Rate Setting

Among its many provisions, the Massachusetts health care reform law established a Health Safety Net Trust Fund to provide for the financing of hospital inpatient and outpatient services and community health center services for the small percentage of the population that remains uninsured. The Health Safety Net is the successor to the state’s Uncompensated Care Pool, which had provided access to services to low-income individuals since 1985 by providing disproportionate share hospital (DSH) payments to providers for their uninsured patients. 

The Massachusetts health reform law also specified that the Office of the Health Safety Net pay providers in a specific way, using Medicare payment principles. This requirement was a significant change in payment mechanisms.

The staff of the Center for Health Law and Economics at UMass Medical School assisted the state with the transition to the Medicare payment method. We developed a payment method for inpatient and outpatient services that approximated Medicare payment levels until the necessary systems for electronic claims processing was developed. In doing so, our staff drew on its extensive knowledge of hospital payment methods, including Medicare's inpatient and outpatient prospective payment systems, which enabled the state to meet new payment requirements for care to the uninsured.