Drugs, waste, disparities targeted at health costs hearing
State officials with roles overseeing and drafting rules for the Massachusetts healthcare market targeted Medicaid waste, disparities in contracts between insurers and providers, and the cost of pharmaceutical drugs at a hearing Tuesday on health care cost trends.
Senate President Stanley Rosenberg, whose branch last week passed legislation changing how narcotics would be prescribed, said he wanted the Health Policy Commission to keep the cost of prescription drugs in its sights.
"We don't want to kill the goose that lays the golden egg," Rosenberg said, noting the state's efforts to boost the biotech sector.
Referencing double-digit increases in drug expenses, Rosenberg said Washington and Oregon had teamed up to purchase drugs together, saving 40 percent.
Gov. Charlie Baker vetoed fiscal 2016 budget riders that would have investigated the possibility of Massachusetts joining a multistate bulk-purchasing program to reduce the cost of drugs, arguing in a veto message that the task forces are unnecessary to answer the questions and bulk-purchasing efforts are already underfoot.
"We are in discussions with him," Rosenberg told the News Service. The governor's budget proposal included language intended to advance bulk-purchasing of drugs and equipment in MassHealth, the state's massive insurance program for the low-income, elderly and disabled.
Rosenberg, Attorney General Maura Healey and State Auditor Suzanne Bump, all testified Tuesday, the second and final day of hearings looking at the health care market, which saw expenses grow 4.8 percent in 2014, outpacing the state's 3.6 percent benchmark.
Lahey Health President and CEO Howard Grant charged that health care customers in lower-income cities with relatively inexpensive but high-quality hospitals such as Lawrence, New Bedford and Lowell, subsidize the premiums of people in wealthier parts of the state that choose to use high-cost providers.
"A higher proportion of care in our state is delivered in the highest-cost settings for those who can afford it," Grant said in prepared written testimony. "Yet it is those who can least afford it who subsidize this practice."
Grant continued, "Disparities still exist and they are getting worse. As hospital beds continue to be filled in inappropriately high-cost settings, the transfer of wealth from employers and residents of our economically challenged communities to our wealthier communities continues to accelerate."
Bump noted her work investigating fraud and waste in MassHealth, the state's Medicaid program, including a report Monday that wheelchair-van provider Rite Way potentially fraudulently charged MassHealth $16 million for people who did not need or did not use wheelchairs.
"Inadequate controls is a recurrent finding in our MassHealth audits," Bump told the commission and the health care executives and lobbyists who filled a room at Suffolk University Law School. She said, "Inadequate controls mean we are spending money unnecessarily increasing the overall cost of the program."
According to Bump, the auditor's office contacted the attorney general's office about the situation in August, and the AG gave clearance to suspend MassHealth's payments to Rite Way.
Speaking on different issues, Healey noted that high health care costs serve as a barrier to access and highlighted disparities in the health care market, both in numbers covered and in deals between insurers and provider groups of varying sizes.
The Charlestown Democrat said while about 96 percent of the population statewide has health insurance coverage, in Everett and Lawrence less than 90 percent of people have coverage.
When she took office earlier this year the attorney general helped torpedo a planned expansion by the state's biggest health care provider Partners Healthcare, and on Tuesday she suggested that more efficient providers should potentially be given greater leeway to expand and consolidate.
"Shouldn't more efficient providers be given more room to grow than less efficient providers?" Healey suggested to the commission, which has the regulatory power to review and potentially refer to the attorney general proposed expansions.
Describing "market dysfunction" that she said is hurting families and businesses and suggesting "stronger interventions" may be needed to address disparities, Healey expressed an openness towards working with health care industry stakeholders and lawmakers on changes.
House Majority Leader Ron Mariano and Healey have proposed legislation (H 3678) that would increase the legal weight of the commission's reports. Healey told the News Service her office has authority to intercede on proposed mergers even when not accompanied by federal anti-trust investigators - as was the case with the scuttled Partners deal.
"We have an anti-trust division and a team," Healey said. "We have the opportunity to review and take action with respect to proposed mergers and consolidations."
Healey's office looked at one major insurance company's risk-based contracts with a variety of providers circa 2013, and extrapolated out that for a population of 35,000, Partners would be paid $220 million while smaller providers would all make less. Riverbend Medical Group, a Pioneer Valley provider that lists six locations, would make $59 million less, according to a presentation by Courtney Aladro, an assistant attorney general.
Healey's office also highlighted the role prescription drug expenses play in driving cost in the market. The office forecasts a 12.5 percent increase in drug expenses against a 3.6 percent benchmark increase in total medical expenses.
To meet benchmark - with total health expenses rising from $18.9 billion in 2014 to $19.6 billion in 2015 - all the other non-pharmaceutical expenses would be limited to about 1.8 percent, according to the attorney general's office.
Stuart Altman, an economist and the chairman of the commission, said expensive and effective drugs can be beneficial, highlighting Sovaldi, an expensive and effective drug used to treat hepatitis. Altman said that "over time" the use of Sovaldi "is going to reduce the need for services."
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