MASS AP­PEAL

With the mea­sure vow­ing to save $200 bil­lion over 15 years, other states may fol­low, cost­ing health­care providers bil­lions in rev­enue /

Modern Healthcare - - FRONT PAGE -

As Mas­sachusetts launches an ag­gres­sive ef­fort to con­tain health­care spend­ing, the rest of the coun­try will be watch­ing. On July 31, law­mak­ers passed first-in-the-na­tion leg­is­la­tion peg­ging health­care ex­pen­di­tures at or be­low the state’s over­all rate of eco­nomic growth, a strat­egy of­fi­cials es­ti­mate could save Mas­sachusetts as much as $200 bil­lion over the next 15 years.

The bill’s pas­sage comes six years af­ter the state en­acted a land­mark law ex­pand­ing health­care ac­cess, widely seen as the blue­print for the in­sur­ance pro­vi­sions of the Pa­tient Pro­tec­tion and Af­ford­able Care Act.

Gov. De­val Patrick, who pushed hard for leg­is­la­tors to come up with a com­pro­mise be­fore the ses­sion ended, said in a state­ment that he planned to sign the bill.

The leg­is­la­tion will re­quire providers to meet spend­ing tar­gets, al­though the con­se­quences for fail­ure are still murky. To that end, the state plans to col­lect a wide ar­ray of new data on health­care cost trends and qual­ity. In the mean­time, the bill fires ev­ery ar­row in the cost-con­trol quiver, in­clud­ing new pay­ment method­olo­gies, pre­ven­tive care and price trans­parency.

“I have no doubt this will be in­flu­en­tial be­cause this re­ally is the first time any state has at­tempted to leg­is­late lower cost trends,” Paul Ginsburg, pres­i­dent of the Wash­ing­ton-based Cen­ter for Study­ing Health Sys­tem Change, said of the bill. “I think other states, par­tic­u­larly in the North­east, will be look­ing at this bill very care­fully.”

From 2013 through 2017, the leg­is­la­tion sets health­care cost goals at the gross state prod­uct, es­ti­mated for 2013 at 3.6%. The goals for 2018 through 2022 are even more ag­gres­sive, push­ing the state to re­duce spend­ing to as low as 0.5% be­low the gross state prod­uct.

Health­care spend­ing has in­creased at an an­nual rate of about 6% or 7% in re­cent years, Mas­sachusetts law­mak­ers said.

The Mas­sachusetts Hospi­tal As­so­ci­a­tion called such cost goals “daunt­ing,” par­tic­u­larly given added pres­sures to ad­dress in­creas­ing obe­sity rates and pro­vide care for a rapidly ag­ing pop­u­la­tion.

Mas­sachusetts health­care spend­ing was pro­jected to be about $68 bil­lion in 2010, ac­cord­ing to fig­ures from RAND Health.

The 349-page bill, ap­proved by a vote of 380 in the Se­nate and 133-20 in the House, rep­re­sents a com­pro­mise from ver­sions in­tro­duced this spring. In many ways, the new bill takes a softer, gen­tler ap­proach to cost con­tain­ment than did the pre­vi­ous bills, said at­tor­ney Stephen Weiner, chair of the health law sec­tion of Mintz Levin, Bos­ton.

For in­stance, the “lux­ury tax,” a con­tro­ver­sial pro­vi­sion that would have taxed pricier hos­pi­tals that pro­vide pre­mium ser­vices, was left out of the new­est ver­sion. That was re­placed by a one-time sur­charge as­sess­ment on acute-care hos­pi­tals and health sys­tems that have more than $1 bil­lion in to­tal net as­sets and de­rive less than 50% of their rev­enues from pub­lic pay­ers.

The funds from hos­pi­tals’ sur­charge as­sess­ments, to­tal­ing $60 mil­lion, along with $165 mil­lion in one-time sur­charge as­sess­ments from pay­ers, will be dis­trib­uted among three funds. Sixty per­cent, or $135 mil­lion, will go to a trust fund for dis­tressed hos­pi­tals, while $60 mil­lion will be put to­ward preven­tion and well­ness ef­forts. The re­main­ing $30 mil­lion will go to a fund that pro­motes the use of health in­for­ma­tion tech­nol­ogy, ac­cord­ing to the bill.

Those are worth­while tar­gets for im­prove­ment, said Tim Gens, the state hospi­tal as­so­ci­a­tion’s ex­ec­u­tive vice pres­i­dent, but he ar­gued that adding an­other cost burden onto cer­tain hos­pi­tals is the wrong way to gen­er­ate needed funds.

“At a time when the gov­ern­ment is look­ing to lower costs, to ac­tu­ally im­pose ad­di­tional costs on providers is some­thing that we don’t think is sound pub­lic pol­icy, par­tic­u­larly at a time of chronic un­der­pay­ment for ser­vices,” Gens said.

Mass. Gov. De­val Patrick says the leg­is­la­tion will show the na­tion how to con­tain health­care spend­ing.

ERIK JA­COBS/THE NEW YORK TIMES/RE­DUX

Gov. De­val Patrick, cen­ter right, shakes hands with Jack Con­nors, re­cently re­tired board chair­man of Part­ners Health­Care, which may feel the ef­fects of the sur­charge as­sess­ment.

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