Massachusetts hospitals are poised to receive a $3.5 billion windfall in federal funding over the next 10 years thanks to a little-known provision Sen. John Kerry (D-Mass.) inserted into the Affordable Care and Patient Protection Act, also known as “Obamacare.”
The increased funding—$367 million a year in the form of Medicare reimbursement payments, according to the Federal Register—would not only come at the expense of hospitals in the 49 other states, but would also directly benefit an organization that has given generously to Kerry’s campaign.
The obscure policy change was formally approved by the Center for Medicare and Medicaid Services (CMS) in July 2011. It was prompted by a small, 15-bed hospital located on the upscale island of Nantucket, a popular vacation spot for wealthy New Englanders where Kerry and his wife own a $9 million waterfront home.
Nantucket Cottage Hospital, which had been operating under a special “critical access” status, sought a number of years ago to be reclassified as a “rural” hospital. The CMS approved the change for fiscal year 2012—a minor adjustment on paper, but one with profound implications.
The Balanced Budget Act of 1997 established a “rural floor” for hospital labor costs (which are used to determine reimbursement rates) mandating that hospitals in urban areas within a given state cannot be paid less than those in rural areas.
Until Nantucket Cottage Hospital made the switch, Massachusetts had no rural hospitals in operation, so the conversion meant that the small hospital, where wages are quite high given its isolated location and high cost of living, would effectively set reimbursement rates for the entire state. The prospect was so appealing to the state’s mainland hospitals that they urged Nantucket Cottage to make the change, and even agreed to reimburse it for any financial losses incurred as a result of the change.
Partners HealthCare, a non-profit conglomerate of hospitals throughout the state, acquired Nantucket Cottage Hospital in 2007, shortly before it began the process of converting to rural status. According to a
Boston Globe report, Partners was actively touting the benefits of the change to the state’s other hospitals, including another Partners subsidiary, Massachusetts General Hospital (MGH) in Boston, calling it a “win-win”:
On its website, in a statement prepared at the time, Nantucket Hospital said: “If this change back to rural status occurs, it would provide a financial benefit for all hospitals in Massachusetts because the state’s Medicare reimbursement rate would increase, and MGH and other Partners facilities would be among the many hospitals in the state that could realize greater reimbursements.”
Partners spokesman Rich Copp told the
Globe in August 2011 that the company would gain between $40 million and $50 million as a result of the new rule, and denied that Partners’ affiliation with Nantucket hospital was financially motivated.
The company, through its board members and top executives, has given generously the Kerry and other Democrats over the years. Since 2007, Partner’s employees have
contributed more than $26,000 to the senator’s campaign, and are collectively his 16th biggest donor over the current cycle.
President and CEO Dr. Gary Gottlieb has given more than $45,000 to Democratic candidates and committees since 2007, including $5,300 to Kerry,
according to a database maintained by the Center for Responsive Politics. Partners board chairman Jack Connors Jr. has given more than $42,000 to Democrats during that same period.
Members of the group’s board have given generously, and almost exclusively, to Democrats, including tens of thousands to Kerry. Four Partners board members in particular—Anne Finucane, Charles Gifford, Edward Lawrence, and Dorothy Terrell—have collectively contributed more than $200,000 to Democrats since 2007 and nearly $15,000 to Kerry.
