HPC reins in Mass General Brigham
Calls for cost-cutting plan; gives thumbs down to expansion plans
THE HEALTH POLICY COMMISSION took two decisive steps to rein in Mass General Brigham on Tuesday, ordering the largest and most prominent health care system in Massachusetts to develop a plan to cut its costs and concluding that a $2.3 billion expansion initiative is inconsistent with the state’s health care cost containment goals.
The twin actions represent an unprecedented rebuff of the state’s largest private employer and its attempts to keep expanding and growing. The commission has always had the authority to order health care providers to implement cost-cutting performance improvement plans, but this is the first time the agency has actually done it since it was created in 2012.
The commission doesn’t have the authority to outright reject Mass General Brigham’s expansion plan, and its analysis differs sharply from a separate one commissioned as part of the Department of Public Health’s determination of need process. But the commission is highly respected on Beacon Hill and its take on Mass General Brigham’s expansion plans is likely to be influential among regulators and policymakers.
“Mass General Brigham has a spending problem,” HPC chair Stuart Altman said in a statement. “Its spending performance and plan for new expansions at their flagship hospitals and into the Boston suburbs raise significant concerns, as documented by the HPC today. In fact, continuing in this manner is likely to impact the state’s ability to meet its spending benchmark and could do serious harm to the structure of the state’s delivery system.”
David Seltz, the executive director of the Health Policy Commission, said the performance improvement plan “will give MGB the opportunity to directly address the spending trends in a publicly accountable way and in so doing help advance affordability for the rest of the Commonwealth.”
Mass General Brigham said in a statement that the organization strongly disagrees with the commission’s decision to require a performance improvement plan, which it says is “based on outdated financial details” and does not account for the fact that the hospital treats some of the state’s sickest patients.
“The HPC’s refusal to acknowledge the acuity of our patients in its judgment of health care spending is short-sighted and unfair, especially to patients,” the statement said.
Each year, the commission sets a benchmark, or target, for total growth in health care spending in the state. The commission found that the growth in spending at Massachusetts General Brigham was a whopping $293 million above the benchmark between 2014 and 2019. Eight other health systems reported growth in spending that ranged from $33 million to $130 million above benchmark, nowhere close to the amount reported by Mass General Brigham.
According to the commission, the major physicians group associated with Mass General Brigham – Partners Community Physicians Organization – consistently has some of the highest spending in the state. The prices charged by Mass General Brigham’s hospitals and physicians are among the state’s highest.
The commission concluded that Mass General Brigham’s spending “raises significant concerns and has likely already impacted the state’s ability to meet the health care cost growth benchmark.”
The review found that Mass General Brigham has the most resources of any health care system in the state, with consistently strong financial performance. Its patients are more likely to be higher income and commercially insured. While the system’s hospitals – Mass General and Brigham and Women’s – offer specialized services to the sickest patients, the review found that patient acuity does not justify the higher prices.
Mass General Brigham said the measure used by the agency – looking at total medical spending unadjusted for the health status of patients – ignored the role of the system’s academic health centers “in treating the sickest and most complex patients in the Commonwealth.”
But Vidal said the commission looked at both unadjusted spending and spending adjusted by health status. The review looked only at spending before the COVID-19 pandemic.
The performance improvement plan is one of the commission’s major tools to control health care costs. The commission collects data from health care providers annually. If the commission decides a health care system has excessive spending, it can require the provider to craft a performance improvement plan.
Mass General Brigham now has 45 days to submit a plan, which will be voted on by the Health Policy Commission. The plan must address the reasons for cost growth and be able to measure savings. The commission will monitor implementation for 18 months.
Altman said it is up to Mass General Brigham what to include in the plan, but he sees three factors driving up costs: their prices, the kinds of services being provided, and where those services are provided. “I’d think they would need to put together a plan which incorporates two if not all three pieces,” he said.
If a health care organization does not comply with the Health Policy Commission, it can be fined up to $500,000. Seltz said a fine is a last resort, and he and Altman said they fully expect Mass General Brigham to comply.
Altman said the commission has met with a number of health care providers over the years to discuss concerns about rising health care costs, and indicated most have responded with serious attempts to address the problem. He declined to disclose the nature of discussions with Mass General Brigham, but said the hospital system has taken the commission’s concerns seriously. “They are not ignoring the process at all,” he said.
The commission on Tuesday also addressed Mass General Brigham’s plan to expand Massachusetts General Hospital and Brigham and Women’s Faulkner Hospital and the creation of three new ambulatory care sites in Westborough, Westwood, and Woburn.
The Health Policy Commission said the projects would increase health care spending by $46 million to $90.1 million annually for commercially insured patients. The commission broke it down between the three projects — $9.3 million to $27.9 million for the ambulatory care centers, $6.4 million to $7.9 million for the Faulkner expansion, and $30.3 million to $54.4 million for the Mass General Hospital expansion.
The commission said the expansion would drive patient volume and revenue to the higher-cost Mass General Brigham system and away from lower-cost providers who are dependent on commercial patient revenues to offset the lower Medicaid payment rates on which they depend more heavily. Commission staff estimated the loss of commercial patient revenues could range from $152.9 million to $261.1 million a year.
In its presentation on the proposed expansions, commission staff pointed out that Mass General Brigham had not suggested that it was expanding capacity at Mass General Hospital and Faulkner to see a chunk of that capacity go unused.
“The expansions, together, are therefore likely to increase the volume of care both at Mass General Brigham’s relatively high-priced hospitals and at the new ambulatory sites,” the presentation said. “If the ambulatory sites increase utilization of Mass General Brigham hospitals by residents of the ambulatory service areas, more of the care filling new MGH and Faulkner beds may be diverted from lower-priced hospitals outside of the Boston metro area.”
The Health Policy Commission’s analysis is markedly different from the findings of a so-called Independent Cost Analysis commissioned by the Department of Public Health and paid for by Mass General Brigham. The commission said the independent cost analysis failed to include all potential costs, minimized others, and failed to consider relevant public information.
But a statement issued by Mass General Brigham said the independent cost analysis found the hospital system’s expansion plan would lower healthcare costs in Massachusetts by delivering services closer to the 227,000 patients that rely on them and at a lower cost than in the system’s academic medical centers in Boston.
“Even if one accepts the HPC’s conclusion that Mass General Brigham’s three determination of need applications will increase annual healthcare spending by as much as $90.1 million, such an increase would only represent 0.15 percent of the total annual health care spend in Massachusetts. That is neither substantial nor significant as the HPC has alleged, especially when considered in the context of national inflation that is currently at 7 percent,” Mass General Brigham said in a statement.The hospital system also faulted the Health Policy Commission for failing to assess the impact of the Mass General Brigham expansion plans on Medicare and Medicaid spending. By contrast, the hospital system said, the independent cost analysis did and found the expansions would result in savings for Medicare and Medicaid patients.
“We look forward to next steps in the determination of need process because now, more than ever, Mass General Brigham patients deserve more access to care, closer to their homes, at a lower cost,” the hospital system’s statement said. “And the world deserves Mass General Brigham’s life-changing research and innovation to advance new treatments and cures.”