Governor Charlie Baker on Friday introduced a sweeping health care bill that reins in physician and hospital billing practices, penalizes drug companies that sharply increase prices, and infuses struggling community hospitals with new funds.
His proposal, the most ambitious health care bill of his five-year tenure as governor, puts a new focus on primary and mental health care and attempts to tackle several complex issues.
It would prohibit surprise medical bills for emergency and unplanned services, and limit the use of hospital facility fees. It also would define and regulate urgent care centers, requiring them to accept low-income patients on Medicaid and provide behavioral health services.
Baker said health systems need to start prioritizing primary and behavioral health care — not just shiny new medical technology.
“For far too long, we’ve neglected preventive services that keep individuals out of our emergency rooms, services like primary and behavioral health care,” the governor said at a State House news conference Friday. “We’re proposing to flip the script.”
Baker’s proposal seeks more limits on the rising cost of prescription drugs. It subjects drugs priced at more than $50,000 per patient per year to more state oversight, and penalizes companies that raise the price of any drug more than 2 percent a year, on top of inflation.
The plan drew an immediate rebuke from the pharmaceutical industry, which is already facing new drug price controls for the state Medicaid program. Other health care industry groups were more receptive to the omnibus plan.
Baker, a former state health secretary and onetime health insurance company CEO, is particularly passionate about health care policy and brings a unique knowledge of its complexities.
Unlike past health care legislation, his new bill doesn’t directly target hospital prices — a significant driver of costs. But it requires hospital systems to rethink their priorities.
It takes the unusual step of requiring hospitals and insurers to increase spending on primary care and behavioral health care by 30 percent over three years. To achieve this and meet existing requirements to control health spending, they would need to scale back in other areas, such as expensive hospital services.
Essentially, administration officials are betting that by spending more on preventing disease and managing health conditions, pricey emergency room visits and hospitalizations will decline, saving costs in the long run.
“We are really trying to take the long view of health care, acknowledging the complexity of our market in Massachusetts, and that all of us have responsibility — payers, providers, government, and consumers,” Baker’s secretary of health and human services, Marylou Sudders, told the Globe.
Danna Mauch, president of the Massachusetts Association for Mental Health, appeared alongside Baker at the State House and called his proposal a “significant step forward to frame a fairer and more cohesive behavioral health system in the Commonwealth.”
Baker’s bill may serve as a blueprint for state lawmakers, who said earlier this year that they expected the governor to take the first crack at health care legislation this session.
Senate President Karen E. Spilka applauded Baker’s efforts.
”The important issues of controlling health care costs overall, especially the rising cost of prescription drugs, and expanding access to mental and behavioral health services are priorities the Senate are actively working on,” she said in a statement.
A spokeswoman for House Speaker Robert A. DeLeo didn’t comment on Baker’s bill, but noted that House lawmakers are already working on their own health care legislation.
Last year, the House and Senate each drafted very different health care bills, and they failed to find a compromise. Baker — who was running for reelection at the time — didn’t wade into that debate.
Now, Baker said Friday, “I think we should try and get this done.”
The governor’s legislation combines several ideas that are part of bills already pending at the State House. For example, it would expand authority for nurse practitioners to independently care for patients, and it would create a new kind of midlevel dental provider.
The bill sets aside $20 million a year for financially struggling providers — half of that for independent community hospitals and half for health centers.
Additionally, the legislation takes steps to give small businesses more affordable health care options.
The governor’s proposed changes to medical billing could significantly reduce what some patients pay out of pocket. Currently, patients can get surprise bills from specialists who are outside their insurance network — even if the facility where they receive care is in-network. Baker’s bill would stop this practice for emergency services by establishing a default payment rate for out-of-network providers.
The legislation also bans hospital “facility fees” for certain services, and for any care more than 250 yards from a hospital campus.
Amy Rosenthal, executive director of Health Care For All, said she was pleased the bill includes strong provisions to help consumers, including measures to boost primary care, curb drug costs, and tackle out-of-network billing.
Steve Walsh, president of the Massachusetts Health & Hospital Association, called the bill “incredibly robust and comprehensive.”
Hospitals support Baker’s proposed controls on drug spending and the expansion of telemedicine, among other measures. “This legislation is a tremendous opportunity to evolve and improve the best health care system in the world,” Walsh said in a statement.
Insurers are also pleased with the legislation, said Lora Pellegrini, president of the Massachusetts Association of Health Plans.
“Primary care and behavioral health are the backbone of our health care delivery system,” Pellegrini said in a statement. “It is necessary that these investments are made within the confines of the state’s cost growth benchmark.”
Pharmaceutical industry lobbyists, however, panned the legislation. Tiffany Haverly, spokeswoman for the Pharmaceutical Research and Manufacturers of America, or PhRMA, released a statement saying the group is “deeply disappointed that Governor Baker is attempting, once again, to implement dangerous price controls that would have a devastating impact on patients.”
Robert K. Coughlin, president of the Massachusetts Biotechnology Council, said Baker’s proposal “misses the mark by not including any proposals that would directly control skyrocketing health insurance premiums and patient out-of-pocket costs.”
Tim Foley, executive vice president of 1199SEIU United Healthcare Workers East, a union representing thousands of hospital workers, called the bill a good start. But he said it should have included even more help for community hospitals and health centers.
The last major health care bill in Massachusetts became law under Governor Deval Patrick in 2012. That legislation aimed to control costs by setting a benchmark for total spending and creating new state agencies to monitor health costs. The Baker administration’s proposal expands on that by adding new penalties for health care providers and insurers that fail to keep spending growth under the benchmark, which is currently 3.1 percent a year.
In 2006, Governor Mitt Romney signed a landmark law mandating insurance coverage for all state residents.
Sudders said the administration’s proposal builds on those past reforms.
“This is a year for us to really think about the next iteration of health care in Massachusetts,” she said.