July 31‚ 2012 - Mintz Levin and ML Strategies
By George K. Atanasov, Julie Cox, and Stephen M. Weiner
Earlier today the Massachusetts legislature, on
the final day of its 2011-2012 session, completed another
major phase in the reform of health care that began with the
dramatic expansion of coverage for health care services in
2006.
The earlier initiative, a model for federal
health care reform in the Affordable Care Act, left largely
unresolved the key issue of how to address the cost of care.
Todayfs action places on the governorfs desk legislation that
would significantly change both the structure and the
financing of health care delivery in the Commonwealth and that
promises to have a dramatic impact on the cost of care for
Massachusetts residents. The legislative leadership predicts
that the bill will save the Commonwealth up to $200 billion
over the next 15 years. Following todayfs House and Senate
votes, Governor Patrick stated that he will sign the bill into
law.
The bill is actually the third comprehensive
health care legislative effort in Massachusetts since the 2006
enactment. Each has addressed issues of health care cost,
quality, transparency and promotion of health care workforce
alternatives, among other topics. Todayfs bill builds on these
actions and seeks, as well, to institutionalize changes
already under way in the provider and payer sectors to
restructure health care delivery and move away from
fee-for-service payment to alternative methodologies.
The bill would put in place mechanisms for
capping growth in health care expenditures and for
restructuring the delivery system in a manner that promotes
coordinated care, quality, and incentives to adopt provider
financing arrangements that are not tied to traditional
fee-for-service mechanisms. While a bill that included
significant regulatory interventions into the health care
system was considered, the version as now presented takes an
approach in which the governmentfs role is largely to set
benchmarks, compile and analyze data on cost behavior, and
undertake more collaborative approaches to impacting cost
growth. As such, this bill may serve as a model for the
unfolding phases of national health care reform.
Major highlights of the bill (but by no means
all of the highlights) are outlined below.
The bill sets out annual statewide health care
cost growth goals based on the potential growth rate of the
statefs gross state product (gpotentialh because the growth in
gross state product is adjusted to smooth out business cycle
fluctuations.) The benchmarks are set as follows:
- From 2013-2017, the potential growth rate of the statefs
gross state product;
- From 2018-2022, the potential growth rate of the statefs
gross state product minus 0.5%; and
- From 2023 on, the potential growth rate of the statefs
gross state product.
A new commission will monitor performance
against these benchmarks, and providers whose costs exceed the
benchmarks may be required to file performance improvement
plans that will be implemented under the commissionfs
oversight.
The new commission may also initiate cost and
market impact reviews where providers or provider
organizations propose to make material changes to their
operations or governance structure. These material changes
include, as examples, corporate mergers, acquisitions,
or affiliations of a provider or provider
organization and a carrier; mergers or acquisitions of
hospitals or hospital systems; acquisition of insolvent
provider organizations; and mergers or acquisitions of
provider organizations that will result in a provider
organization having a gnear-majority of market share in a
given service or region.h Under certain circumstances the
commission can make a referral to the Attorney General for
investigation under the Attorney Generalfs current authority
related to unfair business practices or anti-competitive
behavior.
A parallel agency, the Center for Health
Analysis, will analyze how the statefs policies affect cost
trends.
The bill enhances the role of physician
assistants, building on earlier legislation liberalizing the
role of nurse practitioners, and addresses how retail clinics
may fit more readily into the overall delivery system. It also
provides funding and programs for workforce development
generally and creates incentives for the broader dissemination
of wellness programs in the workplace.
The bill creates certification mechanisms for
accountable care organizations (ACOs) and patient-centered
medical homes as a means for promoting more effective
population health management. It also requires the
registration of provider organizations engaged principally in
payer contracting, to monitor changes leading to greater
reliance on payment methodologies that are alternatives to
fee-for-service, among other purposes. These organizations are
to report regularly on financial performance, market share,
cost trends, and quality measures.
It also sets in place a process to track price
variation among different health care providers over time and
establishes a Special Commission to determine and quantify the
acceptable and unacceptable factors contributing to price
variation among providers.
The bill mandates a transition from
fee-for-service payment methodologies for the state-funded
health coverage programs, including the coverage program for
state and many municipal employees. It authorizes Medicaid
rate increases of up to $20 million for providers that
adequately present a transition to a more cost-effective,
efficient form of payment while still providing high-quality
care, and it establishes a contracting preference in state
health programs for ACOs.
The bill provides a one-time assessment on
certain hospitals and private carriers to generate $225
million over four years. Of this amount, $135
million would be allocated to support distressed hospitals;
$60 million would be applied to wellness efforts to reduce the
instances of diseases such as diabetes, asthma, and obesity;
and $30 million would be applied to support the transition to
electronic medical records.
The bill creates a 182-day cooling off period
for the parties to a medical malpractice proceeding to seek a
negotiated settlement, and includes requirements relating to
information exchanges to promote an early resolution.
It provides that a health care provider or
facility may admit to a mistake or error, and the admission
may not be used as an admission of liability in court (unless
the provider lies under oath).
The bill also creates a task force to study
defensive medicine and medical overutilization.
The bill requires that, when transitioning to
the use of alternative payment methodologies, Medicaid must
consider, among other factors, the use and the continued
advancement of new medical technologies, treatments,
diagnostics or pharmacology products that offer substantial
clinical improvement and represent a higher cost than the use
of current therapies.
Under the bill, state agencies
responsible for purchasing prescription drugs are to form a
uniform procurement unit for bulk purchases. Further, the bill
contemplates creation of a commission to determine methods by
which the state can lower public and private costs for
drugs.
As happened in 2006 when Governor Romney signed
the now well-known Massachusetts health care reform bill, the
federal government, along with state governments, will be
watching Massachusetts as a test case for how to deal with
rising medical costs. The bill takes a multi-pronged approach
to dealing with this major concern of public policy. It may
take some time to assess fully the billfs overall impact, and
there are certainly provisions that differentially impact
providers that may raise concerns and objections. But to the
extent that the changes already taking place in Massachusetts
continue, both because of earlier enactments and because of
the willingness of the private sector to respond to public
policy concerns, on balance Massachusetts residents should
benefit from the implementation of this newest in a succession
of reform initiatives in the Commonwealth.
Mintz Levin and ML Strategies will offer more
in-depth analysis on several aspects of the bill and update
you with further alerts.
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Copyright © 2012 Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.