Last week, Massachusetts Governor Maura Healey signed a new law called H.4654, or the Act Enhancing the Market Review Process. This law aims to close gaps that contributed to the collapse of the Steward Health Care System. It also gives more power to the Massachusetts Health Policy Commission (HPC) since it was established in 2012.
Along with another law, S.2520, on pharmaceutical access and costs, H.4654 introduces several important changes:
- It updates how HPC commissioners are qualified and appointed.
- It increases HPC’s oversight of private equity health investors and other organizations.
- HPC can now summon manufacturers to hearings about cost trends and report on drug prices.
- It broadens the scope of material change notices and cost market impact reviews.
- A new Office of Health Resource Planning will be created within the HPC.
The new legislation particularly focuses on private equity and real estate investors who have shifted away from the hospital sector. While the hope is that this will prevent another Steward-like disaster, it’s unclear if these changes will truly stabilize the healthcare system or just add more regulations. This is certainly something to keep an eye on.
What is the Health Policy Commission?
The HPC has two main roles: monitoring the costs of healthcare in Massachusetts and overseeing major mergers or acquisitions involving healthcare providers. To track costs, HPC has set a benchmark for healthcare cost growth, currently at 3.6%. They publish reports and hold hearings with sworn testimony from healthcare providers and payers. If a provider exceeds the benchmark, HPC has the authority to require a Performance Improvement Plan.
For market oversight, healthcare providers must file a material change notice (MCN) with HPC before making any significant changes. HPC reviews the MCN and may choose to conduct a cost market impact review (CMIR) to understand how the changes will affect costs, access, and quality of care. Since 2013, over 180 MCNs have been filed, but only six CMIRs have been completed.
Updates to HPC Commissioners
H.4654 makes some changes to how HPC commissioners are appointed. The Insurance Commissioner will join the commission, while the auditor will no longer have an appointee. The Governor will now appoint six members, and appointees must include candidates nominated by the Senate President and House Speaker. While there will be more oversight, the law also introduces stipends for commission members but keeps the current conflict of interest restrictions intact.
Cost Trends Monitoring
The law significantly broadens the scope of annual hearings about cost trends. Now, testimonies will not only come from providers and payers but also from pharmaceutical manufacturers and private equity investors. This enhanced focus aims to gather more comprehensive insights into the healthcare landscape.
Expansion of MCN and CMIR Authority
The bill will now require MCNs for a broader range of significant provider changes, like expanding operational capacity. Changes involving substantial equity investments and property sales will also come under this process. The HPC will now have enhanced authority to access detailed information from investors and providers for up to five years after a material change occurs.
Health Planning
Massachusetts has faced ongoing healthcare crises, underscoring the need for a comprehensive health plan. This new law shifts responsibilities for healthcare planning from the Executive Office of Health and Human Services to HPC, where the new Office of Health Resource Planning will develop a state health plan. This plan aims to tackle anticipated healthcare needs and resources over the next five years, ensuring a more structured approach to health services.
Our Final Thoughts
This legislation has the potential to prevent future healthcare crises, but the majority of healthcare organizations in Massachusetts are nonprofits, differing significantly from Steward’s model. The challenge will be to avoid over-regulating existing providers while still enhancing oversight. We hope for a balance that encourages both innovation and access to quality healthcare, which is crucial for the well-being of our communities.
As changes unfold, we’ll be paying close attention to see how this new law affects the healthcare landscape in Massachusetts.
