Seltz dissects Mass. health care market

Takes on market clout, rising health insurance rates, burdensome rules

MASSACHUSETTS HEALTH care costs are expected to actually drop this year because of a decline in non-COVID care, but the executive director of the state’s Health Policy Commission says many of the underlying drivers of spending haven’t changed.

David Seltz, speaking on The Codcast with John McDonough of Harvard’s T.H. Chan School of Public Health and Paul Hattis, a retired associate professor at Tufts University Medical School, said the clout of larger health care providers remains undiminished and health insurance rates are already scheduled to rise next year.

Seltz said one of the disconnects in the state’s health care system – that larger hospital systems receive higher payments for many procedures without providing any qualitative difference in care – has remained unchanged over the last eight years.

“It does not appear to be an issue that fixes itself and policy solutions are difficult to find consensus on,” he said.

Seltz said he expects more consolidation in the health care industry in the wake of COVID. And he said he would not be surprised to see larger hospital systems use their clout in the marketplace to negotiate higher rates next year to recover their COVID losses.

“Will these precious dollars go to the biggest systems or will they go to the smaller hospitals?” Seltz asked. “Will we actually see a greater divergence in these payment rates when the pressure is on and the pie is only getting smaller?”

Health insurers seem to be preparing for much higher costs next year. Even though health care spending is declining this year, health insurers have already won approval from state regulators to raise their rates an average of 8 percent next year. Some insurers are projecting double-digit rate increases.

“The numbers are troubling,” Seltz said. “It raises a lot of questions for you and the public because we know there will be financial windfalls for many health plans in the current fiscal year.”

He said health insurance plans are probably trying to be conservative, guessing that pent-up demand for health care services, including a COVID-19 vaccine, will drive up costs substantially. Still, Seltz said, it’s hard to defend a big rate increase at a time when costs are falling.

“That’s a hard story to tell the public, and rightfully so,” he said.

Seltz, in an interview that covered a wide range of issues just prior to his agency’s annual cost-trend hearing, made clear the Health Policy Commission will remain focused on old and new priorities to rein in health care spending.

In the category of old priorities, Seltz said the commission recently examined prior authorization rules of eight health insurance plans for 26 orthopedic procedures. Seltz said the commission found no consistency in the rules among the health plans for any of the procedures, which puts health providers in a tough spot as they navigate the insurance industry bureaucracy.

“It’s so incredibly confusing and so incredibly burdensome,” he said. “That doesn’t seem to be providing very much value on a systemwide basis. … We’re talking about billions of dollars of just added expense.”

Meet the Author

Bruce Mohl

Editor, CommonWealth

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

One of the commission’s new priorities relates to pharmaceutical costs. A new state law authorizes MassHealth, which administers Medicaid, to negotiate directly with pharmaceutical manufacturers for drug rebates. If those efforts are unsuccessful, state officials can refer the drug to the Health Policy Commission for an evaluation of whether the drug’s value matches its price.

Seltz said no drugs have been referred to the commission yet, but he said the agency is educating itself and preparing for that eventuality. “We’re really trying to build a transparent process,” he said.