The Massachusetts legislature has sent to Governor Charlie Baker’s desk a measure that addresses price variation among hospitals and avoids a question that the SEIU union was working to place on the November statewide ballot. The consensus agreement struck by Governor Baker, House Speaker Robert DeLeo, and Senate President Stan Rosenberg was announced on Wednesday and fast-tracked through the legislature on Thursday.
MHA President & CEO Lynn Nicholas, FACHE, praised the three for their leadership in forging a consensus that avoided the potential of “imposing oversimplified laws on a very complex issue through the ballot process.” She noted the rapidly approved proposal was “certainly a superior approach to determining complex and critical public policy through a charged political campaign. This is especially true when just about all healthcare experts viewed SEIU’s proposals as both unwise and unworkable.”
The MHA Board of Trustees had earlier this year voted unanimously to oppose the ballot question, terming it a poorly thought-out attempt to redistribute money between Massachusetts hospitals.
The agreement, creates a “Special Commission to Review Variation in Prices Among Providers” to be co-chaired by the Chairs of the Joint Committee on Health Care Financing – Rep. Jeffrey Sanchez (D-Jamaica Plain) and Sen. James Welch (D-West Springfield). It will conduct an analysis of acceptable and unacceptable factors contributing to price variation in physician, hospital, diagnostic testing and ancillary services and file a report, and any proposals for needed legislation, by March 15, 2017.
The agreement adds $7.5 million a year on top of the new $250 million increased tax assessment on hospitals included in the FY2017 state budget. That funding combined with federal Medicaid matching revenue will be used for an additional $15 million in Medicaid payments to hospitals, as a class, in addition to the planned $250 million in annual MassHealth payments. Under the tax assessment methodology, approximately half of the state’s hospitals will be “net gainers” while half will be “net payers”. The increased hospital tax assessment will sunset on October 1, 2022.
In addition, the state will divert $5 million from the Center for Health Information and Analysis’ (CHIA) administrative budget in FY2017, and $10 million in the following four years ($45 million total), to a new “Community Hospital Reinvestment Trust Fund” which will distribute the funding to hospitals with relative prices below 120% of the statewide median price, based on a weighted formula. The CHIA budget is paid for by hospitals and health insurers.
MHA has had a price variation workgroup meeting over the past few months to reach a hospital community consensus on the issue.
Said MHA’s Nicholas, “The announced resolution offers an opportunity to conduct an evidence-based analysis of the price variation issue prior to deciding upon a course of action. Given the complexity of healthcare delivery, which is a fragile ecosystem, it is essential that any future actions are thoughtful and do not have unintended consequences.”