State finalizing regulations to contain high-cost health care

BOSTON – An organization representing health care plans was alone in responding publicly Wednesday to proposed regulations governing how a state agency deals with health care providers and payers who are deemed to have “excessive” annual cost increases.

Only the Massachusetts Association of Health Plans testified Wednesday at the public hearing held by the Health Policy Commission’s Cost Trends and Market Performance Committee, and the committee chair suggested the regulations could be finalized in two weeks.

A portion of the 2012 health cost containment law kicked in last year authorizing the commission to require performance improvement plans for payers and providers whose excessive cost growth is deemed to threaten the state’s overall benchmark.

“The performance improvement plans process is one of the key mechanisms in Chapter 224 by which the HPC can enforce the benchmark and ensure accountability to the commonwealth’s cost containment goals,” HPC Executive Director David Seltz said. He added, “We really think about the performance improvement plans as an opportunity for the HPC to work with payers and providers to address their cost growth and to pursue collaborative best strategies to address them, and really is an opportunity for the commission to help move our cost containment goals forward.”

The performance improvement plan (PIP) process begins when the Center for Health Information and Analysis provides the HPC with a confidential list, typically each fall, of entities that experienced excessive cost growth. The HPC board then can vote to require an entity on that list to submit a proposed PIP within 45 days. Implementation of the PIP begins immediately upon the board’s vote to approve the plan and a PIP can remain in effect for up to 18 months, according to the HPC.

Medical spending in Massachusetts for two straight years has exceeded the 3.6 percent benchmark established under the 2012 law intended to control costs.

Total health care spending in Massachusetts increased 4.1 percent in 2015 to $57.4 billion after climbing 4.2 percent in 2014, according to CHIA. There are no penalties associated with exceeding the benchmark. The HPC plans to vote March 29 on whether to set the growth benchmark at 3.1 percent, 3.6 percent or somewhere in between.

Working under interim guidance for about the last year, the HPC and its committees have been putting together permanent regulations governing the performance improvement plan process. Wednesday’s public hearing was the final step before the HPC board could be asked to approve the regulations.

Eric Linzer, executive vice president of the Massachusetts Association of Health Plans, was the only person to testify before committee chair Dr. David Cutler and committee member Rick Lord, president and CEO of the Associated Industries of Massachusetts.

Linzer said MAHP members recognize the importance of controlling health care costs and are doing everything within their power to make and keep care affordable, “but ultimately, premiums reflect the price of care.” He pointed to prescription drug prices and provider consolidation as significant factors in the state’s inability to stay within its benchmark.

MAHP also proposed additional requirements for when the HPC board determines whether to approve a PIP proposed by a payer or provider, and what it takes into account when determining whether the PIP was successful.

“We think that there should be some additional elements spelled out, specifically what changes an entity has seen in relation to things such as relative price, total medical expense, how funds are being distributed between and among different providers among an institution … and finally the entity’s cost structure in relation to its competitors,” Linzer said. “If you’re going to approve a PIP and determine it to be successful, there should be some element of looking at what that entity has done to really address some of its own cost structures.”

Linzer also urged the committee to keep in mind potential changes to the Affordable Care Act and “how that may affect different populations and enrollment aspects, how that may affect different elements throughout total health care expenditures” as it establishes which entities should be subject to the PIP process.

After Republican Congressional leaders released their proposed overhaul of the Affordable Care Act, Linzer last week said MAHP had not taken a firm pro or con position on the bill, but had concerns about its potential to disrupt access to care in Massachusetts and make it less likely that low-income people will remain insured by wiping out federal subsidies.

Linzer said the insurance mandate included in a 2006 state health care access law was an important component of that law and raised concerns about erasing the mandate included in the Affordable Care Act. He said a multi-year period is essential to make the transition from Obamacare to its successor law and called the need to control rising health care costs “more important than ever.”

[Michael P. Norton contributed to this report.]