The state Senate Commerce, Labor and Consumer Protection Committee approved a bill on Thursday that would create a three-member commission to oversee hospital rates in the state, a move that hospitals including Dartmouth-Hitchcock Medical Center have said they oppose. The commission, if established, would recommend how much New Hampshire hospitals should charge for medical services, state Sen. Maggie Hassan, D-Exeter, said in an interview with The Dartmouth.
New Hampshire State Senate Bill 505 is intended to increase competition among insurance carriers, improve transparency and give the public a role in price negotiation, according to Hassan, the state Senate majority leader. The commission would conduct studies of hospital costs and compile an annual report of its findings, according to the bill.
"Right now when people are charged for a hospital service in New Hampshire, their charges depend on who they are insured by or whether they have insurance in the first place," Hassan said in the interview.
Insurance companies and hospitals rather than consumers negotiate health care costs, and those with larger market shares can influence prices, she said. As insurance premiums rise, more constituents are left without insurance or have high deductible plans.
"The cost of services is really a critical issue for a lot of New Hampshire citizens," Hassan said.
The cost commission would be similar to the current public utilities commission, which regulates the cost of public utilities, she said. Independent commissioners would be appointed by the governor and could then hire staff members, she said.
According to the bill, the three paid commissioners would develop a uniform financial reporting system in which hospitals would be required to provide information about finances and procedures to the commissioners, she said. The commissioners would then prepare a recommendation about the prices for different services based on factors including uncompensated care provided by the hospital, labor costs and building costs, Hassan said.
DHMC will work "very hard" to defeat or correct the bill if it passes in the Senate and moves on to the House of Representatives, Frank McDougall, DHMC vice president for government affairs, said in an interview with The Dartmouth.
"We recognize that health care costs are a national problem, and are sympathetic to the objective of the bill, but think the bill is flawed," McDougall said.
Thirty states had rate commissions in place during the 1970s and 1980s. Since then, every state except for Maryland has eliminated its program, McDougall said. Studies have shown that rate commissions contribute to increased morbidity in some cases, he said.
Hassan noted, however, that Maryland has some of the lowest health care costs in the country and is the home of the Johns Hopkins University Hospital, which is regularly ranked among the best in the country, she said.
Hassan also said the New Hampshire proposal is different from Maryland's program, which permits the commission to mandate prices.
An earlier version of the bill gave the commission the power to mandate hospital rates, but the proposal has since been modified so that the committee could recommend rates, but does not have the power to enforce them, McDougall said. McDougall said he believed the change was a response to criticism of the bill.
McDougall also criticized the fact that the bill was formulated in just three weeks.
Despite the change, Hassan said she believed the bill would be effective in decreasing costs while maintaining standards of care.
The commission's recommendations could help consumers understand what factors affect the price of medical care, allowing them to make better decisions about where to pursue care, Hassan said.
"If the system is transparent, accountable and fair which I think Bill 505 would accomplish then we can understand all of the variety of issues that go into health care and insurance," she said.
The commission's recommendations are intended to encourage hospitals to adopt practices that allow them to decrease costs while maintaining patient care, Hassan said. She cited accountable care organizations in which the physician practice has a financial stake in the patient's outcome as a potential way for hospitals to decrease the number of unnecessary procedures.
Hassan said that the correlation between cost and quality in medical care has not been shown, and that the best quality hospitals in New Hampshire are not the most expensive ones.
Alternative changes to the system have greater potential to increase efficiency and reduce costs, McDougall said. He cited a program that uses "unique population identifiers" for the Medicaid population that would track patients from hospital to hospital. Under the current system, a patient initially treated at DHMC who then goes to another New Hampshire hospital, for example, will receive a new patient identity number and will likely undergo a second and unnecessary round of testing, he said. The alternative program could save "millions of dollars," he said.
Other Senate bills and the Senate insurance department are working to control insurance company rates in conjunction with the current proposal, Hassan said.
"At the end of the day, this is about starting a conversation about why health care costs what it does," she said.
