Yesterday the Health Policy Commission (HPC) held its second meeting. While its initial meeting was all about the promise of health care cost control and quality improvement, at this meeting the enormity of the work ahead for them became apparent. Chapter 224, the health delivery system reform and cost containment law, heaped loads of responsibility on this new entity. With just one staffer (David Seltz, unanimously approved as Executive Director) and early deadlines, the work begins in earnest. Materials from the meeting may be viewed here, and our detailed report is just a click away.
The HPC first considered the appointment of their Executive Director. A subcommittee of HPC Chair Stuart Altman, Wendy Everett, Paul Hattis, and Rick Lord set criteria for the position, reviewed 16 resumes and conducted interviews. After narrowing the field down to three applicants, the subcommittee unanimously decided to recommend David Seltz for the position of Executive Director of HPC. Altman formally recommended Seltz to the full committee. Hattis and Lord echoed the recommendation. The entire HPC then unanimously agreed to appoint Seltz as Executive Director.
Seltz then joined the HPC and said a few words. Seltz was humbled and honored to accept the position. He believes in the mission and work of the HPC. He knows that cost containment is a major challenge for the state and that it affects many people, including businesses, families, and individuals. He agrees with the Governor’s sentiment that health is a public good and that we need to move to a more patient centered health care system. Seltz pledged to keep an open mind, to be honest and fair, to work with all, and to facilitate an atmosphere of collaboration and mutual respect.
Seltz then led the HPC through the bylaws. The bylaws are based on the Health Connector bylaws. They lay out where records are kept, how replacement commissioners are appointed, the role of the executive director, the hiring of staff, the appointment of an advisory council, and the fact that HPC members are not liable for actions taken in their official capacity. The bylaws were adopted by unanimous vote.
Next was a discussion of the one-time surcharge assessment on a few large, wealthy acute care hospitals and surcharge payers (insurers and self-insuring employers). Funds from the surcharge will go to fund the Commission itself, as well as the Prevention and Wellness Trust, E-health/ electronic health records, and the distressed hospital fund. In total the surcharge should generate $225 million. Neither surcharge payers nor acute hospital systems may raise rates or premiums to offset the cost of the surcharge. Hospitals may seek waivers if they demonstrate that they lack access to resources. Hospitals may also request a surcharge mitigation of up to 66% if their net assets are low or they receive most of their revenue from Medicaid. Hospitals and surcharge payers have the option of paying the surcharge in one lump sum or in equal installments over four years. Seltz added that the law envisions that the HPC will create regulations to implement the surcharge by December 31 of this year. Altman said that this was going to be tricky in light of the holiday season. Seltz recommended the creation of draft regulations or informal guidance by the deadline because the comment and hearing process would not be complete by Dec. 31.
Jean Yang asked how the HPC will ensure that surcharge payers do not raise premiums to offset the surcharge. Seltz said that the DOI can oversee insurers, but that HPC has to create an oversight mechanism for hospitals. Seltz added that several things remained to be fleshed out through regulation, such as: the collection of funds, the waiver and mitigation process, and the calculation of assessments. Altman noted that CHIA had gone through a similar process and that the HPC would not be starting from scratch. Sec. Bigby suggested that Seltz list their options. Seltz listed three options: (1) draft emergency regulations before Dec. 31, (2) set a calculation process before Dec. 31 in absence of regulation and set regulations in the new year, or (3) provide unofficial guidance before Dec. 31. Altman suggested the options 2 and 3 be combined. Seltz said that it was possible. Everett asked if this would meet the spirit of the law. Seltz said that it would and that unofficial guidance would be helpful to the industry. Altman suggested that the HPC create unofficial guidance before the end of the year and work on the actual regulations in January. Seltz said that this would be fine and that the comment and hearing period could happen in January and that the new regulations could be adopted afterwards, around February or March. Altman commented that the regulation process highlighted the need for more staff. Yang then asked Seltz how the search for staff was going, given that there is so much data to be collected. Seltz said that he was diligently searching and seeking to hire a General Counsel quickly. Altman then moved to provide unofficial guidance before Dec. 31 and start looking at drafting regulations at the January 16 meeting. The motion was unanimously approved.
HPC then took up the appointment of a Vice Chair. Altman recommended Wendy Everett. The HPC unanimously approved and Everett was installed as Vice Chair.
Next was the issue of subcommittees. There are four subcommittees. Each subcommittee is in charge of appointing its own chair. Every member of the HPC is on two subcommittees. Altman expects the subcommittees to meet regularly and hold hearings when appropriate. Subcommittees report back to full Commission and engage with the advisory council. The full Commission will meet every other month to give the subcommittees a chance to meet. Subcommittees are subject to the open meeting law. Altman is a member of all the subcommittees and will try to attend most meetings, at least by phone. The subcommittees are (1) Cost Trends and Market Performance [Cutler, Everett, Hattis, Lord, Sec. of Administration and Finance], (2) Quality Improvement and Patient Protection [Allen, Everett, Sudders, Turner, Sec. of Health and Human Services], (3) Care Delivery and Payment System Reform [Allen, Cutler, Sudders, Yang, Sec. of Health and Human Services], and (4) Community Health Care Investment and Consumer Involvement [Hattis, Lord, Turner, Yang, Sec. of Administration and Finance]. All subcommittee appointments were unanimously approved.
Next was a presentation by Candace Reddy from Administration and Finance on the growth rate benchmark, tied to the determination of growth in “Potential Gross State Product” (PGSP) for calendar year 2014. Reddy said that the consensus revenue hearing last Tuesday was the first year that Massachusetts is looking at the growth rate of PGSP. She said that PGSP is a well-established concept among economists. ANF will report on PGSP before Jan. 15 of next year. Cutler added that PGSP is something that underlies most state financial forecasts and estimates and that it is an agreed upon concept. Altman added the PGSP was designed to reflect the capacity of a state over time to generate gross domestic product while controlling for changes in the business cycle. The health care cost growth benchmark is pegged to PGSP to enable health systems to rely on a stable forecast for purposes of long term planning. Turner added that there was lots of confusion in the industry about PGSP and that some providers report that insurance companies are using PGSP as a “stick,” and not agreeing to rate increases in excess of this year’s limit, 3.6%. Sec. Bigby forcefully reiterated her comments from the last meeting that PGSP is an average and not an absolute percentage cap, because certain segments of the health care sector have been underfunded for years so these segments may need to grow faster than PGSP. She also said a goal of chapter 224 is to reduce disparities in payment, and that some providers start with a higher baseline. Cutler offered to share a presentation of PGSP with the commission at the next full commission meeting. All agreed that this would be helpful.
Finally, Medicaid Director Dr. Julian Harris gave a presentation on MassHealth’s payment reform initiatives, including the Patient Centered Medical Home Initiative (PCMHI) and Primary Care Payment Reform Initiative (PCPR). As part of ten major initiatives in its new strategic plan, MassHealth is particularly dedicated to promoting integrated care systems that share accountability for better health, better care and lower costs. Primary Care Payment Reform falls under this initiative. MassHealth is attempting to leverage the experience of Massachusetts’ health plans to stand up several models of primary care payment reform in the context of managed care organizations, primary care clinician plans, the dual eligibles demonstration, and other fee for service plans. Both PCMHI and PCPR seek to integrate behavioral health initiatives.
PCMHI is a 46 practice, multi-payer demonstration project that covers over 100,000 members enrolled in both the PCC plan and MCO plans. Practices receive infrastructure payments, a per member per month payment for medical home activities, and upside-only shared savings paymemts. PCMHI practices will be able to transition into PCPR. PCPR will have a three-pronged payment structure: (1) comprehensive risk-adjusted capitated payment for primary care services that may include some behavioral health services, (2) annual incentive for quality performance based on primary care performance, and (3) primary care providers share in savings on non primary care spend, including hospital and specialist services. The PCPR payment structure will not change billing for non-primary care services, such as specialists and hospitals. However, MassHealth is evaluating complementary alternative payment methodologies to hospitals and specialists for acute services. As part of PCPR implementation, MassHealth will be giving providers non-financial support in the form of learning collaboratives and access to timely and accurate data. Implementation will also protect members and establish a 3 year procurement process for providers in the PCC plan to receive a comprehensive primary care payment. The goal is to have 25% of members (PCC and MCO) participating in alternative payment methodologies by 2013, 50% by July 2014, and 80% by July 2015.
Altman concluded with next steps. Seltz will draft unofficial guidance on the surcharge assessment. Subcommittees will have a phone meeting before the full Commission meeting in January. The next full Commission meeting will be January 16 and then in March. The HPC thanked Sec. Bigby for her service. Altman said that he hopes to have time in future meetings to take comments from the audience.