INSIDE THE ISSUE

> Addressing Prior Authorizations
> PGSP is 3.6% Again
> Topsy-Turvey Federal Policy
> Vaccine Mandates
> Northeast Mass. at Capacity “High Risk”
> AMA’s Telehealth Issue Brief
> Transition

MONDAY REPORT

Governor Announces Prior Auth, Affordability Initiatives

Last Wednesday, Governor Maura Healey announced two new steps that the commonwealth is taking to make healthcare easier to obtain and more affordable. First, the Division of Insurance (DOI) will issue updated regulations to streamline prior authorization practices for fully insured commercial insurers. And second, the governor announced the creation of the “Health Care Affordability Working Group” charged with advancing proposals to reduce costs across the system.

DOI will soon release draft regulations to eliminate prior authorization requirements for many services, including emergency and urgent care, primary care, chronic care, occupational and physical therapy, substance use disorder treatment, post-acute care services provided on weekends and holidays, and certain prescription drugs. The regulations are based on this examination that DOI conducted into insurers’ prior authorization practices in 2023 and 2024. The findings highlighted what most providers already assumed: there is significant variation in prior auth requirements among carriers, the number of services requiring authorizations increased between 2023 an 2024, and the approval rates for many services exceeded 90%. The report also showed that the largest number of requests were for radiology and that fewer than 2% were for inpatient admissions.

Under the governor’s proposal, patients that switch insurance will be able to carry over their authorizations from one insurer to the other. The new ruling will require insurer responses to urgent prior authorization requests within 24 hours, and will require the plans to publicly post all services, supplies, and medications that require prior authorization in an effort to enhance transparency for consumers and providers.

Streamlining the prior authorization process has been a longtime advocacy priority for MHA, as well as for its partners in the clinician and patient advocate spaces. It is also important to note that DOI only has jurisdiction over fully funded commercial plans. Self-funded plans (which comprise more than half of the employer based insurance market) do not have to adhere to these new requirements, nor do plans offered through Medicare Advantage or Medicaid.

The new Health Care Affordability Working Group that Healey announced along with the prior authorization directive is charged with advancing proposals to reduce healthcare costs across the system. It will be co-chaired by Kate Walsh, the former Health and Human Services Secretary and former CEO of Boston Medical Center; and by Lisa Murray, Massachusetts State President at Citizens. MHA President & CEO Steve Walsh will be a member of the working group. The complete list of members is here.

The governor said she wants the working group to come up with initial proposals by June and stressed that she is not looking for another “blue ribbon report,” but rather concrete suggestions for changes.

“Our hospitals and health systems applaud the Healey-Driscoll administration for this important day of action – all centered around supporting patients, businesses, and affordable care,” MHA said in a statement it released to the media. “These new prior authorization reforms are a tremendous step toward breaking down roadblocks that are proven to drive patient care delays, drive healthcare workers out of the field, and drive up costs for everyone. DOI Commissioner Caljouw and his team should be commended for their months of thoughtful listening and resolve to remove harmful and unnecessary complexity from everyday care. For too long, stasis and division have stood in the way of what patients, caregivers, and employers truly need. We are honored to be a part of the governor’s new workgroup to make meaningful progress on affordability and access using our commonwealth’s greatest strengths: innovation and partnership.”

Growth Rate Once Again Set at 3.6%

Secretary of Administration and Finance Matthew Gorzkowicz, Senate Ways and Means Chair Michael Rodrigues (D-Westport), and House Ways and Means Chair Aaron Michlewitz (D-Boston) last Wednesday set the state’s potential gross state product (PGSP) growth rate for calendar year 2026 at 3.6%. That metric is of great importance to the healthcare community since the Health Policy Commission uses the PGSP to determine the cost growth benchmark – a threshold that becomes central to local health policy conversations each year.

The PGSP factor is intended to represent the state’s expected economic growth. For 14 years, ever since the benchmark process was created in 2012, the PGSP always has been set at 3.6% despite economic changes over the years. The HPC is expected to formally set the healthcare cost growth benchmark by April and has historically aligned with PGSP.

At the end of last year, MHA wrote to the three finance leaders that set the PGSP, acknowledging that the process they inherited had become flawed over the years and asking asking them to consider adopting a more accurate forecasting tool. MHA noted that actual growth in the gross state product typically exceeds the PGSP amount that is determined each year. According to actual economic activity, Massachusetts GDP growth has averaged 5.2% for the past 10 years and in seven of those years, the actual state GDP growth has exceeded the PGSP amount – and therefore also the healthcare cost benchmark. Because the PGSP factor has not been representative of the state’s economic growth, MHA argues it is no longer the most appropriate benchmark for healthcare cost growth as the 2012 healthcare reform law intended.

Legislation is now pending in the legislature’s Joint Committee on Revenue to modify the PGSP process using an economic data driven methodology. As proposed in H.3196/S.2047, An Act to Reform the Healthcare Cost Benchmark, a historical growth rate in gross state product would be calculated using the most recent 10-year period and would serve as the default healthcare cost benchmark. Like today, the HPC would still have the ability to recommend a benchmark that is different. However, the benchmark would be tied initially to state economic activity as Chapter 224 intended.

Also last week, Gorkowicz, Rodrigues, and Michlewitz estimated that Massachusetts will collect $44.9 billion in tax revenue in FY2027 – a 2.9% increase over this year. The revenue estimate is used by budget writers when drafting the upcoming state budget proposal. Governor Healey is expected to release her budget proposal next week.

The Trump Administration’s Ever-Changing Health Policies

The Trump administration roiled the healthcare community with two recent policy changes – but in both instances has retreated in the face of strong opposition.

One reversal involves the 340B Rebate Model Pilot Program, which the Health Resources and Services Administration (HRSA) announced in July 2025, with an implementation date scheduled for January 1, 2026. The pilot program would have removed upfront drug discounts to hospitals in favor of the facilities buying the drugs at cost and then having to file for a rebate. It was immediately challenged in court. In December, a U.S. District Court granted a preliminary injunction blocking implementation of the pilot program. The federal government immediately filed an appeal seeking a stay of the injunction pending appeal. This month, a U.S. Circuit Court of Appeals denied that motion for a stay. Last Friday, the Trump administration, rather than further contesting the issue, filed a “Consent Motion to Voluntarily Dismiss Appeal,” saying that is has consulted with counsel for the plaintiffs who agree to the government dropping the appeal. The American Hospital Association was the lead plaintiff in the 340B case; MHA, along with other hospital associations, filed an amicus brief.

The second major turnaround involves the $2 billion that U.S. Health and Human Services cut from the Substance Abuse and Mental Health Services Administration (SAMHSA) last Tuesday. About 2,000 grantees received letters telling them that funding for their mental health and substance use disorder (SUD) programs was ending, sending the grant recipients reeling. The next day, Wednesday, January 14, the cuts were rescinded without comment.

Last week, the president unveiled what the White House is calling “The Great Healthcare Plan” aimed at making care more affordable. The plan does not include an extension of enhanced premium tax credits, choosing instead to send payments directly to households to cover health costs. But no details were released about the amount of payments, eligibility, or how the money could be spent. The plan also calls for codifying the administration’s “most-favored-nation” directive that sets the prices of new drugs introduced into the U.S. market at no greater than those of comparable countries. The White House says the plan will “end the kickbacks paid by pharmacy benefit managers (PBMs) to the large brokerage middlemen that deceptively raise the cost of health insurance.”

Supreme Court Turns Down Case on Hospital Employee Vaccine Mandates

On January 12, the Supreme Court announced that it had declined to hear Bridges et al. v. The Methodist Hospital et al., a case challenging a hospital’s 2021 COVID-19 vaccine mandate for employees. By declining to hear the case, the decisions by the lower courts, which ruled in favor of the hospital, are left in place. The case from 2021 was one of the first in the nation that challenged vaccine mandates.

Eastern Massachusetts Regions Facing Severe Capacity Strains

Last week, the state placed Health & Medical Coordinating Coalition Regions 3, 4, and 5 into Tier 3, meaning that hospitals serving communities in those regions are at “High Risk” of experiencing capacity constraints. Region 2 (Central Mass.) is escalated to Tier 2 (“Moderate Risk”), while Region 1 remains in Tier 1 (“Low Risk”).

Region 3 covers the northeast part of the state, Region 4 (and its sub-regions) covers Metro Boston out to Hudson and Stow to the west, and Region 5 consists of Southeastern Massachusetts, the Cape and Islands.

The spike in flu cases, in combination with other factors usually seen this time of year, is putting added strain on hospitals across the state. Regions 4, and 5 had previously been escalated to Tier 2 in December.

AMA Tells Congress: Extend Telehealth Flexibility

The agreement late last year that kept the federal government running also extended telehealth flexibilities – but only through January 30. As that deadline approaches, provider groups are once again pressing Congress to enact a permanent extension of the telehealth flexibilities that were created during the pandemic and that have become a vital and regular part of care delivery.

The American Medical Association released this 13-page issue brief earlier in January describing the current use and importance of telehealth. The Massachusetts Telehealth Coalition, convened by MHA and comprised of more than 50 organizations, has also been advocating for a long-term or permanent extension of the telehealth flexibilities – as have provider groups and healthcare interests around the country. The AMA also called for extension of the acute hospital care at home waiver that also expires on January 30.

Transition

Governor Healey has appointed Eric Goralnick, M.D., as secretary of the Massachusetts Executive Office of Veterans Services, effective in February. His secretariat oversees the Massachusetts Veterans’ Homes, while advancing behavioral health and suicide prevention initiatives, and supporting veterans transitioning from military to civilian life, among other things. Goralnick is an emergency medicine physician and U.S. Navy veteran, who has served in various leadership roles within Brigham and Women’s Hospital and Mass General Brigham. He is a graduate of the United States Naval Academy.

John LoDico, Editor