Massachusetts House Passes Bill That Would Whack Large Hospitals, Insurers To Subsidize Community Hospitals

Printed from:

By Michael P. Norton

The Massachusetts House of Representatives on Tuesday night passed health care reform legislation that uses $337 million in new assessments to stabilize community hospitals and charts a new course to help the Legislature make decisions about scope of practice changes for medical professionals.

The vote was 117-32, with Democrats voting for the bill and Republicans nearly united against it.

The new assessments — $247.5 million on insurers and $90 million on the largest hospitals — are the centerpiece of a bill that House Majority Leader Ronald Mariano said tries to keep in play lower-cost community hospitals as payment reforms and consolidations shake out in the health care industry.

“It is our hope that over the three years of this bill, and the three years of support that these hospitals will get, the dynamic in health care will change,” Mariano said. “And I’m not going to say we won’t be here three years from now making adjustments on what health care looks like then, but we will at least know that we have done things to put these hospitals on a very strong and firm footing. And that’s the focal point of the bill, probably the largest endeavor that we take under this bill and probably the most important thing that we can do in this bill.”

The House reduced the planned assessments Tuesday night, adopting an amendment offered by Lowell Democrat Rep. David Nangle, that cut the original $330 million assessment on insurers and $120 million on larger hospitals to $247.5 million and $90 million, respectively.

Under the bill, grants to community hospitals will be based on factors such as patient acuity and patient mix. Mariano described community hospitals, such as one in Holyoke, as so dependent on public payments that changes in commercial payments would not make a major difference, but in recent days he has said the hope is the move away from fee-for-service to global payments will boost the community hospitals’ share of the commercial market.

The bill represents the latest overhaul of health care laws as lawmakers try to hold on to the insurance access gains achieved since Gov. Mitt Romney signed a universal access law in 2006. Since then, costs have continued to grow and the state’s massive MassHealth program has consumed more of state spending.

The legislation expands the powers of the state’s Betsy Lehman Center and calls on that agency to share medical insight with lawmakers as they review bills aimed at changing the scope of practice of medical professionals. Such bills are being considered to reduce costs and widen access to care. “There will be many scope of practice issues going forward and we hope that this will professionalize getting to the full use of your license,” said Mariano.

Rep. Jeffrey Roy, vice chairman of the Health Care Financing Committee, said the bill will establish standards for telemedicine, or technology-assisted care that enables doctors and patients to communicate remotely rather than at medical offices.

“The reforms in this bill will help us deliver more sustainable methods of improving health care in Massachusetts,” Roy said. “The Massachusetts approach to health reform is not about squeezing out efficiencies and cutting costs. Rather it is transforming how we seek to pay for care to promote cost effective, value driven services in a way that makes the health care system more accessible and more effective for us all.”

Other pressing concerns, such as the state of struggling nursing homes and administrative costs that some say are weighing down the health care system, are delegated under the bill to task forces for further study, a favored practice in a Legislature replete with its own specialized review committees.

Former Health Care Financing Committee Rep. Peter Kocot, who passed away in February while working on the bill, took to heart the work of a special commission that examined variations in prices charged by health care providers, according to Ways and Means Committee Chairman Rep. Jeffrey Sanchez.

“I am proud that we are doing this work in his memory today,” said Sanchez.

The price variation panel agreed that surprise and out-of-network billing needed to be addressed, Sanchez said, and the “grand majority” of the commission agreed that price variation “is an issue in Massachusetts.” Both issues are addressed in the bill, he said. The bill would also empower the Division of Insurance to review provider contracts for unwarranted pricing, and gives the Health Policy Commission the authority to require performance improvement plans with financial penalties for non-compliance attached.

The House adopted one amendment on Tuesday offered by Rep. Jay Livingstone, whose district includes Massachusetts General Hospital, that would make medical research one of the factors a hospital can use to defend higher pricing.

While Gov. Charlie Baker aimed to extract savings from MassHealth last summer, Sanchez spoke to the economic role of the massive program.

“We remain committed to our MassHealth program,” he said. “This is an investment in the frail, the elderly, the poor and the working poor. In supporting MassHealth, we support the economic development of the Commonwealth, and that is what we have here today.”

The bill is likely headed for a six-member conference committee with the Senate, which passed a very different version of the bill last November.

The Senate bill tries to address community hospital struggles with a rate floor for hospital payments from insurers at 90 percent of the statewide average.

Twenty-seven hospitals are paid less than 90 percent of the statewide average commercial rate, accounting for 20.3 percent of all commercial payments. Six of those hospitals that also serve cities like Lowell, Lawrence, Brockton and Holyoke with large minority and low-income populations were paid 85 percent or less in 2016. The cost of bringing all hospital payment rates up to 90 percent of the statewide average has been estimated at $180 million a year.

Mariano called the House bill’s assessments “extraordinary measures to make sure there’s a minimum reimbursement rate for our hospitals – our hospitals that are in our gateway cities, hospitals that are the largest employer in these cities, hospitals that are the economic enginess of these cities that struggle to raise revenues, extremely important cities to the economy of the commonwealth.”

Partners HealthCare, which would face new assessments under the House bill, declined to comment Tuesday night.

If lawmakers are able to agree on a consensus bill and pass it before the end of formal sessions on July 31, it faces an uncertain fate with Gov. Baker. Last summer, Baker initiated the debate by pushing public and private sector cost saving measures that are not a focus of the House or Senate bills.

Baker last year also balked at business assessments without savings-minded reforms, but ultimately agreed to those assessments.

The state’s largest business group on Tuesday called on lawmakers to take more seriously the need to lower health costs and embrace reforms. Associated Industries of Massachusetts (AIM) is concerned that the assessments will force health companies to add charges onto employers to replenish their reserves.

“All these assessments have been levied without any mention of reforms to MassHealth,” AIM Vice President Katherine Holahan wrote in a letter to lawmakers. “AIM’s employer members brace for the next year and a half with no reform in sight and new assessments created to support one specific segment of the health-care system.”

After Tuesday night’s session, Massachusetts Association of Health Plans President and CEO Lora Pellegrini said the House had addressed some of the group’s concerns about the “insurance reserves assessment.”

“We continue to have concerns with the House’s approach and look forward to continued discussions about how best to address provider price variation as the bill heads to conference.” Pellegrini said in a statement. “We believe that any final legislation that emerges from a conference committee must have the explicit goal of containing costs for employers and consumers while improving quality of care for patients.”

In a statement released after the bill passed, House Speaker Robert DeLeo said, “We recognize the complex factors that are driving the health care marketplace right now and view this legislation as a smart, stabilizing mechanism to ensure residents in each corner of the Commonwealth have access to quality care throughout the changes.”

The House rejected, on a voice vote, an amendment to exempt from the sales tax certain non-prescription drugs. Rep. Geoff Diehl argued the tax break would make medicines more affordable for people who need to take over-the-counter medications on a long-term basis.

The House is back in session on Wednesday, with Democrats planning a 10 a.m. caucus ahead of an 11 a.m. session. Lawmakers are working on a time-sensitive proposal to settle minimum wage, paid family and medical leave and sales tax reduction ballot questions, and a potential deal could emerge at any time.