business

Boston hospital system to snap up Medicaid health plan

Neighborhood Health Plan, which serves mostly low-income enrollees, would be affiliated with an organization that includes two hospital giants in Massachusetts.

By Emily Berry — Posted Aug. 30, 2011

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Partners HealthCare, one of the largest systems in Boston, announced Aug. 11 that it plans to acquire Neighborhood Health Plan, which manages care for 240,000 members, most of whom are enrolled in Medicaid or Commonwealth Care, a state-sponsored insurance plan for adults.

The two companies said no money would change hands and that NHP would remain its own corporate entity. However, NHP would become an affiliate of Partners, like Brigham and Women's Hospital and Massachusetts General Hospital are part of Partners. Partners promised to make grants to NHP to "improve the infrastructure and expand programs for community health centers." Partners spokesman Rich Copp said no specific amount is being announced at this point, but he said it would be "significant."

NHP was created in 1986 by a group of community health centers. Both companies said they would continue to support the community health center model of care.

Partners' move to acquire NHP will put it in the health insurance business for the first time.

The move was puzzling to some, including Paul Levy, former CEO of Partners' competitor, Beth Israel Deaconess Medical Center, who wrote on his blog that the move could be a way for Partners to change its reputation, particularly in light of antitrust scrutiny. A 2010 report by Massachusetts Attorney General Martha Coakley concluded that the state's largest health system was responsible for driving up the cost of health care by commanding higher payments despite no discernible difference in quality of care. The report showed that payments to Partners facilities were consistently at or near the top, depending on the insurer.

Levy mentioned the possibility that Partners was trying to take advantage of the already-rapid growth in Medicaid rolls, which is expected to accelerate in 2014 when more adults become eligible for Medicaid under the Patient Protection and Affordable Care Act. But it would be difficult to make that profitable, he wrote.

"To make that work, it would have to develop new models of care that enable this group of patients to be profitable, notwithstanding Medicaid rates that are acknowledged to be too low," he wrote. "A worthy, but very hard row to hoe."

Bruce Landon, MD, a professor of health care policy at Harvard Medical School and a practicing internist at Beth Israel, said he doubts the deal would give Partners any further bargaining power with health plans. "It's a way for them to potentially score points by making an investment in these safety net providers," he said.

Neighborhood Health Plan members typically are seen and treated at community health centers and safety net hospitals, not at Partners hospitals.

Those relationships would remain in place, and NHP members would be able to continue to see their regular physicians, NHP spokeswoman Rhian Gregory said in a statement. There are no plans to push for members to seek care at Partners facilities, she said.

"We share a deep commitment to provide high-quality, high-value, culturally competent and compassionate care that is accessible to our members and their families. In that context it would not match our mission or our contract commitments with providers to incent NHP members to seek care at Partners versus other providers."

Copp said Partners does not intend to change "existing patient pathways or relationships."

Partners and NHP said the affiliation would be subject to approval by the state attorney general's office and other state and federal regulators. A spokeswoman for the attorney general's office said she had no comment. Massachusetts Medical Society spokesman Rick Gulla said the association had no position or comment.

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