Massachusetts Attorney General Martha Coakley has amended her agreement with Boston-based Partners HealthCare to include more price containment provisions.
The updated agreement — which would allow Partners to complete its proposed acquisitions of South Shore Hospital in Weymouth, Mass., and Hallmark Health System in Melrose, Mass. — requires Partners to cap prices at Hallmark for six-and-a-half years, limiting any increases to either general inflation or medical inflation (whichever is lower). Partners has also agreed to maintain psychiatric and behavioral health services at its Hallmark and North Shore facilities at their current levels for five years.
Furthermore, the amended settlement requires the system to develop procedures to address potential out-of-network patient referral issues when implementing its new information technology system. Finally, a compliance monitor selected by the attorney general and paid for by Partners will review and report on Partners' "commercial risk" business, which is subject to a total medical expenses restriction, according to Ms. Coakley's office.
The amendments build on the original settlement, under which Partners would have to limit future price increases across its network to the rate of general inflation through 2020. The settlement would also limit Partners' joint contracting with commercial payers. Ms. Coakley, who is also a Democratic gubernatorial candidate, has faced criticism from political rivals, economists, health insurers and other healthcare organizations for striking an agreement with Partners, which critics claim will drive up prices.
Earlier this month, The Boston Globe reported Ms. Coakley's office decided to renegotiate the settlement with Partners after the release of a final report from the Massachusetts Health Policy Commission finding that Partners' takeover of Hallmark would be anticompetitive and raise spending on medical care by $15.5 million to $23 million per year. Partners and Hallmark disputed the findings, saying the merger will actually decrease medical costs by $21 million annually over five years because of more efficient care delivery.
Ms. Coakley's office filed the amended agreement in Suffolk Superior Court yesterday, and it is expected to be considered by Judge Janet Sanders. The next hearing concerning the settlement is Monday.