For Immediate Release - November 18, 2011

AG Coakley Offers Reforms to Tackle Skyrocketing Health Care Costs

Following Up On Landmark Health Report, Calls For Initiatives To Increase Transparency For Consumers, Ensure Competitive Market, and Address Unwarranted Price Variation

BOSTON – Following up on two landmark reports issued by her office on the major cost drivers of health care in Massachusetts, Attorney General Martha Coakley today outlined solutions to help cure a “dysfunctional market” and control health care costs moving forward. 

Speaking at the annual conference of the Massachusetts Association of Health Plans (MAHP), Coakley outlined three concepts to address those issues: improving transparency and health care literacy, ensuring an effective and competitive market, and fixing unwarranted price variation.  Coakley’s prior reports had found that health costs in Massachusetts were largely a result of a dysfunctional market in which costs were not based on factors such as quality or value, but instead on the leverage of providers. 

“In order to truly rein in rising costs that are hurting our consumers and businesses, we must address the flawed foundation caused by this dysfunctional market,” AG Coakley said.  “There are many ideas to fix this problem and these are just a few.  But the one thing we can’t accept is to do nothing.”

Today, Coakley mapped out a plan to help control health care costs by setting clear cost markers and allowing the market time to correct itself.  If those goals were not met by 2015, then temporary price restrictions would be enforced.  One example Coakley laid out would be to require prices to fall within 20% above or 20% below a health plan’s average price from the previous year.  This market intervention would be temporary, with a sunset provision after three years to re-evaluate the system and determine whether it makes sense to continue beyond 2018 or 2019.

In addition, a stronger effort to examine data about market consolidation will help identify problems early before the involvement by law enforcement.  AG Coakley suggested that an administrative review process could gather updated information and provide that data to a regulatory agency.  When a provider reaches a certain level of market clout, it would trigger a market impact review to determine whether the provider’s size is having a negative impact on consumer choice, access, or healthy market function.  The agency must then have regulatory authority to restrict certain types of provider activity to protect consumers and the market. 

Finally, the AG’s Office is also considering requirements that providers disclose the full amount that consumers could be liable to pay.  For example, patients are often required to sign a form indicating that they are liable for any amount not paid for by their insurance, but they don’t get any information, or even an estimate, of the cost of that care.  While not all services can be scheduled or quoted in advance, providing consumers with this information is a critical component of cost containment.  

Addressing health care costs while preserving quality and access has been a priority for AG Coakley. Through her office’s many divisions, AG Coakley has brought transparency and accountability to the complex system of health care delivery and payment by:            

  • Obtaining record recoveries for Massachusetts in Medicaid fraud enforcement actions;
  • Bringing consumer protection cases against numerous drug and insurance companies;
  • Ongoing anti-trust review and monitoring;
  • Promulgation of new community benefits guidelines;
  • Review of non-profit executive compensation and board of director pay at major hospitals and insurers.

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