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Mass. bill aims to rein in health care costs

The Bay State Banner, 5/23/14

Members of the Massachusetts Nurses Association and the National Nurses United have been urging state legislators to pass a bill they introduced last year, the Hospital Profit Transparency and Fairness Act. The HPTFA would limit excessive revenues and executive compensation for nonprofit, state-assisted hospitals, and would require hospitals to publicly disclose their financing, including their tax-sheltered offshore accounts.

While health care costs are the financial ruin of many families, hospitals are able to boost revenue in part by keeping offshore accounts, which are not subject to the rigors of taxation or regulatory oversight. In 2012, Boston Medical Center received a total of $333,307,018 in taxpayer funding, one-third of which were NIH grants. That year, Boston Medical Center reported about $320,750,000 of investment in the Central American/Caribbean region and about $11,500,000 in Europe.

The MNA and NNU have found that all of the Partners Healthcare hospitals and Tufts Medical Center have offshore accounts in the Cayman Islands.

In the press release announcing these accounts, Rep. Josh Cutler of Duxbury stated: “I am deeply troubled to learn that some Massachusetts hospitals are storing funds offshore in the Cayman Islands and not disclosing it. Before we provide these hospitals with public money for reimbursements, we should be demanding greater transparency and accountability.”

Under the HPTFA, if the CEO is paid in excess of 100 times the lowest-paid full-time employee, then a proportional penalty will be levied upon the hospital. For example, if the CEO is granted $2.7 million in one year, and a full-time research intern is earning $26,000 annually, then the CEO is in violation of the act, and the hospital is levied a fine of $1,000, which is deposited into the state Medicaid Reimbursement Enhancement Fund established by the act. This example is based on actual earnings for research interns and executives in the Partners Healthcare System, although the reported CEO pay does not always include bonuses, deferred compensation, incentive and severance payments, dividends and other in-kind payment.

In contrast, the median salary range for all U.S. nonprofit CEOs lay between $50,000 and $75,000 annually, according to a 2012 non-profit compensation survey by the Watkins Uiberall CPA firm.

This initiative petition was brought before the Mass House of Representatives in December of last year with more than 80,000 signatures. The bill was heard before the Joint Committee on Healthcare Financing on March 24. No further information is available on the status of this bill.

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