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MONDAY REPORT

Bad News Mounts as System Seeks Answer to Affordability Questions

Several of the recent hospital and health system financial reports from the first half of the current Fiscal Year 2026 have revealed a series of large, multi-million-dollar losses.

Those financial results come as no surprise to anyone who tracks the Massachusetts healthcare system; regular reporting from the Center for Health Information & Analysis (CHIA) shows that on average about two-thirds of Massachusetts hospital systems have been consistently operating in the red. What is noteworthy about the current reporting, however, is that the bad news comes at the very time that various taskforces and study groups in the state are working through solutions for making the healthcare system more affordable. The financial trends are a reminder that the stability of the state’s largest sector and component of the healthcare dollar – hospitals – is an essential part of the affordability equation.

“Hospitals are fundamentally ‘cost absorbers’ for the healthcare system, meaning that as outside expenses have spiked dramatically in recent years – whether it be supplies, utilities, labor, or treating sicker patients – they fuel the types of financial trends we have been seeing in recent months,” said Dan McHale, MHA’s senior vice president of healthcare finance and policy. “That is to say nothing of the massive coverage impacts and other Medicaid financing challenges coming our way, which could saddle hospitals with hundreds of millions in new losses.”

Because the cost question is increasingly beyond the control of hospitals, some have expressed concern about ideas that do not center around value nor the protection of critical patient services. Such proposals, should they come to fruition, may provide immediate, blunt savings but those results would pale in comparison to their long-term harm on patient care. Real affordability, they argue, will come by doing the more challenging work of centering a system around value-based care that keeps the focus on patients.

MHA and its members sit on many of the commissions now discussing the problem, and hospitals have been out front on the need to reimagine the healthcare system to make it more accessible, affordable and also innovative at a system level. But they’ve stressed that the sector must, as part of that process, address the deep-rooted financial challenges and factors fueling its losses.

“Point to any Massachusetts hospital, and you will find two commonalities: they are doing everything in their power to maintain accessible patient care, and they are operating within an exceedingly challenging – and increasingly daunting – financial environment,” McHale said. “For hospitals, stabilizing doesn’t just mean the ability to innovate or keep care services open. It must be a foundational piece of a more affordable, sustainable future for Massachusetts providers and patients.”

Hospitals Gearing Up for World Cup, Foreign Travelers

While the soccer-loving world is focused on predicting who will eventually take home the World Cup – as of this week Spain and France are the consensus favorites – a large network of various groups in Massachusetts, including hospitals and health systems, have ramped up preparations for the matches that will occur in Massachusetts beginning this week.

Recently, the Department of Public Health (DPH) issued an important reminder to providers about the need to report certain infectious conditions. While such reporting on residents’ conditions is done regularly, DPH does not routinely receive electronic laboratory reports on non-residents receiving healthcare services in the state. With the influx of foreign travelers coming to Massachusetts for the soccer matches, DPH stressed the importance of notifying it of all infectious disease cases regardless of the patient’s residency.

DPH also directed providers to pay special attention during the World Cup to a subset of reportable infectious conditions, including plague, botulism, anthrax, mpox, etc. When individuals present with potentially infectious symptoms, providers should inquire about local exposures and risk factors, and obtain a detailed travel and exposure history, according to guidance from DPH and the Boston Public Health Commission. DPH also issued new guidance on how to keep track of patients harmed during a mass casualty incident in the commonwealth, and has announced the availability of insect repellent wipes, hand sanitizer, water, and sunscreen for communities hosting World Cup events.

The massive preparations for the World Cup, plus other large events this summer, involve more than healthcare entities. Officials have also banned drone flights over certain areas, and will impose restriction on certain oversized loads on various highways during specific times, among other mass event preparations.

AHA Releases Strategies on National Affordability Solutions

As Governor Maura Healey’s Health Care Affordability Working Group continues to convene and develop state-level recommendations, the focus on healthcare costs continues to grow both locally and on Capitol Hill. Last week saw another affordability report released by the Blue Cross Blue Shield Foundation, as well as a new position paper from the American Hospital Association (AHA).

AHA’s nationally focused blueprint – Making Health Care More Affordable: A Blueprint to Lower Costs, Improve Access and Enhance Quality – notes that “efforts to enhance affordability for one segment, such as individuals, often result in the redistribution of costs to other stakeholders, such as employers or the government. Realizing genuine affordability gains at a systemic level will necessitate collaborative efforts among all stakeholders.”

Among the AHA’s recommendations for reducing costs are:

• Improving people’s health through better access to primary care and prevention to mitigate the costs associated with high-cost interventions further down the road;
• Reducing administrative waste by, among things, having insurers rather than providers collect patient cost sharing; and
• Lowering drug and device costs by, among other actions, curtailing direct-to-consumer advertising of drugs.

Medicaid Work Requirements Interim Rule

The Centers for Medicare & Medicaid Services (CMS) has released the interim rule to implement the work requirements for Medicaid that were contained in the One Big Beautiful Bill Act.

The comment period for the interim rule runs through July 31, 2026. States are required to implement the new work requirements no later than January 1, 2027.

The rule details which Medicaid applicants and beneficiaries must demonstrate “community engagement” (work) requirements, what type of work qualifies, and steps states must take if they determine individuals are noncompliant, among many other provisions.

The Medicaid work requirement poses a high hurdle for states that must build and maintain complex verification systems. Eligibility for Medicaid must be evaluated every six months (over the current one-year re-evaluation), adding another layer of complexity.

Transition

Dr. Ryan Schwarz has been named the Massachusetts Medicaid Director and Assistant Secretary for MassHealth, effective today, June 8. Schwarz has served as chief of the Office of Accountable Care and Behavioral Health at MassHealth since April 2024. As a part of the state’s announcement last week, MHA cited his “deep understanding of the healthcare sector,” his prominent leadership during the COVID-19 pandemic, and the strong relationship he has built with the provider community over the years. Schwarz is also a practicing internal medicine and pediatrics physician at a community health center in Chelsea. He replaces former Medicaid Director Mike Levine, who announced in April that he was leaving the post to lead the Department of Homelessness and Supportive Housing in San Francisco. Schwarz completed his M.D. and MBA at Yale, and his clinical training at Harvard Medical School. 

John LoDico, Editor