Cost commission begins work to rein in Mass. health spending

As he swore in board members who will oversee the Health Policy Commission, the new agency charged with holding down health care spending in the state, Governor Deval Patrick on Friday noted the gargantuan task they faced.

"This is a big challenge, a complicated challenge," he told the 11 members, who have varied backgrounds in health care, including some who have tried for decades to identify ways to slow rising costs. "It is one to which history has called all of you."

Massachusetts is the first state to set an annual target for total health care spending, passing a law earlier this year calling for costs to rise in line with the growth of the overall economy. The commission is charged with monitoring spending by hospitals and doctors groups.

The first meeting of the board at the State House marked "the beginning of the future of health care reform in Massachusetts," Patrick said.

The board will review practices by provider groups whose spending is deemed excessive and may require the groups to submit performance improvement plans, which would be open for public review and comment. Providers that neglect their performance plans, falsify information, or otherwise buck the process could face a fine of up to $500,000.

Board members acknowledged that some providers may reasonably go over the state growth target for the year, while others will be asked to grow less than the average allowed.

"This is a very tricky part" of the commission's work, Stuart Altman, the board's chairman and professor of national health policy at Brandeis University, said about monitoring medical spending. "I think it's going to take a lot of our time and a lot of very smart minds to figure out how to make this work."

The commission has some time to find a way. The process of holding providers accountable to a state spending target begins in 2014, when the commission will be reviewing performance for 2013. The law says total medical spending next year should grow no more than 3.6 percent.

Through 2017, increases will be pegged to the projected growth rate in the state economy. For five years after that, growth in health care spending will be held to a half percentage point less than the overall state growth rate.

The commission will have the power to recommend modifications to the target starting in 2018.

The commission also must hold annual hearings on health costs, file an annual report on the state's progress, oversee the Office of Patient Protection now under the Department of Public Health, and develop standards for certifying patient-centered medical homes, a model of primary care in which a team of caregivers collaborates on people's mental and medical health needs.

The board includes people with decades of experience in health care economics and relative newcomers who bring other industry experience. Among them are Harvard economist David Cutler, who has advised presidents on health care policy, Dr. Wendy Everett, who leads NEHI, a Cambridge-based health care think tank, Marylou Sudders, who has a long history as a mental health advocate and policymaker in Massachusetts, and Veronica Turner, executive vice president of a 1199SEIU, representing about 47,000 health care workers in the state.

Altman pledged to get the commission to work quickly. He established a subcommittee for selecting an executive director, a first step in building a state agency that will employ dozens of people. Altman said he expects to put a candidate forward for review by the full board next month.

The agency also is setting up office space alongside the Center for Health Information and Analysis, an independent agency created under the law to track medical spending in the state. The center is designed to be the nonpolitical group collecting much of the information that the Health Policy Commission will act on. Their offices will be at 2 Boylston St.

The process is reminiscent of the creation of the Massachusetts Health Connector under the 2006 law that expanded health insurance coverage in Massachusetts. That law and the insurance market the Connector created served as a model for the federal Affordable Care Act. Altman underlined the importance of the state's latest effort.

"Not only is the Commonwealth watching us," he said, "but I think the whole country, if not the world."