Home > Employee Benefits > Massachusetts makes health provider price disparities transparent

Massachusetts makes health provider price disparities transparent

The Massachusetts Department of Health Care Finance and Policy issued its annual Massachusetts Health Care Cost Trends report that outlines price variation in Health Care Services. This report continues down the path of heightened transparency of provider pricing as required under Massachusetts’s ground-breaking 2006 Health Care Reform Act.

The report outlines continued large disparities in the price of common procedures. For example, the cost of a Caesarean Section at Mass General Hospital is listed at $10,517 versus only $4957 across the river at Cambridge Health Alliance. However, higher-priced facilities like Mass General (and its parent, Partners Health Care) defended itself by noting that its rates need to be higher to support its research, teaching and other money-losing health care services to the region.

Whatever the explanation, these prominent price disparities will likely lead to increased interest and acceptance of tiered network plans being offered by more health insurers in Massachusetts and other states. Tiered network plans offer lower premiums to employers and employees in return for benefits that are less rich for services at the hospitals with higher reimbursement rates.

It is difficult to determine whether the fault in the present systems lies with the hospitals for not having pricing that equates to value to its customers or the health insurers for fostering and agreeing to these rate disparities over many years. In either case, it may not matter since corporate buyers of insurance are voting with their feet by moving to tiered network plans. The only open question is just how many corporate insurance buyers make the move and what implications arise from that for insurers and providers.


About the Author

Phil Edmundson is the Chairman and CEO of William Gallagher Associates (WGA), insurance brokers and consultants for businesses with over 30 years in the insurance industry. He manages strategy, talent acquisition and development, and management / acquisitions at WGA.

617.646.0229 | PEdmundson@wgains.com | Connect with Phil on LinkedIn |
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  1. May 27, 2011 at 9:52 am

    “Whatever the explanation, these prominent price disparities will likely lead to increased interest and acceptance of tiered network plans being offered by more health insurers in Massachusetts and other states. Tiered network plans offer lower premiums to employers and employees in return for benefits that are less rich for services at the hospitals with higher reimbursement rates.”

    The price disparities are also important for those with HDHP. Astute employees will seek coverage based on cost and quality, thus maximizing the value and longevity of their HSA, while evaluating health services like most other consumer services.

    This information is powerful and will hopefully cause employers and employees to examine their approach to health insurance.

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