Massachusetts

SUMMARY

Massachusetts remains a leader on the health care cost containment, price transparency, and market regulation fronts. In the most recent term, Massachusetts legislation aimed primarily at health insurance rate equity, pharmaceutical company drug development cost transparency, free access to the state’s ACPD, and hospital market regulation.

In regard to cost containment, three Massachusetts bills seek to prohibit health insurance carriers from contracting with providers to reimburse them more or less than pre-determined, geographically-based amounts. In terms of price transparency, Massachusetts seeks to promote transparency and control pharmaceutical drug prices by allowing the HPC to cap pharmaceutical prices it deems are “significantly high” and to require drug manufacturers to disclose development cost information for certain “critical” drugs. Massachusetts legislation also aims to improve price transparency by requiring health care providers to eliminate the user fees associated with its ACPD and by requiring private health payers for small or large group health plans to provide certain plan information on their websites.

Massachusetts also has extensive health care market bills this term. Proposed legislation would require the HPC to identify health care providers that have dominant market shares and would seek to strengthen competition and unfair practice legislation. Currently proposed regulations would also set standards for identifying acute hospitals that are in danger of closing, create processes for receivership of such hospitals, allow the HPC to receive a one-time surcharge assessment fee from surcharge payers, and would limit the changes a provider could make to its operations/governance structure in certain situations.

 

LEGISLATION/REGULATION

Legislative Calendar

Massachusetts’ current regular legislative session runs from 1/4/2017 – 1/3/2018 (est.).

 

Recent Legislative Developments

Healthcare Transparency

2015-2016 H.827

 

 

 

AN ACT RELATIVE TO TRANSPARENT HEALTH CARE DATA: would amend Sections 12(a) and 12(b) of Chapter 12C of the General Laws. Chapter 12C regulates the collection, storage, and maintenance of the payer and provider claims database. HB 827 would eliminate the provisions that allow the Center for Health Information and Analysis (“the Center”) to charge fees for access to the data and user fees that were used to defray the Center’s cost of providing access to non-governmental entities.HB 827 would also amend Section 20 of Chapter 20, which regulates the Center’s maintenance of the consumer health information website. Instead of allowing the Center to update the website “on a regular basis, at least annually,” the Center will need to update the website “on a regular basis, but no more than 90 days after data required to post [ . . . ] has been reported to the center.”

 

Inactive — Died.
S.622 AN ACT RELATIVE TO SUPPLEMENTAL LINES OF INSURANCE: would require private health payer that small or large group health plans to make available data and other information, including:1) average annual individual and family plan premiums for each payer’s most popular plan for a representative range of group sizes, as further determined in regulations and average annual individual and family plan premiums for the lowest cost plan in each group size that meets the minimum standards and guidelines established by the division of insurance under section 8H of chapter 26:

2) information concerning the actuarial assumptions that underlie the premiums for each plan;

3) summaries of the plan designs for each plan;

4)  information concerning the medical and administrative expenses, including medical loss ratios for each plan, using a uniform methodology, and collected under section 21 of chapter 176O;

5) information concerning the payer’s current level of reserves and surpluses;

6) information on provider payment methods and levels;

7) health status adjusted total medical expenses by provider group and local practice group and zip code calculated according to a uniform methodology;

8) relative prices paid to every hospital, physician group, ambulatory surgical center, freestanding imaging center, mental health facility, rehabilitation facility, skilled nursing facility and home health provider in the payer’s network, by type of provider and calculated according to a uniform methodology; and

9) hospital inpatient and outpatient costs, including direct and indirect costs, according to a uniform methodology.

Inactive — Died.
S.1048  AN ACT TO PROMOTE TRANSPARENCY AND CONTROL PHARMACEUTICAL DRUG PRICES: would require the Massachusetts Health Policy Commission (“HPC”) to create a list of “critical” prescription drugs and would require manufacturers of listed drugs to disclose certain information related to the drug’s price. This required disclosures include: total cost of production, approximate cost of production per dose, research and development costs, marketing and advertising costs, the price the manufacturer charges for the drug outside of the United States, and true net typical prices charged to benefit managers for Massachusetts distribution.In addition, the bill would also authorize the HPC to cap the price of any prescription drug it deems “significantly high.”See also Boston Globe Article. Inactive — Died.

 

Healthcare Cost

 

2015-2016

 

 

H.4348 AN ACT RELATIVE TO EQUITABLE HEALTH CARE PRICING:

Added any transfer made to the Community Hospital Reinvestment Fund to the amount that acute hospital, ambulatory surgical center, and surcharge payor should pay to the state.

Raised the annual transfer to the Community Hospital Reinvestment Trust Fund from $5,000,000 to $10,000,000.

Created a MassHealth Delivery System Reform Trust Fund to:

  • (i) “provide reimbursement for services delivered to MassHealth beneficiaries by acute hospitals participating in the MassHealth program”; and
  • (ii) “make enhanced service payments and incentive payments to acute hospitals and other providers or care organizations under contract to provide MassHealth services pursuant to an approved state plan or federal waiver.”
  • Created a Community Hospital Reinvestment Trust Fund to provide annual financial support to eligible acute care hospitals.

Eligibility requires licensure and must not set prices that are at or above 120 percent of the statewide median relative price.

Signed – Signed by the Governor on May 31, 2016, Chapter 115 of the Acts of 2016.
 H.820 AN ACT REFORMING THE HEALTHCARE EXPENDITURE TRACK: would prohibit carriers from granting providers or provider organization annual increases in rates that exceed the annual relative prices established by the Center for Health Information and Analysis. Inactive — Died.
H.848

 

 

AN ACT TO ENSURE RATE EQUITY AND COST SAVINGS: would require carriers to use the Center for Health Information and Analysis’ (“the Center”) uniform methodology for established price relativities to calculate reimbursements to providers.- After January 1, 2017, carriers and health insurance providers would be prohibited from entering into or renewing a contract that reimburses providers above the 80th percentile or below the 20th percentile of the -specific relative price, by pre-determined geographic region.

– Exceptions apply to contracts that use an alternative payment method whereby a provider reports a Total Medical Expense (TME) that is less than or equal to the statewide TME median.

– Any net savings, due to the operation of this section, would then need to be reflected in premiums charged to health plan eligible members.

Every provider that does not agree to participate in a carrier’s network would be required to accept the Center’s carrier-specific median relative price for the provider’s applicable geographic region for out-of-network charges. Providers may not balance bill patients in excess of the amount paid by the carrier pursuant to this section (exceptions include: applicable co-payments, co-insurance, and deductibles).

– In any given year, net increases in premiums would be prohibited.

– The Executive Director, in consultation with the Commissioner of the Division of Insurance, would be allowed to determine, on an annual basis, whether a health care provider applicant could receive an exemption. Determination considerations would include: (1) whether the health care provider provides certain unique and specialty services; (2) the provider’s geographic location; and (3) whether application of Section 28 of Chapter 176O would jeopardize the financial solvency of the health care provider.

Inactive — Died.

 

Healthcare Markets

2015-2016 H.971

 

 

ACT REDUCING PAYMENT DISPARITIES AMONG HEALTHCARE PROVIDERS: would prohibit MassHealth from contracting with any managed care organization (“MCO”) that reimburses participating providers in excess of 15% above the MCO’s network relative price, as published by the Center for Health Information and Analysis’ annual report on relative prices.

 

Inactive — Died.
H.1015  AN ACT ENSURING COMMUNITY HOSPITAL ACCELERATION, REVITALIZATION AND TRANSFORMATION: would require the Health Policy Commission (“HPC”) to establish and receive a one-time surcharge assessment on all surcharge payers. Each surcharge payer’s surcharge assessment would be calculated by multiplying the surcharge percentage by $100,000,000. The surcharge percentage would be equal to the surcharge payer’s surplus divided by the total surplus of all surcharge payers. The HPC could waive the assessment for surcharge payers who lack the resources necessary to pay the assessment. Assessments would be distributed to the Distressed Hospital Fund and awarded to distressed acute hospitals trough a competitive grant process. Inactive — Died.
H.1017  AN ACT TO SET STANDARDS FOR AGO REVIEW OF PROVIDER PRACTICES: would amend Section 13 of the Chapter 6D of the General Laws and require the Health Policy Commission (“HPC”) to make factual findings and issue preliminary reports that analyze cost and market review. The HPC would be required to identify providers and/or organizations that: (i) have a dominant market share for the services it provides; and (ii) charges prices for services that are materially higher than the median prices charged by all other providers for the same services in the same market, or that has a health status adjusted total medical expense that is materially higher than the median total medical expense for all other providers for the same service in the same market.The bill would also require that Chapter 12 of the General Laws be amended to include Section 110—a definition of unfair methods of competition and unfair or deceptive acts or practices. The proposed definition is: “[e]ntering into any agreement to commit or by any concerted action committing any act of boycott, coercion, or intimidation resulting in or tending to result in unreasonable restraint of or monopoly in the delivery of health care services, contracting for payment for health care services, or the business of insurance; (i) seeking to set the price to be paid by any carrier for network contracts at rates that are excessive, unreasonable, discriminatory, predatory, or would otherwise cause the carrier to violate the requirements of its licensure or accreditation; (ii)engaging in any unfair discrimination between individuals who are similarly covered by network contracts; and (iii) making, publishing, disseminating, circulating, or placing before the public, directly or indirectly, any assertion, representation or statement which is untrue, deceptive or misleading.” Inactive — Died.
H.1019  AN ACT TO PROHIBIT MATERIAL CHANGES ABOVE THE COST BENCHMARK: would prohibit any provider or provider organization that exceeds the health care cost growth benchmark, in a given year, from making any material change to any of its operations or governance structure that require notice to the Health Policy Commission (“HPC”). The HPC would be able to release the provider prohibition once its relative price and total medical expenses decrease to a level at or below the cost growth benchmark value. The HPC would have the authority to exclude providers and provider organizations whose market shares are below an HPC-set threshold or whose total medical expenses or relative price are below the statewide median. Inactive — Died.
H.1027  AN ACT RELATIVE TO PRESCRIPTION DRUGS: would require the Massachusetts governor to request from the United States Department of Health and Human Services a waiver that would allow the Massachusetts Office of Pharmaceutical Information to provide Massachusetts residents with information on how to obtain purchase reduced-price prescription drugs from Canada. Inactive — Died.
H.2059  AN ACT ESTABLISHING A STATEWIDE DISCOUNT PROGRAM FOR PHARMACEUTICALS: would establish a “Massachusetts Prescription Drug Program” that would be tasked with: purchasing prescription drugs or reimbursing pharmacies in order to receive discounts and rebates; making prescription drugs available at the lowest possible cost; and negotiating prescription drug prices. Inactive — Died.
S.579

 

 

AN ACT ESTABLISHING MEDICARE FOR ALL IN MASSACHUSETTS: would create a single-payer healthcare system in Massachusetts. Inactive — Died.
S.644

 

 

AN ACT FURTHER REGULATING HOSPITALS: would require the Department of Public Health to determine, on an annual basis, which acute hospitals and hospital services are necessary to protect the health of their communities. The Department would also set standards for identifying hospitals in danger of closing or of changing services in a manner that could harm their communities. For the hospitals in danger of closing, the Department would be required to work, pre-emptively, to preserve them. Preservation methods would include technical and financial assistance.The Department could also bring an action in court, requesting that the Commissioner of Public Health and/or his designee be named receiver and operate the hospital. The receiver could, upon court approval, apply for financial assistance from the Department of Medical Security and/or apply for a loan from the Department of Public Health (for improvements and major repairs). The bill also sets forth the receivers duties and prohibits foreclosure and eviction during the receivership period. A temporary receivership is limited to 5 years. Inactive — Died.

 

Key Statutes

We compile state statutes relate to healthcare price and competition, including healthcare transparency, markets, and costs. For a complete listing of all health related statutes visit the State Health Practice Database for Research.

 

Healthcare Cost

  • In, 2012, Massachusetts passed the landmark health care cost-containment law, L. Ch. 224, codified Mass. Gen. L. Ch. 6D: “An Act Improving the Quality of Health Care and Reducing Costs through Increased Transparency, Efficiency, and Innovation” The Act established the Health Policy Commission (HPC), a new state agency, tasked with advancing the following goals of the new law:
    • Fostering reforms to the health care payment system that aim to reward quality care, improve health outcomes, and more efficiently spend health care dollars;
    • Promoting innovative delivery models that will enhance care coordination, advance integration of behavioral and physical health services, and encourage effective patient-centered care;
    • Investing in community hospitals and other providers to support the transition to new payment methods and care delivery models;
    • Increasing the transparency of provider organizations and assessing the impact of health care market changes on the cost, quality, and access of health care services in Massachusetts;
    • Analyzing and reporting of cost trends through data examination and an annual public hearing process to provide accountability of the health care cost-containment goals set forth in Chapter 224;
    • Enhancing accountability through the implementation of performance-improvement plans for certain providers and payers that threaten the ability of the state to meet the cost growth benchmark;
    • Evaluating the prevalence and performance of initiatives aimed at health system transformation;
    • Engaging consumers and businesses on health care cost and quality initiatives; and
    • Partnering with a wide range of stakeholders to promote informed dialogue, recommend evidence-based policies, and identify collaborative solutions.

 

Healthcare Transparency

  • Gen. L. Ch.12C, §§ 10 through 12 provides broad authority for the Center for Health Information & Analysis (CHIA) to collect information from private and public health care payers, including third-party administrators. CHIA works with the HPC to maintain the state’s All-Payer Claims Database, and to issue other reports and publications in line with its stated mission: “to monitor the Massachusetts health care system and to provide reliable information and meaningful analysis for those seeking to improve health care quality, affordability, access, and outcomes.”

 

  • Gen. L. Ch. 12C, §§ 8 through 9 requires providers to report revenues, charges, costs, prices, and utilization of health care services uniformly as required by CHIA. The Center will collect and analyze such data and publish annual reports on its website, available here. Data submission and reporting regulations promulgated by CHIA are available here.

 

  • Gen. L. Ch. 12C, § 16 directs CHIA to publish an annual report concerning health care provider and public and private payer costs and cost rends relative to market power reviews and relative to quality data.

 

  • Gen. L. Ch. 12C, § 18 directs CHIA to perform an ongoing analysis of the payer and provider data collected under the same chapter to determine which organizations are experiencing an excessive increase in health status adjusted total medical expense such that it threatens the ability of the state to meet the health care growth benchmark under the healthcare cost-containment law (see Ch. 6D above). Organizations identified by CHIA are referred to the Health Policy Commission, who shall establish procedures to the assist the health care entity to improve efficiency and reduce cost growth by requiring them to file and implement a performance improvement plan.

 

  • Gen. L. Ch. 1760, § 27, as part of the chapter on “Health Insurance Consumer Protections, requires that the state’s division of insurance “develop a common summary of payments form to be used by all health care payers in the commonwealth that is provided to health care consumers with respect to provider claims submitted to a payer and written in an easily readable and understandable format showing the consumer’s responsibility, if any, for payment of any portion of a health care provider claim.”

 

  • Gen. L. Ch. 176J, § 15 requires that any insurer offering a tiered network plan clearly and conspicuously indicate the cost-sharing differences for enrollers in the various tiers on all promotional and agreement materials.

 

Healthcare Markets

 

 

  • Gen. L. Ch. 176D prohibits unfair or deceptive acts or practices in the provision of insurance.

 

  • Gen. Law. Ch. 176G, § 9 applies trade regulation respecting antitrust and unfair business practices to the ownership, organization, operation and health care services provided by a health maintenance organization (HMO).

 

  • Gen. Law. Ch. 176G, § 27 prohibits a person from acquiring an ownership interest and right to control an HMO unless such person has filed with the commissioner and obtained approval for the transaction. The commissioner will approve or disapprove a merger or acquisition on the basis of whether, among other factors, the effect of the merger or other acquisition of control would be substantially to lessen competition in the health care insurance market or tend to create a monopoly in the state.

 

  • Gen. L. Ch. 176J, § 12 permits small business group purchasing cooperatives for health insurance. Rates offered by insurance carriers to a certified group purchasing cooperative are regulated under this section. CHIA is directed to report to the legislature on the cost savings of purchasing cooperatives on the qualified association members and the effect of such cooperatives on the risk pool and premium costs in the merged market.

 

  • Gen. Law. Ch. 111, § 25C, Massachusetts’ Determination of Needs program, was established by the Legislature in 1971 to encourage equitable geographic and socioeconomic access to health care services, help maintain standards of quality, and constrain overall health care costs by eliminating duplication of expensive technologies, facilities and services.

 

  • Gen. L. Ch. 176O, § 9A prohibits carriers from entering into contracts that limit tiered networks or guarantee a provider’s participation.

 

FY 2018 Budget 

Massachusetts is funded on a fiscal year basis. The 2018 fiscal year runs from July 1, 2017 through June 30, 2018. The Governor is expected to sign the new budget at the end of June, 2018.  To view Massachusetts’ Office of the Secretary of Health and Human Services most recent FY 2018 budget proposal, click here.

 

LITIAGTION/ENFORCEMENT

  • Southcoast Hospitals Group sued a rival hospital chain Steward St. Anne’s and the state health agency in October 2015 in Suffolk County superior court, seeking to stop the competitor from opening a cardiac service and alleging that the move was made possible by the improper influence of a former health official. The case centers on a 2014 Mass. Dept. of Health Circular providing an exception for ACOs, allowing them to transfer licenses to provide cardiac care which were otherwise subject to a moratorium. Read the Boston Globe article and the complaint. The lawsuit was dismissed in March 2016.

 

  • On Jan. 30, 2015, Suffolk Superior Court Judge Sanders declined to enter the consent judgment reflecting the deal negotiated between former Massachusetts Attorney General Martha Coakley and Partners Healthcare. The decision comes three days after newly elected Attorney General Maura Healey filed a Notice of her office’s position on the deal. That Notice raised concerns over the deal’s terms, and indicated that if the court rejected the consent judgment, the A.G.’s office would void its agreement with Partners and litigate to enjoin Partners’ proposed acquisition of South Shore Hospital, and would take more time to further evaluate the potential acquisition of Hallmark Hospital. In declining to enter the judgment, Judge Sanders expressed concerns about the provider’s market power, and both the inadequacy and difficulty of enforcing the remedies proposed by the parties. The agreement between former A.G. Coakley and Partners was the result of five years of investigation and negotiation. The proposed agreement received substantial criticism from antitrust experts and others who warned it would have anti-competitive effects. Please see Executive Editor Jaime King’s post on Partners on The Source Blog.

 

  • On September 25, 2014, the Massachusetts Attorney General’s Office, under the direction of then A.G. Martha Coakley, announced that it had filed a revised consent judgment to its previously announced June settlement with Partners Healthcare regarding the proposed acquisition of South Shore Hospital it had claimed would “alter [the] provider’s negotiating power, restrict growth and health costs.” The new deal would impose stricter conditions including price caps and rules regarding access to certain hospital services.

 

KEY RESOURCES

Massachusetts State Legislature

Massachusetts Office of the Attorney General

Massachusetts Health Policy Commission

Massachusetts ACPD

Massachusetts Office of Consumer Affairs and Business Regulation