RI Insurance Commissioner Says Healthcare Costs Will Likely Increase if Partners Buys CNE
Friday, March 16, 2018
The Rhode Island Health Insurance Commissioner released a market impact study to assess the proposed transaction of Partners acquiring Care New England and how it could affect the affordability of commercial health insurance in Rhode Island.
The report finds that Partners would be motivated to raise revenues, which would impact commercial insurance rates and therefore adversely impact Rhode Island employers and the Rhode Island health insurance consumer.
Click here to read the entire report.
“The Health Insurance Commissioner’s market impact study is the first review by a regulatory agency of the proposed acquisition of CNE by Partners and it raises real concerns about motivations and outcomes if this ill-advised merger were to come to fruition,” said Bill Fischer, spokesperson for CharterCARE.
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The study includes interviews with health insurers in Rhode Island, Massachusetts, and New Hampshire because Partners has acquired hospitals in both states over the past several years.
“Many interviewees indicated that they believed that Partners would seek higher rates for CNE hospitals, based on their understanding of Partners’ past behavior in Massachusetts.
One interviewee said, “Our experience with Partners tells us they like to solve problems with revenue solutions. They will say, ‘hit this price point or we are out of your network – including the whole Massachusetts network.’” Another interviewee, however, observed that over the past few years Partners had “been on good behavior” and was agreeing to rate increases that were in line with the market, in contrast to its earlier market behavior. However, it is likely that any such 'good behavior' is related to the regulatory oversight and scrutiny provided by the Commonwealth of Massachusetts; it may not reflect Partners’ approach in new markets such as Rhode Island,” says the report.
The report states that Partners Healthcare is the largest health system in New England. Partners hospitals and medical groups tend to have the highest relative prices among Massachusetts providers. In particular, Massachusetts General Hospital and Brigham & Women’s are among the highest priced general acute care hospitals in the state.
Interviewees reported that the Partners physician organizations are up to 50% more expensive than the typical Rhode Island commercial physician’s fee schedule.
The report concludes, “Whether these efforts would increase health care spending more than alternative future scenarios for CNE, we can only speculate. Partners certainly enjoys regional market clout with commercial insurers that is unmatched. However, even if Partners does not acquire CNE, some action by CNE is inevitable, as its current rate of financial loss is not sustainable.
If only because of CNE’s financial distress, we find it likely that if Partners acquired CNE it would take actions to increase revenue to CNE, which, if successful, would adversely impact the affordability of Rhode Island commercial health insurance premiums in the immediate term. The financial realities imply that another acquiring entity would be likely to attempt the same, albeit perhaps with less insurer leverage than Partners."
Related Slideshow: 7 Implications and Unintended Consequences of a Care New England and Partners Merger
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