Health Policy Commission Talks Costs

Goals and Methods of the Massachusetts SIM grant

The Health Policy Commission (HPC) met on Wednesday, October 16, 2013 for its ninth full meeting. Several important issues were discussed at the meeting, including trends that emerged from the Annual Cost Trends Hearing; updates on the Community Hospital Acceleration, Revitalization, and Transformation (CHART) investment program; current activities under the federal State Innovation Model (SIM) grant program, and updates on cost and market impact reviews.

The consolidated meeting presentation is here (pdf), and our full report is below the fold.

Executive Director David Seltz began the meeting with the Executive Director Report, outlining the major HPC milestones since last November and key upcoming activities (slides 5-7). He then led a discussion on the themes that emerged from the Annual Cost Trends Hearing (slide 9). The themes identified included:

  • Provider, payer and purchaser efforts around cost containment, care delivery and payment reform
  • Conflicting incentives within organizations and across the system to transform care delivery and enhance efficiency
  • Market structure and payment disparities
  • Need to coordinate and integrate care across the continuum, including behavioral health services and services for unique and vulnerable populations
  • Need for more reliable data and information for all market participants and purchasers
  • The state’s role in advancing and supporting system transformation

Following this summary, the Commissioners were invited to share their takeaways from the hearing. Commissioner David Cutler’s takeaways were threefold: 1) that the HPC needs to be more pro-active with cost and market impact reviews (CMIR), and that CMIRs should focus on the impacts on quality as much as cost; 2) that all health care stakeholders need more data, including data on patients and cost; and 3) that there still exist various complex issues with payment system design. Commissioner Paul Hattis next discussed the major issues he identified, including the various ways the market is failing (including the discrepancy in payment rates for providers) and the problems with the overall health payment scheme, including primary care providers being underpaid and specialists being overpaid.

Commissioner Jean Yang then suggested that each major issue that arose from the hearing be given a “home” in one of the subcommittees to ensure the HPC addresses and acts on them. Chairman Dr. Stuart Altman reiterated Commissioner Yang’s comments and then shared one of his key takeaways from the hearing – that the demand side of health care can be used to control costs. Chairman Altman recognized the potential consequences of demand side solutions, such as high deductible health plans preventing low income people from accessing care, but emphasized that these consequences have to be balanced against the potential positive outcomes, such as greater price sensitivity amongst health care consumers. Commissioner Rick Lord also echoed the need to give employers and consumers the tools to make intelligent choices. Commissioner Marylou Sudders reiterated the need to keep consumers at the center of reforms, especially in light of findings raised at the hearing that consumers are paying more out of pockets costs for health care. Commissioner Carole Allen then discussed her takeaways, including the tension between carriers’ increased use of PPOs and providers’ growing desire to adopt coordinated care models such as patient centered medical homes (PCMHs). She also thought there was not enough emphasis on prevention, an issue raised by HCFA’s Brian Rosman during his testimony at the hearing. Commissioner Veronica Turner closed out the takeaway session by emphasizing the need for the HPC to dive deeper into reimbursement rate disparities, especially with regards to Medicare and Medicaid, and how to keep care at community hospitals.

The next agenda item was a report from the Care Delivery and Payment System Reform subcommittee. Commissioner Allen stated that the subcommittee’s main focus was creating a credentialing process for PCMHs.  HPC staff Patti Boyce is leading this process and meeting with experts to regarding how to define high value criteria. As noted in previous committee and subcommittee meetings, the credentialing criteria will be a subset of the National Committee for Quality Assurance (NCQA) standards, with a MA-specific focus.

Commissioner Allen then introduced Dr. Ann Hwang from the Executive Office of Health and Human Services to give a presentation on the Centers for Medicare & Medicaid Services’ (CMS) State Innovation Model Grant (SIM) program created by the Affordable Care Act (slides 12-25).  Massachusetts was one of six states to receive SIM grants and was awarded more than $44 million dollars. Dr. Hwang discussed grant activities to support public and private payers in transitioning to integrated care systems; enhanced data infrastructure for care coordination and accountability; and creating measures and processes for evaluating and disseminating best practices.  In response to various questions from the Commission, Dr. Hwang noted that the SIM grant program will be connected to and work in tandem with Chapter 224’s CHART investment program and other provisions of the law.

The next report was from the subcommittee on Quality Improvement and Patient Protection. The subcommittee stated that it will next review the Office of Patient Protection amended regulations on internal and external appeals processes.

The subcommittee on Community Health Care Investment and Consumer Involvement next outlined the CHART investment program request for proposals (RFP) process (slides 29-44). ‎HPC Director for System Performance and Strategic Investment, Iyah Romm, led the presentation detailing the Phase 1 and Phase 2 approaches, selection criteria, project evaluation and timeline.  After some discussion, the Commission voted to authorize the Executive Director to issue an RFP for the CHART investment program.

The next update was from the subcommittee on Cost Trends and Market Performance. Karen Tseng, HPC Policy Director for Market Performance, discussed the material change notices required by the HPC in its function to monitor and review the impact of changes within the health care marketplace (slides 48-54). She presented the form that organizations must submit to the HPC before making any material change to its operations or governance structure. Tseng also presented a summary of the type of transactions that have been taking place in MA, based on the notices the Commission has received. Physician group affiliation or acquisition was the most common type of material change.  Tseng noted that this type of information had not ever been previously compiled. She then outlined the statutory factors for review of material change notices and the initial questions that the HPC asks for evaluating changes in total medical expenditure (TME) (e.g. the level of medical spending associated with the parties) and for evaluating changes in access and quality (e.g. whether the transaction will enhance or reduce availability of and access to needed services).

In response to her presentation, Commissioner Cutler suggested that the HPC also look at what didn’t happen, such as look at the outcome of material changes that were promised but did not occur. Chairman Altman reiterated the need to look at past transactions and posed that the HPC should consider the question of “how big is too big” when thinking about policies around material change notices. Commissioner Glen Shor (Secretary of Administration and Finance) then suggested that another question to ask was whether the material change will increase competition. Commissioner Yang suggested that a simple way of determining when a provider is “too big” is when a payer cannot afford not to have the provider in their network. Commissioner Allen also voiced concern that quality not be sacrificed in efforts to bring down costs. She stated that quality has to be the first concern, then cost. Chairman Altman contended that cost is the ultimate issue and that quality and access are important but should not always trump spending.

Following the subcommittee presentations, Executive Director Seltz gave an Administration and Finance update (slides 56). Specifically, he presented information on the professional services contracts the Commission had proposed to engage in. The Commission voted to authorize the process to review hourly professional service contracts.

The next full HPC meeting is scheduled for November 20, 2013.
Lara Shkordoff

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