Yale’s Taheri cautions against potential negative consequences of state legislative proposal

Pending legislation in the Connecticut General Assembly could have significant negative impact on the Yale Medical Group (YMG), its services, and staff, according to Paul Taheri, deputy dean for clinical affairs in the Yale School of Medicine and CEO of YMG.

The legislation — Raised S.B. No. 281, co-sponsored by Senators Martin Looney and Leonard Fasano — would set universal reimbursement rates for medical services, without regard to the varied cost structures of providers, such as academic medical centers, which by nature provide more specialized care and see more of the sickest patients than other hospitals and practices, notes Taheri.

Such a change could have “severely negative unanticipated consequences” Taheri testified on March 3 at a public hearing of the state legislature’s Joint Committee on Insurance and Real Estate, as it “would impose a sweeping regulatory requirement on all private insurance in Connecticut.”

The proposed legislation, he noted, aims to require private insurers in the state “to adopt so-called ‘site-neutral reimbursement policies.’” In its current form, though, he testified, “if SB 281 were enacted, insurers would be required by law to cut reimbursements to Yale Medical Group by as much as $15 million annually.”

“A cut of that magnitude would have serious repercussions for teaching at the School of Medicine and the conduct of research that has lead to dozens of bioscience companies that have transformed the New Haven economy,” Taheri told the committee. “Furthermore, the Yale Medical Group would be forced to reduce the number of clinicians and support staff, possibly as many as 20 physicians and 150 support staff, including members of Local 34.  In short, it would deal a body blow to the New Haven economy, which would be ill-timed considering the condition of the state’s economy.”

The complete testimony by YMG’s Taheri can be read here. In it, he offers background on the issues and history of reimbursement policies and the cost factors that vary across different health care providers, including academic medical groups.

Taheri described YMG’s services in his testimony on March 3 to the Insurance and Real Estate Committee of the Connecticut General Assembly. YMG is part of the Yale School of Medicine, and all of its employees are employed by Yale University. In 2015, YMG provided 2.7 million patient encounters and over 1 million outpatient visits; 22% of these patients were covered by Medicaid and 32% by Medicare. 

“Academic medical groups operate in an inherently high cost environment, and the reimbursement from private insurers reflect those costs,” he told the committee. “A large, multispecialty academic practice like the Yale Medical Group bears certain costs, such as cost of teaching or the cost of maintaining highly specialized tertiary care programs that other practices do not incur. Academic practices tend to shoulder a larger responsibility for providing on-call coverage, and they are staffed to be available on a 24/7 basis. These three factors represent about 15% of the annual operating costs of YMG. 

The testimony also noted “unlike most smaller physician practices, Yale Medical Group’s support staff are unionized, and receive compensation that is approximately 36% above levels that prevail in the local market.” Additionally, Taheri observed, insurers “take quality of care into account, and are willing to pay more for care of greater value.” 

The bottom line, Taheri said, is that “adequate reimbursement from payors, especially private insurers,” is necessary to ensure the care YMG provides and the societal benefits it provides in “training the next generation of providers, developing and refining new therapies, and providing the critical safety net for Medicaid recipients and uninsured residents of Connecticut.”

In his testimony, Taheri urged the state to take “further time to study this complex issue before taking up legislation” in keeping with the direction set by legislation enacted in 2015. “We understand that the Department of Insurance did not conduct,” the study required by last year’s legislation, Taheri said. “We strongly recommend that the study be completed before enacting a sweeping mandate that would affect health care for the 65% of Connecticut residents who receive heath care coverage through their employer or the private market.”

He concluded, “I strongly recommend that the committee reiterate the instruction to the Department of Insurance to conduct a study, in collaboration with stakeholders, of site-neutral reimbursement before any legislation is enacted, especially a mandate as sweeping as SB 281.”