Harvard Pilgrim's CEO uses blog to get advice on rate increases

Some say he already has all the information he needs.

By Carolina Procter, AMNews staff. July 2, 2007.

The CEO of Harvard Pilgrim Health Care is publicly asking for suggestions on how much would be a fair increase in rates for hospital and physician services in 2008. The request has some physician leaders and consultants trying to figure out what motivated him.

On his blog (www.letstalkhealthcare.org), CEO Charlie Baker wrote in a May 23 posting, "So, 'viewing audience,' what's a 'reasonable' rate increase ... ? 3%? 5%? 7%? 10%? More? Less? ... Let me know what you think it should be."

Baker, who guided the New England-area nonprofit plan out of receivership in 2000, said he posed the question because he was "curious to see what the breadth of expectation would be." Some physicians responded that 2% or 3% would suffice, while others said "pay me my cost, which would've been 10% to 12%," Baker said in an interview with AMNews.

Harvard Pilgrim's annual rate increases over the last three years have been around 8%, Baker said. Numbers he provided showed physician payments going from around $640 million in 2004, to $692 million in 2005, to $742 million in 2006.

Baker said he posed the question knowing full well that "most people have no idea what goes on year over year with rates. Most employers couldn't tell you. Policymakers couldn't answer. If you ask providers, most would guess, and you'd end up with a wide range of answers."

Yet, he said, "there's nothing that swings a budget more than a percentage point difference in what we pay providers. I thought, what the heck, let's see what kind of answers I get."