Patrick weighs insurance hearing

Healthcare leaders told to rein in costs

Governor Deval Patrick yesterday asked the state's most prominent hospital and health insurance leaders to take quick action to hold down rapidly rising healthcare costs, suggesting that if they did not take steps on their own, they might face new government regulation.

Meeting with healthcare industry executives in response to recent articles by the Globe Spotlight Team about the cost of medical care, Patrick said he is considering holding hearings on health insurance premiums and the primary driver of premium increases - the rates hospitals charge insurers for members' medical care. Last week, he said the state Division of Insurance has the power to reject rates it deems excessive.

"Other governors haven't used this power, but he's telling them, 'I have this and tell me why I shouldn't use it,' " said state Inspector General Gregory W. Sullivan, who attended yesterday's meeting in Patrick's office.

Insurance executives at the meeting said they would welcome such an investigation, according to Charles D. Baker, chief executive of Harvard Pilgrim Health Care, the state's second-largest health insurer.

Sullivan asked the executives to refrain from signing new contracts that cover patient care beyond this year until the government has time to consider potential reform measures. The inspector general singled out the largest private contract in Massachusetts healthcare, between the state's dominant provider, Partners HealthCare, and its largest insurer, Blue Cross and Blue Shield of Massachusetts.

The two agreed last summer to a multiyear contract that calls for annual rate increases of about 5 to 6 percent. Spokesmen for Partners and Blue Cross said yesterday the agreement was final.

Still, Sullivan said he believes unforeseen circumstances - such as state insurance hearings - would be grounds for the two companies to revise or suspend their deal.

After the meeting, several executives said they will support a new payment reform commission about to begin meeting, but they did not promise any other immediate action or changes. The commission, created by legislation Senate President Therese Murray spearheaded last year, will examine alternatives to the traditional payment model in healthcare. Many insurance executives and healthcare reformers argue that providers should be paid for healthy outcomes, not as they are now - based on the number of tests and procedures they perform on patients.

Dr. James J. Mongan, chief executive of Partners, said Patrick "understands [healthcare costs] are national issues, but the state of Massachusetts showed it could lead on national issues with [healthcare] coverage and it's going to try and lead on national issues with costs."

Baker said Patrick "made clear that this is sort of a today issue, not a tomorrow issue, but in a room with 30 people it's hard to pursue specific commitments in front of everybody else."

"It was more about expressing urgency and seeking aggressive participation," he added. "I think he got the right answers from everybody."

The Spotlight Team reported recently that Partners and Blue Cross made a deal in 2000 that called for major increases in what Blue Cross would pay for the services of Partners, the parent company of Brigham and Women's and Massachusetts General hospitals. In exchange, Partners would insist on receiving payments from other insurers that were at least equal. Healthcare costs have risen dramatically since that time.

Tufts Medical Center said last week it would soon stop accepting Blue Cross insurance because the company will not pay reasonable rates, while Blue Cross says demands for higher payments by Tufts would increase healthcare costs. Blue Cross rates obtained by the Globe show Tufts is paid about 32 percent less than Mass. General or Brigham and Women's.

Marcella Bombardieri can be reached at bombardieri@globe.com.