State mulling new benchmarks after healthcare costs rise
WBJ File
The Massachusetts Health Policy Commission may set a new healthcare spending benchmark this year.
After two years in which healthcare spending has grown more rapidly than the Massachusetts economy, state officials will now decide whether to keep or raise a lower growth target for next year.
A healthcare cost containment law signed in 2012 created a benchmark against which total medical spending is measured. The Health Policy Commission, a watchdog agency also established as part of the law, has new authority this year in setting that benchmark.
The law, known as Chapter 224, required the benchmark to be set for the first five years at a level equal to the potential gross state product growth, a number determined each January by state budget writers.
Administration and Finance Secretary Kristen Lepore and Ways and Means Committee Chairs Rep. Brian Dempsey and Sen. Karen Spilka announced Thursday they had agreed to a potential gross state product rate of 3.6 percent for the calendar year 2018, the same rate used for the past three years.
Chapter 224 called for the health care spending benchmark to be half a percentage point lower than the potential gross state product for the calendar years 2018 to 2022 and gave the Health Policy Commission a limited power to modify it.
For next year, the commission has the opportunity to set the benchmark at 3.1 percent, bring it back up to the 3.6 percent used in previous years, or set it anywhere between those two figures. The decision will be made over the course of the next several months, commission officials said this week.
"The benchmark is the organizing principle of Chapter 224, and this is an important responsibility for the board around this potential decision," HPC executive director David Seltz told the commission's board Wednesday. "And this structure, while complicated, was highly negotiated as part of Chapter 224, and there was an interest by the Legislature at that time to have the default be to lower the health care cost growth benchmark."
Medical expenditure growth has outpaced the 3.6 percent benchmark in two of the last three years. After rising by 2.3 percent in 2013, health spending climbed 4.2 percent in 2014 and 4.1 percent in 2015, according to the Center for Health Care Information and Analysis.
When debating the bills that eventually became the cost containment law, lawmakers considered including penalties or ramifications for providers who charge demonstrably higher prices, but ultimately laid those aside in favor of setting an overall cost control benchmark. There are no ramifications for exceeding the benchmark, other than publicly demonstrating that existing health care policies are insufficient to keep cost growth in line with economic growth.
After Massachusetts in 2006 passed a landmark law under Gov. Mitt Romney expanding access to health coverage, the 2012 law aimed to limit the growth in medical costs to the level of state economic growth.
In 2012, legislative leaders suggested the health care system overhaul, which encouraged alternative payment and care delivery models that focused on preventative care and patient health, could trim $200 billion from health care expenses over the next 15 years.
Total health care spending in Massachusetts increased 4.1 percent in 2015 to $57.4 billion, growing at a rate more rapid than the state's official benchmark of 3.6 percent, according to the Center for Health Information and Analysis.
If the Health Policy Commission does decide to raise the benchmark from 3.1 percent, it is required to first hold a public hearing and submit notice to the Legislature's Joint Committee on Health Care Financing.
The commission must set the benchmark for next year by April 15, 2017, but lawmakers have the option to override the HPC and establish the benchmark legislatively. Any legislation would come in May, based on the timeline in the statute, after the Health Care Financing Committee received notice from the HPC of its intent to modify and the committee held its own hearing.
Though the commission has not yet decided whether it will keep or change the 3.1 percent benchmark, its board this week elected to move forward with the hearing process which Seltz said reflected an interest in having "a public and transparent process that allowed for input, data and other perspectives" and providing the board all necessary information.
A hearing has not been scheduled but is expected for early March, with a vote on whether to modify planned for March 28.
HPC Chairman Stuart Altman said he wanted to see "forward-looking" information and data that would provide a national context before making the decision, saying the board should make its choice "based on facts, not what we want or would like to see happen."
"The projections are, nationally, that inflation is beginning to heat up, so it's going to be an interesting discussion," Altman said.
In the years since the passage of the cost containment law, managing health costs has remained a focus on Beacon Hill, where policymakers acknowledge both the major role health care, biotechnology and hospitals play in the local economy and the pressure placed on state, employer and family budgets by the rising costs of care.
MassHealth, the state's Medicaid program, is the biggest spending area in the state budget, at 40 percent of the total and around $15 billion. A five-year deal with the federal government aims at shifting the program toward an accountable care model, in hopes of leading to more sustainable growth.
A surge in MassHealth enrollment driven by an expansion in coverage under the federal Affordable Care Act over the past decade has put increasing financial pressure on the state, with enrollment growing by 70 percent since 2007 and now approaching the 2 million mark, the News Service reported Thursday.
President-elect Donald Trump and Republicans in Congress have pledged to scrap the health care access law known as the Affordable Care Act or Obamacare, creating uncertainty about what provisions will remain, what replacement legislation will contain, and how much federal money will flow to states.
Meanwhile, a commission of state officials and health care leaders - created last year to avoid a costly and contentious ballot fight over hospital pricing - has been studying the different prices charged by providers for similar services in Massachusetts. The panel, whose recommendations are due in March, has discussed ways to encourage patients to select lower-cost and community-based providers that provide equivalent quality of care.
A Senate working group is studying strategies other states use to keep their health care spending in check and traveled to Minnesota last month to hear from officials there. Before the trip, Sen. James Welch described the effort as the "next step in cost containment" and said lawmakers were concerned about the rapid rate of spending growth.
"I think more than anything, with the cost containment legislation, that we're talking about growth in health care on a very regular basis, the growth rates and the expectations that we have in the industry for everyone to meet those measures and meet those numbers," Welch told reporters in December. "So I think as much as anything, 224 gave us that, which I think is a very positive thing to focus on."
WBJ Web Partners
Most Recent
Most Recent
0 Comments