Mariano backs bill to provide more scrutiny of hospital expansions

Speaker wants Health Policy Commission to analyze market impacts

THE MASSACHUSETTS HOUSE will consider a health care bill that would impose increased scrutiny on hospital expansions, House Speaker Ron Mariano said Thursday. 

The goal of the bill would be to stop behemoth health care systems from expanding into communities where today patients primarily rely on community hospitals, then siphoning revenue away from those hospitals. Mariano acknowledged that the bill was prompted by Mass General Brigham’s proposal to expand into Westborough, Westwood, and Woburn – which some worry will take patients with commercial insurance away from providers already serving the area.  

Mariano’s proposal represents yet another attempt to shore up financially struggling community hospitals, with a different type of policy solution than those lawmakers have considered previously. Instead of rate relief or subsidies, Mariano is seeking more aggressive regulation. 

“We have a whole bunch of folks going forward with expansions into different catchment areas that dramatically affect community hospitals and their public-private payer mix numbers,” Mariano said in an interview. “My feeling is we really can’t allow some of these folks to move into some of the community hospital catchment areas and siphon off the private payers and leave the community hospitals only with public payers.” 

Mariano said this bill, if passed, “will help stabilize the payer mix for community hospitals.” 

Mariano said the bill will be released from committee before lawmakers go on break November 17, though he could not say if the House would try to pass it before then. 

Lawmakers have been trying for years to pass legislation that would curb the costs of health care and also help financially struggling community hospitals stay afloat. Reports by the Center for Health Information and Analysis have repeatedly found that community hospitals are far less profitable than teaching hospitals and academic medical centers, which tend to be bigger with more market power and more ability to negotiate favorable rates with insurers.  

Mariano has long been a supporter of community hospitals, but he has previously taken a different tack toward shoring them up. The House’s 2018 health care bill, which Mariano took the lead on, would have charged fees to larger hospitals and insurers, and used that money to fund community hospitals and community health centers. The Senate that same year proposed limiting the variation in what insurers are allowed to pay different hospitals for the same procedure. Attempts at reconciling House and Senate proposals fell apart at the end of formal sessions in 2018.  

The next legislative session was derailed by the COVID pandemic, although lawmakers did pass a bill focused on telehealth. More recently, the state’s Health Policy Commission tried to get at the problem of unwarranted price variation by supporting price caps, to limit how much expensive hospitals can charge. 

Mariano’s latest proposal will focus primarily on limiting hospital expansions via regulation.  

The bill, which is still being worked on by the Committee on Health Care Financing, would require the Health Policy Commission to conduct a study of the market and cost impacts of any hospital seeking to expand into a new location with an ambulatory surgical center or clinic. The review would take into account the payer mix of the expanding hospital and the surrounding providers, and those providers’ ability to negotiate rates with insurers. The idea would be to have the review flag a situation where a large hospital would siphon off commercial insurance patients, leaving a smaller hospital with primarily public payers and a limited ability to negotiate rates. 

The HPC report would become part of the Department of Public Health’s “determination of need” process, which it uses to determine whether an expansion can go forward. 

The Health Policy Commission currently performs market analyses of proposed hospital mergers, but not always of expansions – although the commission can choose to examine an expansion if it believes there will be a significant impact on statewide health care costs. Mariano called that omission a “loophole” that lets hospitals avoid undergoing that kind of financial analysis. 

The proposal comes as Mass General Brigham is moving ahead with a controversial plan to create ambulatory care centers in Westborough, Woburn, and Westwood. The hospital system says this will bring its high-quality care close to where its patients live,  but critics worry it will hurt existing local health care providers. The Health Policy Commission has opted to examine the Mass General Brigham expansion, although it does not have a formal role to play in the Department of Public Health’s approval process. 

Mariano said he believes the added scrutiny of expansions would make a difference in curbing problematic ones. “What we want to do is preserve community hospitals as a low-cost alternative to care,” Mariano said. “The best way to do that is keep infringement into their catchment area at a minimum so it doesn’t disrupt the financial structure of the reimbursement rates.” 

Eric Dickson, the CEO of UMass Memorial Health Care and the chair of the board of the Massachusetts Health and Hospital Association, said earlier this year that Mass General Brigham’s expansion is a real concern. 

“If you let the most expensive, largest health care system in the state expand to one of the wealthiest regions of the state and neighborhoods of the state, we just all have to go in eyes wide open and say, boy, that’s going to have a negative effect on the health care systems that were cross-subsidizing their care before, and in Westborough that’s us,” Dickson said. 

Paul Hattis, a former commissioner of the Massachusetts Health Policy Commission and a senior fellow at the Lown Institute, a health care think tank, said he applauds Mariano for wanting to address the problem. But he said the details will be important – for example, how large an expansion would be needed to trigger a Health Policy Commission review and whether that review will be the only study conducted.  

Today, the Department of Public Health can require the hospital to pay for an independent study of a transaction, but Hattis said those studies are often biased toward the hospital that is paying for the study. Ideally, Hattis said, if the Health Policy Commission weighs in on a transaction, the “independent” study would no longer be conducted. 

Hattis also said the proposal is “not a substitute” for addressing provider rate disparities, since major expansions only happen every few years, while rate disparities are a continual concern. 

Mariano said the change in law would be paired with the House’s proposed investment of $250 million in federal American Rescue Plan Act money to assist financially strained hospitals –another effort to shore up community hospitals. The Senate is seeking to spend $50 million less than the House and to assist a more limited group of providers, so it remains to be seen what emerges in the final bill.  

The House health care bill will not be a large omnibus bill, but it will contain some other policy changes. Mariano said it will revive a Health Planning Council that would take an inventory of what exists and what the needs are in the health care system. 

Asked whether he would support requests by the Health Policy Commission to expand the commission’s power in other ways – like letting them impose heftier financial penalties, gather better data, or allow price caps – Mariano was noncommittal. He said those issues require “broader discussion,” though they are all “legitimate requests.”  

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Shira Schoenberg

Reporter, CommonWealth

About Shira Schoenberg

Shira Schoenberg is a reporter at CommonWealth magazine. Shira previously worked for more than seven years at the Springfield Republican/MassLive.com where she covered state politics and elections, covering topics as diverse as the launch of the legal marijuana industry, problems with the state's foster care system and the elections of U.S. Sen. Elizabeth Warren and Gov. Charlie Baker. Shira won the Massachusetts Bar Association's 2018 award for Excellence in Legal Journalism and has had several stories win awards from the New England Newspaper and Press Association. Shira covered the 2012 New Hampshire presidential primary for the Boston Globe. Before that, she worked for the Concord (N.H.) Monitor, where she wrote about state government, City Hall and Barack Obama's 2008 New Hampshire primary campaign. Shira holds a master's degree from Columbia University's Graduate School of Journalism.

About Shira Schoenberg

Shira Schoenberg is a reporter at CommonWealth magazine. Shira previously worked for more than seven years at the Springfield Republican/MassLive.com where she covered state politics and elections, covering topics as diverse as the launch of the legal marijuana industry, problems with the state's foster care system and the elections of U.S. Sen. Elizabeth Warren and Gov. Charlie Baker. Shira won the Massachusetts Bar Association's 2018 award for Excellence in Legal Journalism and has had several stories win awards from the New England Newspaper and Press Association. Shira covered the 2012 New Hampshire presidential primary for the Boston Globe. Before that, she worked for the Concord (N.H.) Monitor, where she wrote about state government, City Hall and Barack Obama's 2008 New Hampshire primary campaign. Shira holds a master's degree from Columbia University's Graduate School of Journalism.

Mariano would not say whether he would support ideas previously proposed by Gov. Charlie Baker to require providers to spend more on primary care. “I’m committed to doing whatever I can to help community hospitals. And if a good idea comes from the governor or the Health Policy Commission or anyone else, I will listen and work with folks to make it better,” Mariano said. 

The Massachusetts Health and Hospital Association declined to comment, since the proposal has not yet been released in writing.