts with particular providers and make a determination that certain contracts will produce excessive and unreasonable payments to providers. The excessive amounts would then not be passed along to premium payers, thereby lowering their premiums.

The approach I am recommending applies to insurers on a case-by-case basis. In contrast, your proposed legislation would apply generally to all insurers and could be determined in one regulatory proceeding. But the case-by-case approach would bridge the gap until the time that a more general approach could be adopted. If we simply wait until legislation is passed, we will likely be unable to control health care costs for many years.

While their tactics might be slightly different, both the Governor and the Inspector General seem to be saying that the current rate-setting process is broken, that it does not provide enough transparency and accountability to the public.

If a few more elected officials step up and concur publicly, in the words of Arlo Guthrie, we "may think it's a movement."