Give the Health Policy Commission greater leverage

Oversight of Mass General Brigham shows flaws in current system

“UNLESS THE Commonwealth’s health care cost containment approach is strengthened and expanded by policymakers, the result will be a health care system that is increasingly unaffordable for Massachusetts residents and businesses with growing health inequities.”

There is a lot of truth and wisdom in that statement from the Health Policy Commission’s 2022 cost trends report, and so I am hopeful that our legislative leaders and the next governor are paying attention to that sentence as well as the three areas in which the commission is prioritizing improvement in terms of state oversight and accountability.

The commission wants to target above-benchmark spending growth, constrain excessive provider and pharmaceutical prices, and limit increases in health insurance premiums and cost-sharing.

The inadequacy of our current state oversight scheme was on display at last week’s Health Policy Commission board meeting with respect to the first two items.

First, the main feature of the meeting was the review and final approval of a performance improvement plan for Mass General Brigham, the state’s largest hospital system. Both the final content of the plan and the nine-month process to develop it underscore the weakness of the approach.

Policymakers have been aware of Mass General Brigham’s excessive prices since 2012, the year the Health Policy Commission was created. The data contained in the 2022 cost trends report show that things have only gotten worse in recent years. And keep in mind that the data don’t fully reflect the extent of the problem.

Mass General Brigham last week upped its spending reduction target from $70 million to $128 million, but that only means the hospital system moved from a wholly inadequate proposal to one that is still inadequate.

My greatest worry now that the plan has been approved is that state policymakers will sit back and say the problem is solved. Nothing could be further from the truth, as many members of the commission pointed out.

A simpler plan would have been to simply ask the insurers who operate in the state to simply hold back 1.5 percent of the total monies that they owe Mass General Brigham for all services under commercial contracts for five years or so. The money could then be sent back to premium payers in a way that would parallel the rebate process that happens now when an insurer’s medical cost ratio is not high enough for their applicable insurance products.  Self-insured employers would also get checks back and they would need to work out how to share these monies with their employees.

I realize that the Health Policy Commission did not have the negotiating leverage to make that happen, since Mass General Brigham, under the current law, could have walked away at any point by cutting a check for $500,000.

So instead there will need to be a lot of attention given to making sure the approved performance improvement plan cost cuts actually happen, that they are sustainable over the long term, and that they are not offset by price increases elsewhere in insurer contracts.  Sadly, it may be a big effort for not much in return in terms of affecting the overall spending problem.

That’s why the commission’s key policy recommendations include greatly strengthening the agency’s performance improvement plan process over a wider range of providers, including both measuring and holding accountable hospitals, whose prices and revenue flows threaten state cost control goals. My hope would be that the Legislature would pass legislation similar to a law in California, where escalating penalties to the tune of hundreds of millions of dollars can be given out to a provider that fails to make a credible effort to deliver on a plan to meet its individualized cost growth target. Such an approach would put  a real cost growth tool in place.

During a separate part of its meeting, the Health Policy Commission failed to raise concerns about expansions at Boston Children’s Hospital and UMass Medical Center.  From a public policy perspective, I think that is a mistake.

The new cost trends report contains data clearly suggesting that Boston Children’s is truly an outlier with respect to its outpatient hospital prices as compared to all other providers.  Absent some sort of state oversight, what is to stop them from having these new or expanded ambulatory care sites price their care as outrageously as their hospital outpatient departments currently do?  That’s why I favor adding the Health Policy Commission’s analysis to the recently released consultant’s cost report on the Boston Children’s expansion could at least add some additional clarity as to whether cost growth concerns are likely to be significant or not, and whether some additional conditions for this project might be needed.

And for UMASS, the new cost trends report shows that care costs for their attributed patients have grown substantially from 2015-2020, giving it the second highest absolute measure of total medical expense and the second-highest rate of growth during that period—surpassed only by Mass General Brigham. While none of these measures by themselves create reasons not to approve their hospital bed addition project,  it does suggest that a more detailed  analysis of some potential cost growth issues could be helpful to the Department of Public Health in its review of the project with an eye toward its spending impact for central Massachusetts.

Both of these expansions and their review process at present require the Health Policy Commission to actively insert itself into the review process without having complete access to all of the needed data for a detailed review, nor adequate time to truly conduct a full analysis.  This should not be the case. Governmental agencies, including the Health Policy Commission and the attorney general, should be given additional legislative authority and time to complete a full cost and market impact review of provider expansion projects with substantial capital outlays and increases in operating costs.

Finally, of note from the meeting, is that while Chair Deb Devaux seemed restrained in commenting about any of these issues in detail at her first board meeting, she was quoted as saying it was  “time for us to consider new approaches.”   I certainly hope she can convince both our next governor and the state legislative leadership, and help point them towards the priority for action ideas outlined in the agency’s cost trends report.

Paul A. Hattis is a fellow at the Lown Institute.