State plans to reallocate its payments for free care
The Romney administration is planning its first step to overhaul the state's healthcare program for more than 400,000 uninsured residents, reducing payments to Boston Medical Center and Cambridge Hospital and giving more money to other Massachusetts hospitals.
The so called free-care pool has become a "very, very tense issue in the hospital community," said Ronald Preston, secretary of the Executive Office of Health and Human Services. "I've had people from the hospitals parading through my office complaining how unfair it is."
As a result, Preston said, the free-care pool plans to reimburse Boston Medical Center and Cambridge Health Alliance, the parent organization of Cambridge Hospital, for about 85 percent of the money they spend caring for uninsured patients. The pool had been paying them more than 90 percent.
Meanwhile, the pool will increase other hospitals' pay levels to 82 or 88 percent of their expenditures, depending on how many poor patients use their facilities. The pool had been paying many hospitals for less than 50 percent of their costs.
To pay for the increases, the state and health insurers -- who along with some hospitals are required to fund the free care pool -- will put more money into the pool, as well.
The Massachusetts program is one of the most generous in the country to patients who can't afford health insurance but are too well-off to qualify for Medicaid, the state and federal insurance program for the poor and disabled. The state pays entire medical bills for families who earn up to $60,840, and will pay a portion of the bills for large families that earn up to $121,680.
But the program has pitted hospital against hospital, draining the finances of some, while benefiting those that treat large numbers of poor patients.
The new plan "has made a huge difference to us in a very difficult year," said Diana Franchitto, executive director of marketing at Caritas Norwood Hospital, which has long complained about the distribution of the free care pool and will get $1.5 million more under the new plan than it received this year.
Partners Health Care, a network that includes Massachusetts General Hospital and Brigham & Women's Hospital, will get the most relief, $25 million, both to reduce the amount it is required to pay into the pool and to help it care for poor patients.
Executives at Boston Medical and Cambridge Health Alliance said their payments were cut too much. Even before the cuts, Cambridge Health Alliance said, it expects to report an operating loss of more than $20 million for the fiscal year that ended in July, and will eliminate 70 jobs. The hospital said losses could grow this year.
"I cannot underscore how serious this situation is," said chief financial officer Robert Cooper. Under the administration's new plan, Cooper said, his system's free care pool payments will fall to $95 million in fiscal 2004 from $101 million in fiscal 2003, while he predicts costs will grow to $135 million. Thomas Traylor, a Boston Medical vice president, said his hospital's payments will drop to $165 million from $175 million.
Executives at both hospitals -- as well as several legislators and Partners executives -- are trying to convince the Romney administration to recalculate.
Boston Mayor Thomas Menino also plans to meet with the administration. He said he is worried that if Boston Medical loses significant amounts of money, poor patients "will end up sick and on the street."
Preston said he is reviewing the numbers to see if he can give Boston Medical and Cambridge Health Alliance more money. But he is worried that if he does, he will have to take dollars away from other hospitals. Besides, he said, the state is giving Boston Medical Center $130 million more next fiscal year for other programs that pay for medical care for the poor. The state also is giving Cambridge Health Alliance more money for other programs, but he did not know how much.
The administration is finalizing its plan, which is based on newly passed legislation, and will hold a public hearing Sept. 25. The plan is an interim step while state officials and hospital executives grapple with a wholesale overhaul of the program.
All hospitals pay into the free care pool, and those that treat the highest percentage of privately insured patients pay the highest rate. Hospitals also receive payments from the pool; those that treat the greatest numbers of poor patients get the most. Boston Medical and Cambridge Hospital are the biggest recipients, receiving nearly one-third of the pool money, about $415 million last year.
"One reason Boston Medical Center and Cambridge get so much is that the other hospitals are suffering too much" by paying a lot into the pool and receiving little, Preston said. "Boston Medical Center and Cambridge perform an incredibly important and difficult mission in the Commonwealth. The last thing we want to do is damage them. But this is a difficult balancing act and a difficult time."
The pool has pitted suburban hospitals against urban hospitals. Many suburban hospitals are net payers into the pool, in effect sending money to their competitors.
South Shore Hospital, for example, paid $3.9 million this fiscal year, which for hospitals ends Sept. 30. But the administration's plan for next fiscal year will require the hospital to contribute only $750,000. The hospital provides about $11 million in free care to uninsured patients.
President David Hannan said the new plan is a one-time fix and the program should be scrapped. Hannan said hospitals should be responsible for funding their own free care. The state should help those like Boston Medical Center and Cambridge Health Alliance that do enormous amounts of free care through a broad-based tax, he said.
"This system pits urban poor against suburb poor," he said. "Why are the poor here any less important than the poor in Boston? Boston Medical Center and I have exactly the same mission. We shouldn't be fighting over the means of distribution of this money."
Liz Kowalczyk can be reached at kowalczyk@globe.com.
