October 23, 2017

Senator James Welch, Chair
Special Senate Committee on Health Care Cost Containment and Reform
Massachusetts State House - Room 413B
Boston, MA 02133                       

Dear Chairman Welch:

We, the 56,000 Massachusetts healthcare workers of 1199SEIU, are pleased to offer this written testimony on An Act Furthering Health Empowerment and Affordability by Leveraging Transformative Health Care (HEALTH Act).

1199SEIU has been a major driver of health reform policy initiatives.  We stand ready to work with the Legislature, the Administration and all stakeholders on An Act Furthering Health Empowerment and Affordability by Leveraging Transformative Health Care.

The healthcare workers of 1199SEIU strongly support the need for new legislation that carefully addresses the rising costs of healthcare, while protecting the financial viability of community hospitals, fully engaging the healthcare workforce in reform implementation, and adequately supporting appropriate workforce training.  Accordingly, our top priorities for the HEALTH Act include:

Supplemental Community Hospital Funding: The state should increase appropriations and expenditures to the Distressed Hospital Trust Fund (MGL ch. 29, § 2GGGG) or similar Funds that support supplemental payments to struggling community hospitals.

Provider Price Variation/Commercial Rate Floor: Massachusetts should establish a series of reforms to address persistent provider price variation in the commercial health insurance market. At a minimum, we should establish a commercial rate floor for acute care hospital payments so that no acute care hospital would be paid less than 90 percent of the average rate of commercial insurance reimbursement.

Prescription Drug Costs: We support reforms to control drug costs such as those included in An Act to Promote Transparency in Prescription Drug Prices (S.627).

Long Term Supports & Services (LTSS): We advocate for careful reform to reduce costs and for including in a final reform bill pending legislation to promote more integrated care, to establish stronger provider oversight, and to ensure affordable access to quality LTSS across the care spectrum (e.g. S.337/H.340 & S.264/H.341).

Workforce Engagement: Successful healthcare reform must include engagement of frontline healthcare workers. The entire healthcare team must have both access to training to meet the demands of reform as well as a significant role and voice in implementing envisioned reform of health care delivery systems.

We applaud the Senate’s inclusion in the HEALTH Act of a number of important initiatives to address escalating healthcare costs.  We strongly support establishing a .9 floor for low-cost, underpaid community hospitals and the substantial reform provisions around prescription drug costs. 

We remain concerned that there is insufficient support for community hospitals in the near term and too few provisions on long term services and supports.  As drafted, the HEALTH Act does not have proposals to promote or incentivize healthcare workforce engagement, training, or development initiatives. We hope these issues can be addressed. We appreciate the opportunity to offer these comments on several of the bill’s provisions:

Provider Price Variation/Community Hospital Support

Hospital Alignment and Review Council and Trust Fund (Sections 41, 111 & 113)

This new Trust Fund, to be administered by the Council, has the potential to support struggling community hospitals and is appropriately established as the recipient of penalty assessments on carriers and top-spending hospitals if these entities fail to meet the new “target hospital rate distribution” and/or “target growth in hospital spending” benchmarks.  We are especially supportive of the bill’s Section 113 which establishes a .9/90% floor for commercial relative prices. 

We oppose establishing overly restrictive conditions on community hospital eligibility for Trust Fund payments that go beyond those already in the HEALTH Act. The Trust Fund payments should primarily support the general operations budgets of community hospitals with relatively low provider prices.  Additionally, we propose adding a seat for a representative from a healthcare workforce labor organization to the Council’s Advisory Committee.

Community & Safety Net Hospital Support

Lower relative commercial rates, relatively high percentages of more poorly-reimbursed Medicaid and Medicare patients, and continuing shifts in volume towards urban Academic Medical Centers all combine to create unsustainable economic hardship for too many Massachusetts hospitals.  If such lower-priced community hospitals are forced to scale back operations or close altogether, statewide total healthcare expenditures will rise as patients are forced to utilize higher-priced facilities.  

The HEALTH Act should do much more than simply establish the January 2022 Trust Fund described above to fund supplemental payments to community hospitals.  We respectfully urge the Legislature to include additional provisions in the HEALTH Act that ensure needed funding for community and safety-net hospital supplemental payments from 2018-2021.  

Health Care Trailblazer Organizations (Sections 23 & 40)

While we support this innovative reform, we would urge the HPC to consult with labor organizations in developing the standards and consider further requiring that certified Health Care Trailblazer Organizations fully engage their workforce in reform through cooperative, labor-management efforts to improve care quality.

Market Force Changes (Out-of-Network Rates/ Limited Networks / Tiering)

Upon initial review, these provisions appear to reflect the Special Commission on Provider Price Variation consensus that limited/tiered network plans, if designed appropriately, can be an important tool to address price variation.”   Specifically, they seem consistent with the Special Commission’s call for “measures to encourage the use of more meaningful consumer incentives to promote high-value choices including, but not limited to, contribution policy, increasing price differentials among tiers, increasing the premiums between limited- and tiered network plans and broader commercial plans, tiering plans based on primary care provider, and other efforts to enhance consumer choice through innovative product design.”  Accordingly, we support these reforms.

Consumer Transparency

Finally, the HEALTH Act includes strong efforts to actualize the recommendations of the Transparency Subcommittee of the provider price variation commission.  Specifically, that Subcommittee recommended accelerating the establishment of a more robust consumer-friendly website to be operated by CHOA.  Conesus was also reached for the need to provide additional support for small business by placing “specific emphasis on interactive decision tools and educational materials to support consumers and small business owners who may not have access to data or expertise.”  Accordingly, we support the “small group incentive program” (Section 110), the inclusion of new definitions for “high-value care services” and “shoppable health care services” provisions (e.g. Section 101), and other provisions through the HEALTH Act that increase price transparency for consumers, small business, and other purchasers of health insurance.

Prescription Drug Cost Reduction & Transparency

Efforts to reduce the cost of prescription drugs, including expansions on price transparency, are another top priority for 11199SEIU.   Therefore, we are pleased to see several strong provisions in the HEALTH Act that address these issues.  Specifically, we strongly support requiring prescription drug manufacturers and pharmacy benefit managers in both the HPC’s annual cost trends hearings and in the annual cost trends report.  We also support the creation of a new academic detailing program (Section 21), new CHIA regulations to “ensure the uniform analysis of information regarding pharmaceutical manufacturing companies and pharmacy benefit managers” (Section 30), and requiring MassHealth to “report on potential cost savings for prescription medications by the office if it joined a multistate Medicaid bulk purchasing consortium.” (Section 138).  Taken together, these provisions are essential first steps to address out-of-control prescription drug costs.

Facility Fees

Throughout the HEALTH Act (i.e. Section 68), there are several provisions to phase out the payment of “facility fees” to hospitals and ACOs.  While we understand that these fees do drive up costs, we remain concerned about the impact of eliminating these facility fee payments to community and safety-net hospitals and the disincentive such reforms would establish to provide care outside the hospital.  We respectfully urge considering amendments to these provisions to exempt High Public Payer Hospitals and/or facilities with below average commercial prices and allow them to continue to collect these fees. Alternatively, we would recommend delaying the phase-out of facility fees until other HEALTH Act provisions (including the .9 relative price floor) are fully in place.

Long-Term Supports and Services

The Health Act should go further to enact needed reforms in the long-term supports and services (LTSS) area.  We support the mandated report on “on the role of long-term services and supports within MassHealth and MassHealth accountable care organizations in each year of the accountable care organization demonstration”. The bill also includes several provisions designed to increase reporting on and to help reduce the cost of unwarranted institutional post-acute care.

However, successful health reform and cost-containment reform legislation must also address LTSS and support full integration across the spectrum of care.  We strongly support reforms to promote more integrated care, to ensure affordable access to quality LTSS and to move towards a new long-term care delivery system centered around home and community based-care.  As part of comprehensive health reform, state government must also take further steps to ensure that the care management entities, home care agencies and workers delivering vital home care services are compensated fairly.  Consumers must be also be protected through enhanced oversight.

Furthermore, the state must also strengthen all forms of LTSS to account for the anticipated growth in demand.  In seeking to control cost growth, the focus should remain on meeting this demand.  Policymakers should aim to control increases in per-person costs rather than seeking to merely reduce overall LTSS spending.  Accordingly, we will continue to advocate for passage of the following LTTSS bills as pieces of an overall reform bill:

An Act Strengthening the Massachusetts Home Care Program (H.341.S.264).

An Act to Improve the Licensure of Skilled Nursing Facilities (H.340/S.337), which requires the Department of Public Health to amend and strengthen the licensure regulations.

Hospital Readmission Reductions

We applaud the HEALTH Act provisions that create a new “readmissions reduction benchmark” and require a “readmissions performance improvement plan” to emphasize the reduction in 30-day readmission rates as a major focus for all hospitals throughout the Commonwealth.  However, to achieve success in this area, frontline healthcare workers must be engaged directly in this work. As suggested below, using innovative funding to support this work will help capture cost-savings.

SECTION 13:  Section 9A(a) of Chapter 6D should explicitly include the social determinants of health as a factor to be considered in establishing the annual readmissions reduction benchmark.  Further, in Section 9A(b) we suggest the addition of “any unintended consequences of readmission penalties, especially for community and safety-net hospital populations” as an additional topic that the commission should examine at the planned public hearing on the readmissions benchmark.

SECTION 15:  In referring to Section 10A (b)(iii) of Chapter 6D, we suggest adding “and social determinants of health;” to ensure that these factors are explicitly reviewed.  The civil penalties collected under Section 10A of Chapter 6D should be earmarked to support innovative labor-management initiatives intended to reduce 30-day readmission rates.

Prevention and Wellness Trust Fund

We strongly support the Section 67 reauthorization of the Prevention and Wellness Trust Fund. This Trust Fund, if adequately funded, has great potential to assist the state and organizational stakeholders in improving public health and addressing social determinants of health.

MassHealth Reform

The HEALTH Act seeks to achieve healthcare reform and cost-savings by taking  comprehensive, systemic approach. We support this driving ideology and believe we cannot reform MassHealth by limiting access and increasing consumer cost. We do not support inclusion of many of the Administration’s proposals given the current national healthcare debate. While we anticipate a robust debate regarding MassHealth reform in the state budget and through the 1115 waiver processes, we support the following HEALTH Act provisions:

The proposed HIRD report on Medicaid employers, which we believe should be made publicly accessible.

The Section 123 Medicaid buy-in program to create greater access to high-quality, affordable care.

Provisions to facilitate access to MassHealth premium assistance.

Increasing MassHealth data collection to “coordinate measures of social determinants of health’”

The Section 131 pilot “supportive housing” program for Medicaid and Medicare recipients and the Section 133 MassHealth report on the Administration’s 1115 Waiver Amendment

We tentatively support “passive enrollment” in the Senior Care Options program if carefully implemented.

In conclusion, we support An Act Furthering Health Empowerment and Affordability by Leveraging Transformative Health Care to the extent it seeks to guarantee affordable, accessible and high-quality health care for all Massachusetts residents.  We urge the Senate and the Legislature to proceed with a commitment to ensuring that reform does not require excessive sacrifice from providers, payers, consumers or the health care workforce.  Instead, the state must carefully address growth in health care costs while simultaneously ensuring the financial viability of community hospitals and engaging the healthcare workforce in reform implementation. 

Thank you for this opportunity to testify on An Act Furthering Health Empowerment and Affordability by Leveraging Transformative Health Care.  We look forward to continuing our work with the Senate and other stakeholders on these issues of foremost importance to all of us at 1199SEIU.

Sincerely,

Tyrek D. Lee, Sr.
Executive Vice President, Massachusetts