United States: Massachusetts House Lawmakers Propose Overhaul To Health Care Payment And Delivery System

Last Updated: May 15 2012
Article by Ropes & Gray LLP's Health Care Practice

On May 4, 2012, lawmakers in the Massachusetts House of Representatives introduced a bill entitled Health Care Quality Improvement and Cost Reduction Act of 2012 ("the Act") that would overhaul the health care payment and delivery system in Massachusetts.

The Act offers an alternative to the health reform legislation announced by Governor Deval Patrick on February 17, 2011. Similar to the Governor's legislation, the Act seeks to control rising health care costs in part by transitioning the Commonwealth to a health care payment and delivery system in which providers organized as accountable care organizations ("ACOs") receive global payments, bundled payments, and other "alternative payment methodologies." A new Division of Health Care Cost and Quality ("Division") will oversee the transition and manage the new health care payment and delivery system. This alert highlights some of the key provisions in the Act.

Division of Health Care Cost and Quality

The Act creates the Division as an independent public entity that is charged with overseeing the health care quality and cost reforms.

  • A board of nine members, including government officials, health care professionals, health care administrators, and other experts in the field, will lead the Division.
  • The Division's primary functions will include promoting the formation and overseeing the certification of ACOs and adopting appropriate regulations for ACOs; overseeing the development of patient center medical homes; requiring providers to adopt alternative payment methodologies and delivery systems; and overseeing providers' use of standard quality measures. Alternative payment methodologies are defined to include global payments, bundled payments for acute care episodes and chronic diseases, and shared savings arrangements and to exclude fee-for-service payments.
  • The Act requires the Division to assess a surcharge on providers whose "contracted average price" exceeds 120% of the "median contracted price" in the Commonwealth. The surcharge will equal 10% of the difference between the provider's contracted average price and the Commonwealth's median contracted price multiplied by the units of services provided. The funds collected from the surcharge will be paid into a trust fund for distressed hospitals.
  • The Division will also assess a one-time surcharge on most acute hospitals, ambulatory surgery centers, and payors. This surcharge will also be paid into the distressed hospital trust fund.
  • The Division will collect and publish data concerning the cost of health insurance within the Commonwealth, hold annual hearings, and provide recommendations to reduce costs, improve patient care, and improve access to health care services.
  • The Division's health care cost oversight responsibilities will include setting a target per capita medical expense for each calendar year. If the actual per capita medical expense of providers in the Commonwealth exceeds the target per capita medical expense, the Division can take actions to limit the actual per capita medical expense, including making changes to alternative payment methodologies, requiring providers and payers to implement a corrective action plan or reopen contracts that contribute to excessive spending, or propose additional legislation to combat spending.

ACOs

The Act includes a number of requirements regarding the formation and structure of ACOs in the Commonwealth. The Act's requirements for ACOs are generally consistent with the requirements for ACOs participating in the Medicare Shared Savings Program (implemented under the Patient Protection and Affordable Care Act of 2010).

  • The Act defines ACO broadly as an entity comprised of health care providers that accept shared risk for the cost and quality of patient well-being. Providers that integrate or contract with an ACO are considered "ACO participants."
  • The principle requirements for the formation of an ACO include the submission of a collaborative care plan; the establishment of a governance body, executive officer, and a medical director; the acceptance of compensation by an alternative payment methodology; the adoption of interoperable electronic health information technology; coverage for between 15,000 and 400,000 covered lives; and holding adequate reserves to enter into risk arrangements.
  • There are several patient protection mechanisms in place for ACOs, including a requirement to report pricing information to consumers. Patients will generally have the right to appeal decisions made by their ACO providers and the right to a second opinion. ACOs will be liable for up to $500,000 for medical malpractice claims made against any of their constituent participants based on actions taken on behalf of the ACO.

Other Key Provisions of the Act

The Act would implement a number of other changes that seek to reduce the cost and improve the quality of health care in the Commonwealth.

  • Private Health Plan Use of Alternative Payment Methodologies: Private health plans will generally be required to implement alternative payment methodologies "to the maximum extent feasible" by January 1, 2015.
  • Medicare Waiver: The Executive Office of Health and Human Services is directed to seek a waiver from Medicare to allow alternative payment methodologies, integrated care organizations, and ACOs for Medicare beneficiaries.
  • Medicaid Use of ACOs and Patient-Centered Medical Homes: The Act encourages the use of ACOs within the state Medicaid program, setting a goal that by January 1, 2015, 80% of Medicaid payments are under the ACO or patient-centered medical home health care delivery model. Medicaid fee-for-service reimbursement will be permitted only if part of a shared savings payment program.
  • Medicaid Payment Increase: Medicaid payments to acute care hospitals and primary care providers will increase by 2% starting July 1, 2013, but only if the hospital or provider demonstrates a "significant transition to the use" of alternative payment methodologies. The Division will establish regulations to govern what constitutes a significant use.
  • Fraud and Abuse Waivers: By August 15, 2012, the Division will seek waivers of the requirements under the federal Stark law and anti-kickback statute to allow for the transition to alternative payment methodologies, risk sharing among providers, and the formation of ACOs.
  • Prohibition on Joint Contracting: Public and private payers will generally be required to negotiate separate contracts with hospitals and clinics that are part of the same system. Each hospital and clinic within the system must maintain a separate negotiating team. A firewall mechanism must be in place to prevent information sharing between negotiation teams.
  • Determination of Need: A determination of need will be required before the acquisition of a hospital. The determination may include considerations such as financial capacity of the prospective owner, the affect of the acquisition on the availability or accessibility of health care services, and the prospective owner's plan for provision of community benefits and essential health services.
  • Attorney General Oversight: During the transition of the health care payment and delivery system, the Attorney General will monitor the size and composition of ACOs, consolidation by providers, payer contracts, and patients' choice of providers and ACOs. The Attorney General will have the power, in consultation with the Division, to take action to prevent excess consolidation or collusion of providers, ACOs or payers and to prevent other anti-competitive behavior.
  • Health Information Technology: A Health Information Technology Council will advise the Division on health information technology in the Commonwealth, including the creation of a statewide electronic health information exchange by January 1, 2017.
  • Physician Assistants: The Act provides for patient choice of and insurance coverage for physician assistant services.
  • Nurse Overtime: The Act prohibits hospitals from requiring nurses to work mandatory overtime except in emergency situations where the safety of the patient requires such overtime and there is no reasonable alternative.
  • Patient Disclosure: A health care provider must, upon request by a patient or prospective patient, disclose the actual or estimated charges for a proposed admission, procedure, or service.
  • Loan Repayment: The Act establishes a loan repayment program for health professionals that serve in medically underserved areas for at least two years. The loan repayment program will be administered by a Health Care Workforce Center established within the Division.
  • Medical Malpractice: An apology or similar statement made by a health care provider will be inadmissible as evidence in a judicial or administrate proceeding. Also, a 180 day cooling-off period will be established to allow for settlement negotiations.

A copy of the Act can be found here. The Act has been referred to the House Committee on Ways and Means where it will be further refined during the coming weeks before debate by the full House of Representatives. The Massachusetts Senate released its own proposal for health care payment and delivery reform on May 9, 2012. A Ropes & Gray alert on the Senate proposal is forthcoming.

www.ropesgray.com

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Ropes & Gray LLP's Health Care Practice
 
In association with
Related Video
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert
Email Address
Company Name
Password
Confirm Password
Mondaq Topics -- Select your Interests
Accounting and Audit
Anti-trust/Competition Law
Consumer Protection
Corporate/Commercial Law
Criminal Law
Employment and HR
Energy and Natural Resources
Environment
Family and Matrimonial
Finance and Banking
Food, Drugs, Healthcare, Life Sciences
Government, Public Sector
Immigration
Insolvency/Bankruptcy, Re-structuring
Insurance
Intellectual Property
International Law
Litigation, Mediation & Arbitration
Media, Telecoms, IT, Entertainment
Privacy
Real Estate and Construction
Strategy
Tax
Transport
Wealth Management
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.