Massachusetts Legislation Introduced to Lower Payments to Highest-Earning Providers

Massachusetts House majority leader Ronald Mariano plans to file legislation today that would require insurers to reduce payments to the priciest hospitals and physicians, according to a Boston Globe report.

The savings achieved by the insurers would be used to increase payments to the lowest-paid providers and to reduce health insurance premiums for individuals and businesses, according to the report. Mr. Mariano said his plan could save $267 million in premiums by narrowing the gap between the 'have' and the 'have-not' providers.

The plan would require insurers to reduce payments to providers with rates in the top fifth and raise payments to those in the bottom fifth. The plan would use a methodology that compares hospitals and physicians within each of four regions of the state to one another. Insurers would not be able to enter into new contracts with top-fifth or bottom-fifth providers starting in Jan. 2012 until their rates move closer to the average.

The plan is guaranteed to be controversial given the push-back from providers on government regulation of healthcare pricing. Lynn Nicholas, president of the Massachusetts Hospital Association, said her members believe that while pricing disparities do exist in Massachusetts, they do not believe the disparities warrant aggressive government intervention into private contracts.

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