Because patients with expensive elective procedures were less likely to pay bills for unpaid care, 1,150 of the most expensive hospitals in the state had their budgets cut by more than $100 million, an analysis published in the New England Journal of Medicine on Thursday found.
The state cut back on such procedures in part because insurers and patients could not pay their bills. The state’s risk-sharing plan, called Atrius Health and designed to protect hospitals, lowered its list of procedures covered by the insurance companies and group purchasing organizations it licenses. As a result, Massachusetts hospitals were able to find out which procedures they could not bill on their own, and were able to decline coverage.
But hospitals were unable to exclude the more common, cheaper procedures. Those kinds of procedures, such as spinal surgery or hip replacements, represented the expenses that prevented the hospitals from collecting insurance payments.
The Massachusetts health department only collects data that provides insight into the gross costs of a procedure, including the additional costs of hospitalization and equipment. Since one of the ways hospitals can be pressured to reduce costs is to reduce the amount they charge insurers for treatments, it can be difficult to see how certain types of procedures are affected by the program.
Physicians didn’t like the program, either. An effort by hospitals and physicians to expand the information that providers are required to report is being opposed by the state insurance department and doctors.
Still, the program was so effective that, according to the authors of the study, at least half of the hospitals were shut out of their bottom line.
Isha Masood, an associate professor of health care policy at Harvard and the study’s lead author, said in an interview that, while it was notable that some expensive procedures were seeing reduction in the state, it was important to remember that hospitals were still seeing a decrease in costs related to emergency room care.
“By not having to care for them [patients], you’re not giving them anything of value,” she said. “These are the kinds of problems that the state’s risk-sharing rule was designed to address.”
To be sure, this is not the first study to examine the effectiveness of a government program on doctors and hospitals. Dr. Gerald F. Glickman, a professor at the Indiana University School of Medicine, wrote a study in the New England Journal of Medicine in 2012 that suggested doctors were less likely to accept additional Medicaid billing from out-of-network providers because of the guarantee of continuing reimbursement from insurance companies.