INSIDE THE ISSUE

> House Provides Safety Net Relief
> Addressing Disparities
> MHA Objects to 340B Carve Out
> Baystate Acquiring Mercy
> An Administrative Nightmare
> Transition

MONDAY REPORT

Massachusetts House Steps Up to Protect Safety Net

The Massachusetts House last Wednesday passed a $63.4 billion Fiscal Year 2027 state budget. Action now moves to the State Senate where the Senate’s Ways & Means Committee is expected to release its budget proposal as soon as tomorrow.

The House budget included an MHA-backed amendment from Rep. John Lawn (D-Watertown) that directs $37.5 million from the Commonwealth Federal Matching and Debt Reduction Fund to the Health Safety Net Trust Fund, , which funds care that low-income uninsured and underinsured people receive at hospitals and community health centers. A further clarifying amendment paved the way for a federal match of that funding, meaning that the House provided a total of $75 million in additional FY2027 relief to the Health Safety Net.

Separately, as part of the November 2025 supplemental budget, the state had already budgeted an additional $50 million in state funding plus $50 million in federal revenue ($100 million total) to support the Health Safety Net in FY2026 and FY2027. If the additional funding now adopted by the House budget is passed by the Senate and ultimately signed into law, $175 million in total funding relief will be available for the Health Safety Net in FY2027.

“We are incredibly grateful for the tremendous support the House has devoted to the Health Safety Net as part of its budget proposal,” said MHA President & CEO Steve Walsh. “This is more than just an investment in a program that has become increasingly fragile over the years; it is a critical protection for low-income patients and safety net hospitals as coverage losses begin to multiply and financial uncertainty continues to define the local healthcare landscape.”

According to MHA’s estimates, the Health Safety Net Trust Fund is on track to experience a $300 million shortfall in FY26 prior to new relief funds the legislature provided. In FY2027, most of the coverage impacts that will affect the Health Safety Net are tied to the 36,000 individuals who lost ConnectorCare Type 1 coverage as of January 1, 2026 – all of whom earn less than the poverty level and therefore are eligible for the Health Safety Net. The situation worsens in FY2028. With as many as 300,000 people in Massachusetts expected to eventually lose coverage as a result of the One Big Beautiful Bill, safety net shortfalls could reach as much as $900 million in subsequent years, pending relief or changes to the program.

Fighting Disparities: Mass. Better Than Most but More Work Needed

The Commonwealth Fund has released a report on addressing health disparities – that is, the differences in access to care, quality of care, and health outcomes between racial and ethnic groups – and found that Massachusetts scores better than most of the nation. But, the report concludes, that even in high-scoring states, healthcare continues to be unequally distributed, “with racial and ethnic disparities in insurance coverage and access to high-quality care contributing to shorter, sicker lives for millions of Americans.”

According to the report, “Connecticut, Maryland, Massachusetts, New York, and Rhode Island stand out for their comparatively high performance across racial/ethnic groups. Still, even in these states there are enduring disparities in access, quality, and outcomes. Health systems in Arkansas, Mississippi, Oklahoma, and West Virginia perform particularly poorly across all racial/ethnic groups for which we were able to calculate overall performance scores.”

In Massachusetts, White people experienced the best healthcare outcomes, access, and quality, scoring in the 99th percentile among all population groups nationally. Hispanic people in Massachusetts scored only in the 76th percentile, but that was the best in the nation. Black people in Massachusetts experienced the worst healthcare outcomes, access, and quality in the state, scoring in the 58th percentile, which while relatively better than most of the U.S. showed the persistent inequalities in care that exist throughout the U.S.

Part of Massachusetts’ leadership in addressing care disparities can be attributed to local hospitals’ extensive efforts to improve patient health outcomes through the Health Quality and Equity Incentive Program (HQEIP), a component of the state’s 1115 Medicaid Waiver. The HQEIP is the first program of its kind, in which acute care hospitals earn funding by meeting specific performance targets for reducing disparities in care, including standardizing data collection, expanding language access and disability-competent care, and implementing performance improvement projects aimed at addressing gaps in behavioral and maternal health.

As a result of this statewide commitment, Massachusetts is now the first state in which every hospital has earned the Joint Commission’s Excellent Health Outcomes for All certification – an advanced program recognizing their rigorous commitment to improving care access and closing longstanding disparities across patient populations.

Now entering the HQEIP’s fourth year, Massachusetts hospitals have committed to achieving 204 health equity goals by 2027.

MHA Objects to MassHealth 340B Carve-out Proposal

Debate begins this week on the Massachusetts House Ways & Means proposed FY2027 state budget – a $63.3 Last Friday, the Division of Medical Assistance (the state MassHealth agency) held a public hearing regarding proposed changes to pharmacy benefits in the MassHealth program. Hospitals and other providers have raised significant concerns around the agency’s proposal to end MassHealth pharmacy coverage of drugs acquired through the 340B Drug Pricing Program billed through pharmacy point-of-sales. Adoption of the proposed regulations would harm 340B hospitals, as they will cause MassHealth to reimburse these hospitals less than the cost of acquiring the prescriptions drugs they dispense to patients in most cases.

MassHealth has reported in separate provider communications that the proposed change applies only to MassHealth fee-for-service members. But despite those assurances, the proposed regulation does not reference this new policy being limited to a specific subset of the MassHealth population and MHA has raised concerns that a wider-carve out could be pursued in the future, resulting in devastating financial effects to 340B providers.

The 340B Drug Pricing Program is a vital element of the commonwealth’s healthcare safety net, enabling hospitals and community health centers to manage rising prescription drug costs while reinvesting savings directly into patient care. These savings help offset the high cost of pharmaceuticals, sustain and expand essential health services, support workforce investments, and fund a wide range of community benefit programs. Importantly, 340B savings are also used to help low-income patients access needed medications regardless of their ability to pay, including through free or discounted medications for uninsured and underinsured individuals.

In testimony, MHA raised the issue that even if the policy is limited to fee-for-service, many 340B hospitals will be financially worse off given that MassHealth will, in most instances, reimburse those hospitals less than the cost of acquiring the prescriptions drugs that they dispense to patients. Increased administrative burden was also cited as a concern, given providers will be required to manage different pharmacy inventories for the MassHealth program depending on fee-for-service and managed care enrollment. MassHealth has stated its intent to implement this policy on July 1, which MHA noted will raise implementation challenges and appears to violate state requirements that hospitals be provided with 180-days’ notice when 340B access is limited. In its public notice, MassHealth states the carve-out proposal “is estimated to result in net savings of $8 million annually, after rebates and federal share.” In response, MHA requested the agency conduct a more robust fiscal impact that includes engagement with 340B entities.

“MHA is deeply concerned that the proposed regulations would impose substantial financial and operational burdens on already strained Massachusetts hospitals, diverting critical resources away from essential services and patient care,” said MHA’s Dan McHale, senior vice president, healthcare finance & policy. “The proposed regulations are also drafted in a manner that permits a wider carve-out than the intended proposal that could be severely detrimental to 340B eligible hospitals. For these reasons, MHA respectfully opposes the proposed changes to exclude 340B drugs from being covered by the MassHealth agency.”

Baystate Health and Mercy Medical Center Plan Merger

Baystate Health and Trinity Health Of New England have signed an agreement to transfer the 182-bed Mercy Medical Center in Springfield and its medical groups to Baystate, pending regulatory approval.

Trinity will continue to own and operate Brightside for Families and Children and will continue to own and provide continuing care services in Western Massachusetts, including Mercy LIFE, Mary’s Meadow At Providence Place, Beaven Kelly Home, and Saint Luke’s Home. The system also owns four hospitals in Connecticut.

According to a media release, Peter Banko, the president & CEO of Baystate Health, said, “Today, access forces too many patients to leave the region to seek care, and we need to ensure that care is compassionate, high quality, affordable, and local. We have been and will continue to be a pillar of our community – rooted here, serving here, and helping generations thrive here.”

The release goes on to note that “Like many other healthcare providers, Mercy has faced significant challenges and financial pressures that threatened its long-term viability. Despite substantial efforts to improve its financial position, sustainability remained at risk due to inadequate reimbursement for care, industry-wide shifts such as declining payment rates, changing consumer preferences toward outpatient services, and persistent staffing shortages. By transitioning to Baystate Health, both Mercy and Baystate will be better positioned to meet the continued healthcare needs of the region.”

An Administrative Mess: 11 Days in the Life of a Case Manager

As Massachusetts focuses intently on how to make healthcare more efficient and more affordable, proposals for reform range from exploring ways to deliver care in less expensive settings to investing in primary care to keep people healthier so they don’t require more expensive treatments further down the road.

Another strategy is to cut through the abundant red tape, paperwork, and authorization processes that cause friction between healthcare providers and health insurance companies – and which ultimately are detrimental to patient care.

One recent example of the administrative runaround that occurs nearly every day at Massachusetts hospitals took place over the course of 11 days between a hospital, a post-acute provider, and a large national health insurance company. It involved a missed deadline for making a critical phone call, providers and administrators scrolling through telephone prompts to find the right human to talk to, clinicians forced to learn the intricacies of an online insurer portal and, ultimately, a patient who underwent back surgery was forced to seek a lower level of care after spending 11 days stuck in an acute care hospital.

Post Surgery Rehab

Last week, Monday Report discussed the case with the hospital case manager who says that what her and her colleagues experienced over nearly two weeks is “an amplified example of what is really an everyday occurrence in terms of a really bad system that is not user friendly and doesn’t make sense.”

At issue was a patient recovering from spinal surgery to relieve pressure that causes severe discomfort and impairment from the buttocks down to the calves. The surgery at the hospital was successful, but the patient’s physicians determined that follow-up rehabilitation was required at an acute Inpatient Rehabilitation Facility (IRF). The IRF was contacted, had an open bed, and the call went out to the insurance company to get the authorization to transfer the patient.

That “prior authorization” was denied, which happens all too frequently.

A Missed Phone Call

The next step in an all-too-familiar process for hospitals is to hold a “peer-to-peer” review between the clinician treating the patient and a doctor at the insurance company, who may or may not be a specialist in the area being discussed. In this case, the post-acute facility (which sought the initial authorization from the insurer) was told the peer-to-peer call to address the denial would occur in a four-hour window.

The post-acute called the hospital and informed them of the window. The hospital tracked down the clinicians involved, pulling them away from their bedside duties. Time passed while the clinicians reviewed the paperwork before calling the insurer. Finally the call was made close to the deadline, at which time the call took an unexpected turn.

“The insurer started asking questions the practitioner didn’t have the answers for,” according to the case manager. “‘What’s your tax ID number? What’s the actual case number? What’s the patient’s insurance number?’” That peer-to-peer call ended before the details of the patient’s case could be discussed. When the hospital tried to call back the next day with all of the requested details, the insurer informed them: You missed the peer-to-peer four-hour call deadline, so now you have to file a formal appeal of the denial. That’s a more intensive process than a peer-to-peer discussion.

The Appeals Process

The hospital then began the appeal process, which entailed a new set of phone numbers, a new set of insurance personnel, recorded messages, phone prompts, waiting on hold, and frustration over the weekend. Days passed.

In the meantime, the patient’s condition had changed. The hospital’s physical therapy and occupational therapy teams did new assessments and determined the rehab care was now needed more than ever. The post-acute then submitted a new request to the insurance company, citing the new data. The insurer’s response was, essentially, “You can’t submit a new request because your appeal from the previous case is still open.”

[While this was occurring the patient did not receive the optimal level of care he required. Acute care hospitals have rehab personnel to assess patients to determine the level of care they need outside of the hospital; but the hospitals are only equipped to provide minimal post-acute rehab care. Also during this time, MHA got involved, attempting to link the hospital’s representatives with the local representatives of the national health plan to resolve the roadblock.]

MHA’s intervention helped when the national insurance company’s local representative directed the hospital to the company’s online portal, which, unfortunately, a nurse practitioner at the hospital had trouble accessing because she had not logged on to it before and she wasn’t authorized to use it. So an administrative assistant was tracked down, accessed the portal, and finally the proper appeal of the initial insurance denial was filed.

““The four-hour window is impractical,” the case manager said. “It’s not feasible for lots of people in our hospital – clinical staff at bedsides and others – to have access to the insurance portal and know how to use it. I’d write up a policy on how to use it for all to use, but it’s not that clear even to me.”

The insurer called back relatively quickly saying the denial was overturned and provided a reference number to allow the patient transfer to occur.

Problem Resolved … Or Was It?

At that point, it seemed as though success had been achieved after nearly a week of trying! The rehab hospital prepared for the transfer but noted that it needed a formal written authorization from the insurer (per the insurer’s own rules) so it could be certain it would be reimbursed for the care it provided. The rehab contacted the insurer, which informed it that it had no record of the denial being overturned, and that as far as it was concerned the appeal was still pending. Over the course of three more days, the part of the large insurer that issued the reference number of the appeal was unable to reconcile with the other divisions of the insurer that issues written notices of successful appeals.

So what happened? After 11 days of navigating one roadblock after another, the hospital chose to send the patient to a skilled nursing facility (SNF) instead. The patient was agreeable to this considering how long he had been stuck in the hospital. Unlike an IRF, a SNF has therapists on staff but not necessarily a physician overseeing the patient’s care. The IRF also provides more hours of more intensive care per day than a SNF. And, importantly – when it comes down to the friction between providers and insurers – SNF care is much less expensive than IRF care. The insurer approved the SNF transfer.

The Final Analysis

A patient in need of one level of care ultimately had to receive a less extensive level of care because it was all that the insurer would approve after nearly two weeks. The hospital finally was able to transfer the patient and open up the occupied bed, which likely allowed a patient backed up in the emergency department to be admitted. MHA’s regular surveys of hospitals finds there are as many as 2,000 such patients regularly “stuck” in hospitals each month.

The hospital lost money during the 10 or more days the patient was stuck in that bed; aside from minimal daily payments, hospitals receive reimbursement for the surgery and associated care provided, not for housing patients that no longer require care. MHA has found these situations cost hospitals – and the healthcare system – $400 million annually.

For the case manager at the center of it all – the phone call, the confusing updates, and the patient who had nowhere else to turn – the conclusion was clear: “It’s just a broken system.”

Transition

Governor Maura Healey, Attorney General Andrea Joy Campbell, and State Auditor Diana DiZoglio have chosen Marisol Garcia to be the Child Advocate for Massachusetts, effective June 1. She replaces Maria Mossaides, who is retiring. Garcia currently serves as deputy director at Health Law Advocates. The Massachusetts Office of the Child Advocate is an independent executive branch agency established in 2008 to ensure that children across Massachusetts – and particularly those who are most vulnerable and at risk – receive high-quality, timely, and appropriate services.

John LoDico, Editor