Mass. lawmakers pass health care cost-control bill

Lawmakers overwhelmingly passed a 350-page health care cost-control bill Tuesday afternoon, a compromise between House and Senate leaders that sets spending targets for hospitals and doctors in the state and penalizes those that exceed them.

Governor Deval Patrick said he would sign the bill. “This is more than a good bill; this is a great bill,” he told reporters after visiting a Roxbury organization that seeks to reduce youth violence. “This is a commonwealth that has shown the nation how to extend coverage to everybody and to do it in a hybrid system with an emphasis on private-sector insurance with subsidies for those who can’t afford it. And now we’re going to crack the code on cost control.”

He said he does not believe the legislation will lead to layoffs in the health care sector or hospital closures. “There are going to be changes,” Patrick said. “But if those changes mean we get lower-cost and higher-quality care because care is being delivered in different settings -- in homes, for example, in neighborhoods, in communities, rather than in hospitals -- then I think that’s something we all ought to strive for and will strive for.”

The plan allows health spending to grow no faster than the state economy overall through 2017. For the five years after that, spending would slow further, to half a percentage point below the growth of the state’s economy, although leaders would have the power under certain circumstances to soften that target.

Supporters believe the bill will help moderate increases in insurance premiums for consumers and businesses. While the measure does not spell out specific cuts, health providers are expect­ed to expand efforts already under­way to slow the proliferation of some medical procedures, better coordinate care to keep patients healthier and out of the hospital, and steer patients to lower-cost care­givers.

Providers and insurers that do not meet the spending targets would have to submit “performance improvement plans’’ to a new state commission. Failure to implement their plans could lead to a fine of up to $500,000.

“This is going to save us $200 billion over the next 15 years, and it’s going to provide better quality of care and better access,’’ Senate President ­Therese Murray said in an inter­view Monday night. “This is a big plus for us. We’re once again in the forefront on health care in the nation.’’

Murray said the 350-page bill will build on the state’s 2006 landmark health insurance mandate, which ­became the model for President Obama’s national health care legislation.

House Speaker Robert A. DeLeo said in a written statement that “while this bill may seem complex, its goal is simple: to cut health care costs that burden businesses and consumers while not interfering with the high quality of health care Massachusetts residents enjoy.”

According to interviews with legislative leaders and a bill summary they provided, the legislation also includes provisions to reduce malpractice lawsuits, enhance public health, and increase transparency for consumers by requiring providers and insurers to provide up-to-date information online about the cost of procedures and tests. Patients generally would not have to pay more out of pocket than the disclosed amount for care.

But sticking to the spending targets could be a significant challenge for the state’s robust health care industry. Medical spending in Massachusetts in recent years has climbed 6 percent to 7 percent annually, compared with the state economy’s annual growth of about 3.7 percent. Health costs appear to be increasing more slowly in the past couple of years, however, in part due to the economic slowdown.

The final bill was negotiated by three House and three ­Senate leaders after their chambers passed different cost-control plans.

The Massachusetts Hospital Association failed in its effort to keep the bill from setting spending targets that are below the growth of the overall state economy. The group declined to comment Monday, saying it needed more time to review the legislation.

But for the most powerful hospitals and doctors groups, the outcome could have been worse. Some of the most stringent limits on providers passed by the House did not survive, including a luxury tax on hospitals, doctors groups, and others that charge considerably more than competitors. A separate House provision that would have required hospitals that are part of larger companies to ­negotiate prices with insurers individually, rather than as a more potent group as is now commonly done, was also eliminated from the final bill.

The legislators, though, did include a provision similar to one proposed by Patrick to ­attack the market power of providers, such as some Boston teaching hospitals that can ­demand high prices for their services because of brand-name or geographic dominance, one of the most-cited reasons for rising medical spending.

The new commission would be required to conduct a “cost and market impact review’’ of certain providers, including those that want to expand or do not meet the state’s spending benchmarks.

If the review finds that the provider has dominant market share and has “materially higher’’ prices and total medical ­expenses than competitors, then the administration must refer the case to Attorney General Martha Coakley’s office for possible formal investigation.

“We are pleased that the bill includes measures to address the market power of certain providers and the prices they charge as highlighted by multiple reports and studies issued by the attorney general and various state agencies over the last several years,’’ said Lora ­Pellegrini, president of the Massachusetts Association of Health Plans, which lobbied for limits on market power. “Dealing with those issues is critical to the bill’s success by ensuring that price differences among providers are correlated to the quality, acuity, and complexity of patient care and are not due to an institution’s or system’s size, brand recognition or geographic isolation.’’

Amy Whitcomb Slemmer — executive director of Health Care for All, a Boston-based consumer advocacy group — said the organization is pleased with the plan and believes it “will lead to better integrated care’’ for residents.

The legislation requires Medicaid and other state-funded health care programs to adopt new ways of paying hospitals and doctors by 2014, including so-called global payments, which give doctors a budget to provide all their ­patients’ care. It also establishes a certification process for account­able care organizations — large groups of providers that provide all a patient’s care in a coordinated fashion — and gives them a preference in contracting with state programs.

Reactions to the bill

The Massachusetts Medical Society outlined its likes and dislikes of the bill. Society president Dr. Richard Aghababian said he is glad the bill strikes a middle ground between the House and Senate’s proposed spending targets, encourages more transparency, presents a new model for allowing doctors to disclose and apologize for errors without fear it will be used against them in malpractice suits, and sets goals to grow the health care workforce to address shortages.

As for the group’s concerns, he cited the burden placed on small physician practices and the expanded scope of drug store clinics, called “limited service clinics”:

▪ We are concerned about the impact of the bill’s very stringent reporting requirements on the smaller medical practices in the Commonwealth. We will look to clarify how small practices will be impacted by the costs and burdens associated with reporting to new entities established by the legislation. The state must ensure that such efforts avoid duplication and provide a true net benefit to our Commonwealth.

▪ We are concerned that the bill goes too far expanding the practice prerogatives of some groups of providers. In particular, we find that the favored status granted to limited service clinics to be unwarranted and thinly supported by research or facts. The classification of physician assistants as primary care providers also raises questions. We will monitor these developments closely and will be prepared to advocate for corrective measures if there are unintended consequences.

In an e-mailed statement, Partners HealthCare Chief Executive Gary Gottlieb said the bill offers “a first-in-the-nation approach to health care cost control.”:

It will be a tremendous challenge for hospitals and doctors to reach this target, but Partners is committed to working with our colleagues across the Commonwealth in order to achieve success and make health care more affordable for our patients.

The bill builds on the great strides Massachusetts has made over the past few years as the market developed new products that move away from the old fee-for-service model to one that rewards value and high quality care. As a result, we are starting to see slower growth in health insurance premiums. At Partners, we ripped up contracts with insurance companies in order to give $345 million back to consumers. We have entered into new contract models like the Blue Cross AQC, which holds the promise of continued savings to the marketplace. And, we are one of just 32 organizations in the nation chosen as a ‘Pioneer’ ACO, which can provide a better blueprint for Medicare and ultimately the entire US health system – one that is more cost effective for everyone.

Veronica Turner, executive vice president of 1199SEIU, the state’s largest health care union, sent this statement:

By specifically prioritizing Medicaid rate increases and workforce training in the bill, the legislature is helping to ensure the long term success of these important reforms for the benefit of patients, consumers, and caregivers alike.

The frontline caregivers of 1199SEIU applaud the House and Senate for forging an agreement that gives health care workers a voice in the process moving forward and that also takes steps to protect vulnerable community and safety net hospitals. To help preserve jobs in our state’s highest employment industry, and to help the health care workforce transition to new delivery systems, the legislature has incorporated a workforce training fund into the bill that 1199SEIU members see as a vital component to the success of these reform efforts.

1199SEIU health care workers have been a major presence at the State House during this process and now we are proud to see that the legislature has heeded the input, concerns and voices of frontline caregivers in crafting this final agreement.