Mariano’s health care bill shows promise

Gives community hospitals leverage against competitive incursions

HOUSE SPEAKER Ron Mariano on Friday followed through on his pledge to put forward legislation that would subject expansion projects of major health care providers to more regulatory review.

The bill, sponsored by Rep. Paul Donato, more formally injects the Health Policy Commission and the attorney general’s office into the determination of need process administered by the Department of Public Health. As Mariano made clear in an op-ed and interviews with CommonWealth and the Boston Business Journal, he is concerned about Mass General Brigham’s plan to open ambulatory care centers in Westborough, Woburn, and Westwood — a move that could threaten both system affordability and some independent community hospitals serving those areas. I share his concern.

Here’s what the bill would do:

It strengthens the language that the Department of Public Health’s Public Health Council would use to judge whether or not capital project proposals should be approved.  Decisions would be guided by a new state health planning process (more below) and some other criteria, including whether any proposal will lead to the provision of services to every Massachusetts resident “at the lowest reasonable aggregate cost.”

It gives the Health Policy Commission the authority to conduct a formal cost and market impact review for hospital capital expansion projects and requires the Department of Public Health to use that review in deciding whether or not to approve the project and/or add conditions to its approval.  Currently, the Department of Public Health relies on an “independent cost analysis” conducted by a firm selected by the applicant seeking expansion approval. To date, these independent cost analyses have not been performed by a neutral third party nor been a true cost analysis.

The bill empowers the attorney general’s office to both investigate and take action if the office believes an expansion will give the applicant dominant market share and the ability to charge higher prices and raise total medical spending to levels above area market competitors. The legislation would allow the attorney general to use findings by the Health Policy Commission as presumptive evidence of a consumer protection violation.

The legislation creates a health planning council to guide a variety of state governmental decisions—including which submitted determination of need projects are meritorious and should be approved, and which ones should be rejected or significantly modified.

The bill gives certain community hospitals much more leverage in turning away incursions by competitors into their service territories. The bill mandates the rejection of any determination of need applications for free-standing ambulatory surgical centers in the service territory of an “independent community hospital” unless the community hospital approves of the expansion or is participating in a joint venture with the applicant.

Less clear is whether the legislation retroactively covers expansion plans already moving through the determination of need process, including ones filed by Mass General Brigham and Boston Children’s Hospital. A short section at the end of the bill requires those with a pending determination of need application to submit notice to the Health Policy Commission, presumably allowing the agency to decide if it wants to conduct a cost and market impact review.

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If that section is challenged,   I think there is still a way to force their current applications to fall under the purview of the new law.  The Public Health Council, if it proceeds now under the current rules and regulations and without a formal cost and market impact review in hand, could simply reject these applications for failing to demonstrate that their projects will contribute to the state’s cost containment goals—a necessary requirement under the current scheme—and force them to start over when the new law would be in place.

The bill is a step in the right direction for more effective government oversight of the determination of need process. Though the bill could change as it makes its way through the legislative process or fail to gain traction with lawmakers, my hope is that lawmakers will pass it in a form that would achieve the key aims that House leadership set out to accomplish with this legislative proposal.