Cost and Effect – Health Policy Commission Tackles an Ambitious Agenda

As executive director of the state’s new Health Policy Commisson, David Seltz has a big job.
That’s because the role of the commission — an independent state agency created by the 2012 law known simply as Chapter 224, and much more clunkily as “An Act Improving the Quality of Health Care and Reducing Costs Through Increased Transparency, Efficiency, and Innovation” — is a decidedly ambitious one.
“Our mission is to work with the healthcare industry to reduce the growth of healthcare costs,” Seltz told HCN. Specifically, the law mandates that healthcare costs in the Commonwealth cannot rise faster than the gross state product from 2013 through 2017, before dipping to GSP minus 0.5{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} after that.
Seltz — who previously worked as the chief healthcare advisor for Senate President Therese Murray and played a role in drafting both the 2006 law guaranteeing health-insurance access to all Massachusetts residents and the 2012 cost-containment law — concedes that his latest task is an ambitious one.
“In a lot of ways, this change is even harder than healthcare access; it’s more complex in a lot of ways. But this effort is really the next phase in that effort that started in 2006,” he said. “I believe the goals are ambitious but achievable. From my perspective … it’s hard, but I am optimistic.”
Seltz met in late March with members of the Affiliated Chambers of Commerce of Greater Springfield to talk about the Health Policy Commission, then visited Mercy Medical Center — which has been a leader on the cost-control issue — to hear about innovations there. Visits to other cities will follow, he explained.
“We recognize that collaboration and partnership with the industry is important to meeting these goals. I want to meet with businesses in Springfield and across Western Mass. to hear what their concerns are, where they see opportunities and challenges, and hear about the impact of healthcare cost increases,” he said. “We’re getting out the message about what we’re trying to do and finding ways where we can partner with other stakeholders.”
Indeed, Seltz noted, employers’ healthcare cost concerns was one of the driving forces in getting the bill through the Legislature and signed by Gov. Deval Patrick.
“I think rising premium costs are a concern for all businesses, especially small businesses. They’re struggling, thinking about growing the economy and what benefit packages and products they can provide their employees,” he told HCN. “Businesses are big consumers of healthcare, and we want to make sure their voices are heard. We want to make the system more efficient for everyone.”
End of an Era
Upon signing Chapter 224 into law last summer, Patrick said that “we are ushering in the end of the fee-for-service care system in Massachusetts.”
Indeed, the law will make a system-wide shift toward accountable-care organizations (ACOs) necessary. Under this care-delivery model, also known as a ‘patient-centered medical home,’ a diverse group of providers — doctors, nurses, specialists, therapists, nutritionists, etc. — are assigned to a patient and are responsible for his or her care year-round. In turn, they are paid a set fee for providing that care. The payment structure discourages superfluous procedures — a hallmark of the fee-for-service model — but built-in quality metrics simultaneously guard against undertreatment because, if a patient’s condition worsens due to inadequate care, no one gets paid.
The law sets out a framework for funding cost containment, levying a $165 million surcharge against health insurers, and a $60 million surcharge against larger hospitals, in order to create a trust fund. These funds will go toward efforts such as a prevention and wellness program and community-hospital infrastructure upgrades, as well as programs to reduce the rates of preventable chronic diseases such as obesity, diabetes, and asthma.
The law also calls for the formation of a commission to simultaneously track healthcare costs and performance. All providers must comply with the performance targets or face fines of as much as $500,000.
The bill was spurred in part by reports issued over the past two years by the state Attorney General’s Office, one of which asserted that “the commercial healthcare system does not pay for care based on value. That is, wide disparities in prices are not explained by differences in quality, complexity of services, or other characteristics that might justify variations in prices paid to providers. Instead, prices reflect the relative market leverage of health insurers and health providers.”
The law gives the state Attorney General’s Office wide leeway to enforce its mandates, while paving the way for shifts in the way healthcare is delivered, such as delegating more responsibilities to physician assistants (PAs) and laying the groundwork for more patients to receive care at home with the help of monitoring technologies that are still evolving.
To begin tackling the myriad mandates of the new law, the Health Policy Commission has established four committees, each with its own set of goals.
The Cost Trends and Market Performance Committee will:
• Establish the annual healthcare cost-growth benchmark for total healthcare expenditures in the Commonwealth;
• Conduct annual cost-trends hearings and issue a final report on healthcare trends;
• Conduct cost and market-impact reviews of health providers and health plans proposing significant market changes to the healthcare industry, considering the impact of these changes on cost, access, quality, and market competitiveness; and
• Oversee the development and implementation of performance-improvement plans for certain providers and health plans.
Meanwhile, the Quality Improvement and Patient Protection Committee will:
• Examine the impact of health-system changes on the quality of healthcare in the Commonwealth, including the impact on patient access to care, and on the providers of healthcare, including frontline practitioners and healthcare workers;
• Establish the role and responsibilities of the Office of Patient Protection;
• Track the progress of efforts regarding mental-health, substance-abuse, and behavioral-health services with physical care in the development of new care delivery and payment models; and
• Develop guidance relative to the prohibition of mandatory overtime for hospital nurses.
A third group, the Care Delivery and Payment System Reform Committee, will:
• Establish a provider-organization registration program;
• Develop and implement standards for a certification program of patient-centered medical homes and accountable-care organizations and develop model payment standards to support them;
• Administer a competitive grant program to foster the development and evaluation of innovative healthcare delivery, payment models, and quality-of-care measures;
• Coordinate the advancement, adoption, and measurement of alternative payment methodologies; and
• Coordinate with the Division of Insurance regarding the development of regulations relative to the certification of risk-bearing provider organizations.
Finally, the Community Health Care Investment and Consumer Involvement Committee will:
• Develop and administer a competitive grant program to enhance the ability of certain distressed community hospitals to implement system transformation;
• Develop strategies for engaging with various constituencies and a communications plan for educating providers, businesses, consumers, and the general public regarding the implementation of Chapter 224;
• Develop strategies for helping consumers navigate healthcare cost and quality;
• Conduct an investigation relative to increased adoption of flexible spending accounts, health-reimbursement arrangements, and health savings accounts; and
• Work with other state agencies to minimize duplicative requirements.

Tough Challenges
Seltz admits there’s a lot on his plate.
“We’re working through these really hard, really complex challenges in healthcare, and we want to create a sense that we’re working with private industry in this regard,” he said by way of explaining the series of meetings he has begun with business and health leaders throughout Massachusetts.
One topic for employers will be the creation of new tax-credit programs for small businesses to support them in developing wellness programs to keep employees healthy, as preventative health is a key to overall cost control in healthcare.
“We know they can save the system money,” he said, but such programs also benefit businesses by reducing recidivism and increasing productivity among employees. “So it’s really a win-win for employers. That’s a big part of partnering with employers as we think about lowering healthcare costs and saving money on premiums.
“We’re still in the very early stages of this commission,” Seltz told HCN — but the conversation has begun in earnest.