Where’s The Money? A Dispute Boils Between Doctors, Hospitals And Health Insurers In Mass.

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Matthew Baum has two children who’ve missed four appointments between them since mid-March. It was mostly routine care — in one case, a follow up test.

“We have no reason to believe anything’s wrong, so it didn’t seem, you know, of crisis, urgency, but we’ll probably still do that whenever we can,” he says.

It’s not clear when that will be,” Baum says. “We’d have to be out of woods on the COVID situation.”

The Baum family’s long-time pediatrician, Dr. Lori Gara-Matthews says she’s cancelled hundreds of similar appointments in the nearly eight weeks since Gov. Charlie Baker put a temporary hold on all non-urgent medical care. Visits to pediatricians are down 62% nationwide, according to a report from the Commonwealth Fund, and that includes the increase in telehealth appointments.

“The first week it was pretty bad,” Gara-Matthews says. “We went down from seeing, like 60 patients a day to having one provider seeing 10 people, mostly phone calls.”

Dr. Lori Gara-Matthews outside of her office. She has cancelled hundreds of appointments with patients while routine and elective care is on hold. (Jesse Costa/WBUR)
Dr. Lori Gara-Matthews outside of her office. She has cancelled hundreds of appointments with patients while routine and elective care is on hold. (Jesse Costa/WBUR)

Through lay-offs and furloughs, the office shrank from 14 full-time to six part-time staff.

Gara-Matthews took a 75% pay cut. She cut back on office and medical supplies. The people who pick up the sharps container with used needles rarely come these days, nor does the IT guy who services the office computers.

In late April, Gara-Matthews secured one of the new federal Paycheck Protection Program small business loans. That $200,000 could keep Gara-Matthews going for about six weeks, but she doesn’t know how she’ll repay it if needed. To Gara-Matthews, it looks like everyone in health care is taking what she calls a “huge hit” during the pandemic — except health insurers.

“They are still getting all of those monthly fees and then people are avoiding coming in at all cost,” she says.

As the intense focus on preparing for the COVID-19 surge shifts, there’s mounting anger from providers directed at insurance companies. The providers’ main questions are: Where have you been, and where’s the money?

Executives and advisers from eight hospitals across Massachusetts use phrases like “sucking us dry,” “bloodbath” and “shameful,” on background, to describe health insurers. None would talk on the record for fear of retaliation.


The Massachusetts Hospital Association estimates its members are losing $1.1 billion a month, and another $280 million if you include affiliated physician groups. There’s no total loss estimate for doctors in private practice like Gara-Matthews. The widespread perception from within hospitals, clinics and community health centers is that health insurers are sitting on piles of unspent health care premiums that they could be using to keep clinicians afloat.

“Unfortunately, that is a wrong perception and we, just like hospitals and physicians, are in a very precarious state right now,” says Lora Pelligrini, president and CEO of the Massachusetts Association of Health Plans. “We’re all in this together.”

Pellegrini says 50-60% of visits have shifted to telemedicine and spending on coronavirus testing and treatment is rising fast. At the same time, employers are asking for grace periods because they can’t pay premium bills, and members who’ve lost their jobs are dropping coverage.

“We have almost a million people unemployed in the commonwealth. Many of those people are currently commercially insured,” says Pellegrini. “So plans could see a precipitous loss in membership in the near future.”

Insurers expect that patients will eventually receive most of the elective care that’s been postponed. While that’s debatable, insurers are also budgeting for future waves of COVID-19 cases and a dramatic increase in testing. Some health economists say those combined expenses will boost health care spending overall this year.

“The biggest concern really is how can we provide affordable premiums, while at the same time paying our clinical partners fairly,” says Andrew Dreyfus, CEO of Blue Cross Blue Shield of Massachusetts. "That’s a tough balancing act on good days, but in a once-in-a-century pandemic, it’s a real challenge.”

Dreyfus says Blue Cross paid more for care and services in March of this year, as compared to last. He acknowledges that April claims will be down. In April, Blue Cross announced $40 million in accelerated payments to providers who’ve signed onto the insurer’s global payments contact. Providers say Blue Cross plans in Maryland and California are being more generous with advances, as is UnitedHealth Group. In Massachusetts, the Baker administration distributed $200 million in cash advances and payments to Medicaid providers.

Blue Cross and other private insurers say they are reviewing requests for help from providers on a case-by-case basis. Providers are asking the plans with substantial reserves to dip into that pool on a short-term basis. Insurers say that would be unwise right now when there is so much uncertainty about future coronavirus health care expenses.

“If a physician practice or a hospital were in real distress I think it would probably be important to look at a community solution along with state government and other private payers in Massachusetts,” says Dreyfus. “We’d be prepared to do that.”

Hospitals in Massachusetts are getting federal assistance. The Massachusetts Health and Hospitals Association projects $1.2 billion for its members and affiliated physician groups, but projects $5.4 billion in losses through the end of July, assuming some elective care resumes in June. Physicians who aren’t employed by hospitals can apply for loans, as Gara-Matthews did, but they haven’t received any direct relief so far.

A chart shows the decline is elective doctors' visits across various U.S. regions. (Screenshot via Commonwealth Fund report)
A chart shows the decline in doctors' visits across various U.S. regions. (Screenshot via Commonwealth Fund report)

A report from The Commonwealth Fund finds many fewer patient visits for at least a dozen medical specialists, with the greatest impact in New England and the Mid-Atlantic states. Ophthalmologists, who generally need to examine someone in person, had the biggest drop, 79%, even when accounting for an increase in telemedicine. But Dr. Michael Chernew, one of the study authors, says the remedy is not so obvious.

“It is probably the case that insurers are suffering less than providers right now but that doesn’t mean they are sitting on hordes of cash that they can dole out to save the system,” says Chernew, a professor of health care policy at Harvard Medical School.

Large employers may be saving just as much as are health plans during this period when patients are mostly staying home. That’s because these firms are self-insured — they hold onto their health care dollars and spend as needed. In Massachusetts, 57% of the insurance market is self-insured, and that includes hospitals.

Take Harvard University, where Chernew chairs the benefits committee. He doesn’t have the latest claims for Harvard employees, but he expects substantial short-term savings.

“It wouldn’t surprise me if overall spending at the end of March through April was down 50% — maybe even more than 50%,” he says. “It’s not clear what that will translate to on a full-year basis.”

Harvard’s health care costs could be up overall in 2020 and add to the university’s projected $750 million budget shortfall.

There’s no indication that large employers are being asked to assist struggling health care providers or issue rebates to employees as some auto insurers are doing. Health care rebates are required in Massachusetts, but only if you work for a smaller employer who is not self-insured, and if your health plan spends less than 88% of premium dollars on health care this year.

This segment aired on May 8, 2020.

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Martha Bebinger Reporter
Martha Bebinger covers health care and other general assignments for WBUR.



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