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Massachusetts HPC Health Care Cost Trends Hearing: Key Takeaways

The Massachusetts Health Policy Commission (“HPC”) held its annual Health Care Cost Trends Hearing on October 16-17, 2018.  The hearing covered a wide range of topics affecting the health care industry here in the Commonwealth and across the country.  Here are some key takeaways and a legislative outlook:

Affordability for consumers is a major concern. 

            Ray Campbell, Executive Director of the Center for Health Information and Analysis (“CHIA”) presented the “State Perspective on Health Care Cost Trends,” which included a report specifically focused on total health care expenditure (“THCE”) in Massachusetts.  Mr. Campbell noted the growing prevalence of high deductible health plans – more than one third of health plans being purchased in the large group market are high deductible, and these plans are even more common among small and mid-size employer group purchasers.  Dr. David Auerbach, the Director of Research and Cost Trends for HPC, later noted that the increase in high deductible plans in Massachusetts only seems to have lowered commercial spending growth in 2017 by 0.2%.  Massachusetts ranks 2nd in highest small employer premiums, and 10th  in large employer premiums, although Massachusetts Connector premiums rank among the lowest in state exchanges in 2018.  Dr. Auerbach noted nearly a third of the total income for lower-income, commercially insured residents is consumed by health care costs (premiums plus out of pocket spending).  As a result, low- and middle-income consumers are experiencing increased rates of outstanding medical debt.  

            As discussed below, policy makers hope that a focus on pricing transparency, along with increased efficiencies, will help alleviate the cost pressure felt by consumers. Throughout the hearing, health care experts and policy makers pointed to ideas for reducing costs to consumers, including alternative billing models, cost-compare websites for health plans, increased access to providers in school and community settings, early intervention and preventative care, surprise billing laws, and other cost-containment strategies. 

The opioid epidemic and access to behavioral health services continues to be a policy focus.

            In his opening remarks, Governor Charlie Baker cited the opioid epidemic and the need for access to behavioral health services as health policy focus areas, noting that although Massachusetts has seen a 30% decline in opioid prescriptions, fentanyl poses new and real challenges.  Governor Baker also mentioned the increased state budgeting for behavioral health and mental health services, which reached an all-time high in the 2019 budget.  Attorney General Maura Healey and others emphasized the importance of prevention in combatting the opioid crisis. Attorney General Healy and House Speaker Robert DeLeo also highlighted the need for early intervention through pediatric providers, including integrating mental health support services in schools and communities.      

            Integration of behavioral health and primary care services was a theme throughout the hearing.  A panel of experts from health systems, physician organizations and urgent care providers from across the state explained how integrating behavioral health into primary care allowed for better retention, decreased emergency department utilization for behavioral health, and better coordination between primary care and behavioral health providers.  The Commissioners expressed concerns about the shortage of inpatient psychiatric beds in the state and the potential impact of nurse staffing ratios on access to behavioral health services. Other speakers highlighted how increased consumer costs can be particularly burdensome for people in need of behavioral health services, and pointed to telemedicine and other new technologies as ways to increase access. 

Telemedicine and other technologies provide opportunities for cost savings.

            Providers, plans and employers all see telemedicine tools as a way to improve access to care at reduced burden on the overall system, as our colleague Ellen Janos has discussed.  When Commissioner Lord asked panelists for their most important cost-containment strategy, responses included telemedicine, telehealth, and telephonic care. In a later session, Dr. Gene E. Green, President and CEO of South Shore Health System, talked about how they are using mobile integrated health tools to notify school and fire and police department partners if a medical issue is an emergency, so they can direct it properly.  Although it seemed everyone agrees that more should be done to use and leverage telehealth tools, almost every provider on the panel admitted that the pace of technical updates and adoption is slow. 

            Policymakers believe technology can produce savings, and providers discussed other technologies they are using to improve care efficiencies.  EHR systems – if used correctly – can offer cost savings.  Dr. Timothy G. Ferris, Chairman and CEO of Massachusetts General Physicians Organization (“MGPO”), discussed how the MGPO is using EHRs to ensure that every patient gets a flu shot and other preventive care. The physician group is also working to use data analytics to inform their care, and Dr. Ferris stressed the importance of real time data that lets providers know if something is working. Physicians worry that EHR data entry can negatively impact the provider-patient relationship by introducing the computer to the encounter, and if an encounter is logged incorrectly, it jeopardizes payment for services.  Dr. Ferris acknowledged that technology can introduce problems, but oftentimes provides a solution.  He cited a virtual scribe program that MGPO is using as an example of technology solving a problem.

Government and private payers look toward transparency to reduce spending.

            Many panelists referred to the “black box” of health care pricing throughout the hearing, and the need for greater transparency to lower overall spending. Liora Stone, a small employer in Uxbridge, MA, pointed to HPC and CHIA reports that small businesses pay a higher percent of premium costs, but have lower negotiating power.  Part of this may stem from a lack of information – as a company with fewer than 100 employees, she does not receive cost trends insurance data, and she admitted it is hard to contain costs when you don’t know what is driving them.  Massachusetts is looking to increase health care cost transparency and Governor Baker reminded everyone of CHIA’s new MassCompareCare website, which provides consumers with cost comparisons, provider quality measures and health care educational materials.  He believes this tool will help make the Commonwealth a leader in transparency.

            It was clear from the hearing that health care policy leaders and academics are pushing for greater transparency as a tool to reduce health care spending, but the myriad reports and data sets discussed demonstrate that health care providers and payers are already supplying large amounts of data for reporting and analysis. One stated goal is to study which models work and which don’t, and to adjust accordingly.  But it is not clear that greater transparency will translate into cost savings.  Harvard Pilgrim Health Care’s CEO, Michael Carson, pointed out that even when products are offered side-by-side, people often choose the higher priced option because they want the broadest access to care. In response to Commissioner Mastrogiovanni’s comment that he believes employees do not have a way to properly compare plans, Mr. Carson pointed out that member education is key, and his plan has created a tool that suggests a specific plan based on a consumer’s personal needs.  It remains to be seen whether consumers will turn to these additional comparison tools and data resources to help manage their health care expenses.

Legislative Outlook

This year, both the House and Senate chambers of the Massachusetts legislature passed omnibus bills to address health care costs, though the branches were unable to reach consensus on the legislation before the close of formal sessions in July (see House and Senate summaries here). Speaker DeLeo made clear in comments to the HPC during the cost trends hearing that readdressing the legislation was a top priority for the House next session, which begins in January. It is likely that many of the issues raised during the hearings will be addressed in the upcoming legislation, in particular telemedicine, out-of-network billing, pharmacy pricing and proper funding mechanisms for community hospitals. It is also likely that the Baker Administration will attempt to curb MassHealth spending, which constitutes 40% of the annual state budget, through legislative fixes that require approval of the House and Senate branches.

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M. Daria Niewenhous

Member Emerita

Caitlin Beresin

Cassandra L. Paolillo is Of Counsel at Mintz whose practice involves advising health care clients on transactional and regulatory matters, including mergers and acquisitions, regulatory compliance, and general contracting. Cassie primarily works with providers and payors.