Over $450M in Fees Eyed to Help Hospitals

June 13, 2018

By Colin A. Young, State House News Service

BOSTON - A House-controlled committee on Tuesday advanced a 127-page health care bill that includes $450 million in assessments on hospitals and insurers, a fee on urgent care clinics, creates consumer protections against out-of-network billing, adds new reporting requirements for MassHealth and urges an acceleration of digital health initiatives.

The 11 House members of the Health Care Financing Committee voted in a poll Tuesday to recommend the bill coming out of committee, while the seven Senate members of the joint committee either reserved their rights or did not respond to the poll, according to the committee.

The bill has been in development for months and serves as an initial counterproposal from House leaders to the health care bill approved by the Senate in November.

"This legislation has been carefully crafted to consider the variety of stakeholders who have shared their priorities with this committee. However, this bill is ultimately shaped around improving the experience for consumers and working towards addressing the growing cost burden of healthcare on the Commonwealth," Rep. Jeffrey Roy, the committee's vice chairman, said in a statement. "Because at its heart, the Massachusetts approach to health reform is not about squeezing out efficiencies and cutting cost, it is transforming how we seek to pay for care to promote cost-effective, value driven services in a way that makes the healthcare system more accessible and effective for all of us.

Roy was not made available Tuesday to discuss the bill with the News Service. The committee did not respond when asked if a committee staffer was available to explain parts of the bill and said it did not have a summary of the bill's provisions available. The speaker's office also refused to make someone available to answer questions about the bill Tuesday or provide any information about the legislation, but said it may hold a briefing on the 100-plus section legislation in the coming days.

As the House has been developing its health care bill over the last six to eight months, House Speaker Robert DeLeo has repeatedly reiterated just how complex and intricate such legislation can be.

"Health care legislation is extremely complicated, extremely complicated because what I have found...any decision that you make many times you find that there is an effect in another part of the legislation, so I think that it has taken us a little bit, maybe, longer period of time," DeLeo said last week.

The bill calls for a total of $450 million in one-time assessments charged on commercial insurers and acute hospitals that had more than $750 million in total net assets in fiscal year 2017 and less than 60 percent of its patients are on Medicaid. The insurers would be hit up for $330 million total, with the hospitals making up the remaining $120 million.

That money would be deposited into a state-run Community Hospital Reinvestment Trust Fund (CHRTF), controlled by the secretary of health and human services, and would be used to boost the bottom lines of acute care hospitals whose relative prices for delivered care are below 90 percent of the statewide median relative price.

The secretary is directed under the bill to give the largest payments to the hospitals with the lowest relative prices and to consider Medicaid volume when determining a payment. In a statement, DeLeo said the committee's application of the assessments "does not single-out any one entity or industry segment and strengthens our community health centers."

The approach to closing the gap between the rates paid to large research hospitals and smaller community providerss differs from the Senate, which voted to set a price floor at 90 percent of the statewide average. The cost of bringing all hospital payment rates up to 90 percent of the statewide relative price has been estimated to cost an additional $180 million a year.

Assessed specialty clinics -- defined as limited service clinics, office-based surgical centers and urgent care clinics -- would also be required under the committee bill to annually pay 8.75 percent of its assessed charges for commercial payers into the CHRTF. Increased fees charged to obtain a license as a physician, nurse, pharmacist, dentist, genetic counselor, optometrist or podiatrist would also be directed into the CHRTF.

The CHRTF would also be funded by penalties on health care entities that exceed the annual health care cost growth benchmark or have unwarranted price variation and do not work in good faith to make agreed-upon improvements.

The bill gives the Division of Insurance authority to review and approve provider contracts, and to refer any provider contract to the Health Policy Commission if it is "influenced by unwarranted factors of price variation." The provider would then have 45 days to come up with a performance improvement plan to bring prices down within 18 months.

"The House bill is asking private insurers and large hospitals to step up to the plate," said Spiros Hatiras, the CEO of Holyoke Medical Center. "It's a small step for the insurers and the large hospitals but a giant leap for the small community hospitals who have suffered from unfair pricing for years."

The legislation also protects consumers from "surprise bills" from out-of-network providers and requires carriers to establish a toll-free telephone number and website for consumers to "request and obtain from the carrier, in real time, the network status of an identified health care provider and the estimated or maximum allowed amount or charge for a proposed admission, procedure or service, and the estimated amount the insured will be responsible to pay for a proposed admission, procedure or service that is a medically necessary covered benefit."

The bill also calls for pharmaceutical industry representatives to participate in the Health Policy Commission's annual cost trends hearings, and instructs the Center for Health Information Analysis to consider pharmaceutical data as part of its cost analyses. The assistant secretary for MassHealth would also be required to testify before the HPC each year under the House bill.

The financial stability of nursing homes, administrative costs of the health care system, and the efficiency and effectiveness of existing special health care funds would each be the subject of new public-private special commissions established by the committee bill.

Tim Foley, executive vice president of 1199SEIU United Healthcare Workers East, called the committee's bill "comprehensive" and said it attempts to tackle some of the state's largest health care challenges.

"This bill will provide additional funding to community hospitals to ensure they can continue to provide high quality, low-cost care to residents throughout the Commonwealth. It also would create a new emergency task force to ensure that nursing homes are properly staffed, reimbursed and managed for the safety and health of their residents," Foley said. "These measures provide our community and safety-net hospitals and our vulnerable nursing homes a much better climate in which to stay vibrant, sustain quality jobs, and offer the best care possible to consumers."

The Massachusetts Health and Hospital Association and the Massachusetts Association of Health Plans did not reply to requests for comment.

Now that it is out of the Health Care Financing Committee, the health care bill will likely head to the House Ways and Means Committee. Rep. Jeffrey Sanchez, the Ways and Means chairman, is a past chairman of the Health Care Financing Committee and has long held an interest in health care legislation.

The bill is officially dubbed "An Act establishing the Honorable Peter V. Kocot Act to enhance access to high quality, affordable and transparent health care in the Commonwealth" in memory of the House Health Care Financing Committee chairman who had been working on the legislation when he died in February at age 61.