Julie M. Donnelly reports in the Boston Business Journal that Massachusetts State lawmakers and industry groups are working to craft a stopgap measure to help small businesses survive the double whammy of the economic downturn and escalating health care costs.

Insiders say lawmakers fear that a failure to step in could result in a wholesale abandoning of health reform mandates by small business, throwing the system into jeopardy.

“The burden on small business is threatening the success of the health care reform law. It really is the fly in the ointment,” said Bill Vernon of the National Federation of Independent Business.

Small businesses have been banned from joining together to negotiate lower health care rates since 1996. Lawmakers decided then that association health plans, as they were known, created inequities within the small group market, in part because associations could exclude sicker members. Without access to group buying, small businesses have seen health care costs grow at a faster rate than larger insurance purchasers. Many small businesses now face yearly insurance hikes of more than 15 percent, and a small number are facing increases upwards of 35 percent.

“Small employers have already bought down to the lowest level plans they can, and they have nowhere to go,” Marylou Buyse, who is president of the Massachusetts Association of Health Plans. MAHP has introduced a plan it says would reduce the costs of premiums by 22 percent for small businesses. A key tenet of the plan is that it would cap reimbursements to hospitals and doctors at 110 percent of Medicare payments. The plan design would match the Commonwealth Choice Bronze plan, which is the least expensive option for individuals in the unsubsidized state-run plan.

The plan is not welcome news to the provider community, which is under increased financial pressures including steep cuts to Medicaid payments. Medicare generally pays 90 percent of provider costs, so at 110 percent the plan would just about cover costs. But Joe Kirkpatrick, vice president for health care finance at the Massachusetts Hospital Association, says this is cutting it too close, because hospitals must maintain a 3 percent margin to be financially sustainable. He also questions the speed at which the proposal is moving forward. “How can the proposal be enacted in such a rapid time frame at a time when federal health reform is up in the air and payment reform in the state is up in the air?”

Democratic state Rep. Harriett Stanley asked, “What are we going to do, say to the little guy, ‘Just wait’?” She and Democratic State Sen. Richard Moore, the co-chairs of the Joint Committee on Health Care Finance, have filed the MAHP proposal as a bill in the Legislature. Stanley said small businesses are in crisis now, and can’t wait the five to seven years she says it will take to implement the reforms issued by the Patrick administration’s payment reform commission. In July, the commission called for an end to fee-for-services reimbursements to providers, instead favoring so-called “global payments,” which are fixed-dollar payments for the care patients may receive in a given time period. The bill filed by Stanley and Moore would sunset when those reforms go into effect.

Read morte at: the Boston Business Journal