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Providers, insurers are warned on fees

By Liz Kowalczyk
Globe Staff / May 14, 2011

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Last week, state Inspector General Gregory Sullivan fired off a letter to Governor Deval Patrick, saying he is worried that hospitals and doctors are trying to lock in fee increases from insurers now, before the Legislature passes a new law to control medical costs.

Patrick responded yesterday, essentially saying to providers and insurers: Don’t even try it.

While Patrick did not offer specifics in his response, he said he also has “heard reports that health plans and providers, in anticipation of new rules, are entering into contracts which would guarantee escalating rates for as long as five years, while we are trying to reduce premiums.’’

But when the state insurance commissioner conducts his quarterly review of proposed premium increases, increases justified by such fee hikes would be “at risk,’’ he said. Repeating a phrase used in Sullivan’s letter, Patrick said, “Any entity that thinks it can ‘beat the clock’ by locking in cost increases now to be passed along to consumers later is mistaken.’’

In his May 3 letter, Sullivan said the insurance commissioner should start more aggressively reviewing the underlying reasons for premium increase requests now, as a stop-gap measure before any new law.

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

The governor filed a 52-page bill in February that would give him expanded authority to scrutinize insurers’ contracts with, and fees paid to, hospitals and doctors — and consider whether those fees are appropriate before approving insurers’ requests for premium increases.

The proposal also affirms the Patrick’s plans to shift 1.7 million state employees, Medicaid recipients, and other residents with state-subsidized health insurance —1 in 4 residents — to a new system in which hospitals and doctors would be given a set budget for each patient’s care.

Liz Kowalczyk can be reached at kowalczyk@globe.com.

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