Hospital CEO Levy: Time to Change how we set Hospital "Payment" Rates (End free market approach and insist on complete and total transparency)

Know that feeling of reading a blog post that makes you feel smarter but also makes you want to learn more, hear more? Paul Levy is President and CEO of Boston-based Beth Israel Deaconess Medical Center (BIDMC) and for a long time he has also been that kind of blogger under the banner "Running a Hospital." (Two disclaimers that may be unnecessary -  This author's father is employed by the BIDMC and Levy is a PBLN member since 2009). 

BIDMC President Paul Levy with WBUR executive John
Davidow at the 2009 PBLN Summit at the John F.
Kennedy Presidential Library in Boston

In today's post ("Three ways to set payment rates") Levy blogs about one of his core business issues, where even Massachusetts, pioneer in so many aspects of healthcare policy, seems to be stuck. The topic? Hospital "reimbursement rates" aka "payment" rates and how they are set. With links to prior posts and examples from other states, the post is an important read. The upshot? Levy says let's move away from a "free market" approach where insurers set rates that hospitals get paid for treating patients. Replace it with what? That's why you have to read Levy's post. There are models out there to be studied. 

Levy stresses that any model absolutely must have total transparency. To quote him on this point because he says it so clearly, "The final requirement, which must be added to any of three concepts above, is absolute, complete transparency of payment rates. That, more than any rate-setting formula, is likely to drive all rates to the mean, eliminating the huge disparity that exists today. There is no reason not to put it in place immediately while we debate the rate-setting process."

Levy also calls for a public forum on this topic. This is perhaps something that PBLN should convene (our thought not his). And given the nice shot of Levy with WBUR exec John Davidow from last year's PBLN Boston Summit, maybe WBUR would like to partner in bringing such a discussion to the web and airwaves? John?

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