Proposal to allow hospitals to act as insurers sparks battle among insurers, consumer advocates and hospital

May 25, 2015

A proposal aimed at promoting new ways to pay for the healthcare of low-income patients spurred a fierce political fight between insurers, consumer advocates, and one of the largest hospital systems in Massachusetts. At issue is whether the proposal would allow hospitals and health systems to essentially act as insurers in managing the care of patients covered by Medicaid. Steward Health Care System, which lobbied for the budget amendment, said the proposal would simply allow hospitals to adopt the so-called accountable care model for Medicaid patients, but consumer advocates and insurers say the language of the amendment goes beyond that. They say it would permit Steward and other health systems to take on risk the way insurance companies do, without following the same regulations and meeting the same requirements, such as setting aside sufficient cash reserves to cover losses.