Last week, Massachusetts Governor Maura Healey signed H.4654, known as An Act Enhancing the Market Review Process, marking the largest expansion of authority for the Massachusetts Health Policy Commission (HPC) since its inception in 2012. Acclaimed by both the Governor and the legislature for addressing critical gaps that had contributed to the downfall of the Steward Health Care System, this new law aims to stabilize the health care system, an endeavor that will test its efficacy in the years to come. Alongside H.4654, the Governor also endorsed S.2520, an Act Relative to Pharmaceutical Access, Costs, and Transparency, both of which collectively introduce a range of measures intended to enhance oversight and transparency in Massachusetts’s complex health care landscape.
Expanding HPC’s Authority
The enactment of H.4654 significantly broadens the scope and influence of the Massachusetts Health Policy Commission. One of the key aspects of this expansion involves the comprehensive update to the qualification and appointment process of HPC Commissioners. The law enables the HPC to exert oversight over private equity health care investors, real estate investment trusts (REITs), management service organizations (MSOs), and pharmacy benefit managers (PBMs) to various extents. These measures aim to address the existing gaps that were instrumental in the collapse of the Steward Health Care System, which had raised alarms about the vulnerabilities in the health care framework.
Another major provision of the new legislation authorizes the HPC to compel manufacturers to participate in cost trends hearings. Furthermore, it empowers the newly established Office of Pharmaceutical Policy to produce detailed reports on drug cost trends. This initiative is part of a broader effort to enhance transparency and hold various stakeholders accountable. Additionally, the expansions to the scope of material change notices (MCNs) and cost and market impact reviews (CMIRs) are expected to play a crucial role in the HPC’s oversight capabilities. These measures, combined with the establishment of a new Office of Health Resource Planning within the HPC, are poised to bolster systemic checks and balances.
Updates to HPC Commissioners
H.4654 introduces modifications to the selection process of the eleven commissioners on the HPC. The bill designates the Insurance Commissioner as an ex-officio member, replacing the Secretary of Administration and Finance, and reconfigures the appointment powers. The Governor will now appoint six commissioners, the Attorney General will appoint three, and the Auditor will no longer have the authority to appoint any commissioners, a change that underscores the current discord between the legislature and the Auditor.
This adjustment also dictates that one of the Governor’s appointees must be nominated by the Senate President and another by the House Speaker, ensuring a balanced representation of legislative interests. Previously, the commission included a role specifically reserved for a primary care physician. This role has now been supplanted by an expert in hospital or health systems, reflecting a shift in focus. The introduction of a stipend for the commission aims to attract qualified professionals, although the conflict of interest rule remains intact. This rule prohibits commissioners from serving while affiliated with any Massachusetts health care entity, preserving the commission’s impartiality.
Cost Trends Monitoring
The bill significantly widens the scope of the annual cost trends hearings, which were previously limited to testimony from payors and providers. Now, H.4654 mandates that pharmaceutical manufacturers, PBMs, private equity investors, REITs, and MSOs also provide testimony. This expansion to include pre-filed written testimony from these additional entities reflects an acknowledgment of the significant impacts that private equity, REITs, and MSOs can have on the health care system.
The inclusion of these new participants seeks to provide a fuller picture of the economic forces shaping the state’s health care costs. The HPC has traditionally relied on testimonies from a diverse array of payors and providers, including academic medical centers, community hospitals, and commercial health plans, among others. The expanded testimony requirements will now mandate sworn statements from identified pharmaceutical manufacturers, PBMs, REITs, MSOs, and state insurance regulators such as the Division of Insurance, Health Connector, and MassHealth. This broader approach is intended to yield more comprehensive data and insights into cost trends, thereby informing more effective policy decisions.
Expansion of MCN and CMIR Authority
The legislation also expands the types of transactions requiring a material change notice (MCN). Any significant expansion of a provider organization’s capacity will now necessitate the filing of an MCN. This measure aims to address transactions like the outpatient expansion proposed by Mass General Brigham in 2021, which previously fell outside the purview of the notice process. As a result of this broader authority, numerous provider expansions, which would have otherwise gone unnoticed, will now be subject to rigorous review.
Additionally, the bill includes provisions for various other types of transactions that now require an MCN. These include significant equity investments leading to changes in ownership or control of providers, provider organizations, or carriers, as well as substantial acquisitions, sales, or transfers of assets, including real estate sale-leaseback arrangements that were previously utilized by the Steward Health Care System. Moreover, the conversion of a provider or provider organization from a non-profit to a for-profit entity is now also subject to MCN requirements. This broadened authority empowers the HPC to request exhaustive information during the CMIR process, extending to any significant equity investor or related parties. Consequently, the HPC can now solicit detailed information regarding an equity investor’s capital structure, financial condition, ownership, and management arrangements, as well as additional data from the provider or provider organization for up to five years following the material change.
Health Planning
In recent years, the Massachusetts health care system has experienced one crisis after another, often operating in a reactive mode with little forward planning. This new bill seeks to address these systemic issues by transferring the responsibility for comprehensive health planning from the Executive Office of Health and Human Services to the Health Policy Commission. This transfer will lead to the creation of a new Office of Health Resource Planning within the HPC, specifically designed to undertake this critical task.
The Office of Health Resource Planning will comprise key state leaders and appointed members responsible for developing a state health plan. This plan will outline anticipated health care services and facilities needs, current resources available to meet these needs, prioritize areas for development, and provide a comprehensive five-year forecast for the demand, supply, and distribution of health care resources. This office will also be required to hold at least five public hearings across different regions of the state to gather input from various stakeholders while developing the plan. Additionally, it must file annual reports with the joint committee on health care financing, thereby ensuring ongoing oversight and adjustments as needed over time.
Balancing Oversight and Innovation
While H.4654 aims to prevent issues similar to those witnessed during the Steward Health Care crisis, it is crucial to recognize that most health care organizations in Massachusetts are nonprofits and thus differ significantly in structure and function from those involved in the crisis. Over recent years, private equity has largely shifted away from investing in hospitals, which raises concerns about whether the legislative drive to regulate this sector might inadvertently harm the remaining entities. The true challenge will be to strike a balance between adequate regulatory oversight and fostering the necessary innovation within the health care sector.
At the 2023 hearings held by the HPC, testimony was presented advocating for greater oversight of private equity and aligning with many of the changes enacted by this bill. However, there was also an emphasis on the need for continuous governmental innovation. With this bill granting the HPC additional authority, it also provides an opportunity for government innovation through the HPC’s new Office of Health Resource Planning. Massachusetts, having pioneered the creation of the HPC to monitor health care cost growth, must now build on this foundation to anticipate and adjust to new challenges.
Ensuring the continued promotion of access to high-quality, affordable health care will be pivotal for the future. The capacity for hospitals and health care systems to innovate and adapt is crucial for their survival in a rapidly changing environment. State agencies must also be dynamic and proactive, avoiding stifling innovation while maintaining robust oversight to prevent any adverse effects on Massachusetts’ health care system. This finely tuned balance is essential to ensure the system’s resilience and its ability to serve as a model for other states.
Conclusion
Last week, Massachusetts Governor Maura Healey signed H.4654, titled An Act Enhancing the Market Review Process. This marks the most substantial expansion of authority for the Massachusetts Health Policy Commission (HPC) since its establishment in 2012. The Act aims to address significant deficiencies that had previously led to the collapse of the Steward Health Care System, with an overarching goal of stabilizing the state’s health care system. The impact of this law will be closely watched in the coming years as it takes effect.
In addition to H.4654, Governor Healey also signed S.2520, known as the Act Relative to Pharmaceutical Access, Costs, and Transparency. Both of these legislative measures aim to boost oversight and transparency within Massachusetts’s intricate health care system. They introduce new provisions and protocols intended to improve how the system operates, particularly in terms of market regulation and pharmaceutical accessibility.
These legislative efforts reflect a concerted endeavor by both the Governor and the Massachusetts legislature to address critical issues within the health care sector. By enhancing regulatory frameworks and increasing transparency, these new laws aim to create a more stable and efficient health care environment for residents. As these measures begin to roll out, their effectiveness in addressing past pitfalls and improving the overall system will be a key focus for policymakers and the public alike.
