Mass General Brigham ups cost reduction target to $127.8m

MASS GENERAL BRIGHAM, after months of consultation with the Health Policy Commission, submitted a second plan for reducing costs that is very similar to its initial plan but with higher estimates of savings.

The initial plan was submitted to the Health Policy Commission on May 16 and pledged to reduce spending by $70 million a year as of December 31, 2023.

The new plan promises to reduce spending by $127.8 million a year by March 31, 2024, an increase of $57.8 million, or nearly 83 percent. The new plan, which was dated Tuesday, was posted on the Health Policy Commission website.

The framework of the two plans is very similar. Both plans indicate cost reductions will be generated in four areas – by reducing utilization of services, by shifting care to lower-cost settings, by reducing prices, and by enhanced accountability.

The numbers changed in two of the four areas. In the original plan, reducing utilization was projected to save $10.8 million a year. In the latest plan, the number was increased to $32.4 million. Two items that carried no estimate of spending reductions in the original plan had projections of nearly $20 million in savings in the new plan.

The original plan also called for $53.8 million in price reductions, while the latest plan sets the target at $90 million. The higher number includes a more than doubling of savings from reducing rates for outpatient services negotiated with major health insurers and a slight increase in savings by lowering rates at the hospital system’s outpatient facility in Waltham to the rate level charged by the system’s community hospitals.

Gregg S. Meyer, executive vice president of value-based care at Mass General Brigham, issued a statement suggesting the hospital system’s plan was the outgrowth of negotiations with the Health Policy Commission.

“Mass General Brigham is proposing annualized health care savings of $127.8 million, representing our commitment to transforming how care is delivered and making it more affordable, while improving outcomes for patients. This is well above the spending reduction identified as needed to improve affordability,” Meyer’s statement said.

“We appreciate working with the Health Policy Commission to develop a plan that relies on our proposed solutions and strategies to reduce health care spending growth,” he said.

A spokesman for the Health Policy Commission declined comment on whether the plan was a joint collaboration with Mass General Brigham, but he said the hospital system’s performance improvement plan is likely to be a focus of a meeting of the commission on Tuesday.

Mass General Brigham is the first hospital system required to submit a performance improvement plan since the Health Policy Commission was created 12 years ago. As a result, both the commission and the hospital system are operating in largely uncharted territory, and it’s unclear what will happen if the two sides are unable to reach agreement.