The Health Policy Commission (HPC) answered this question in its full commission meeting this week on Wednesday, February 19, 2014. As David Seltz stated in his Executive Director report, the agenda for Wednesday’s meeting was short, but very important. According to the final report from the HPC regarding Partners Health Care System’s proposed acquisition of South Shore Hospital and Harbor Medical Associates, the answer to this question is written in the data or, more accurately, in the lack of data. Without abstention, The HPC voted to approve the final report recommending that Partners’ proposed acquisition should not proceed. Also up for a vote were the final regulations from the Office of Patient Protection (OPP) on health insurance consumer protection. Materials from today’s meeting can be found here, and our full report on details from the meeting is on the backside.
After giving his Executive Director report, Seltz gave an update from the Care Delivery and Payment System Reform (CDPSR) committee on behalf of Commissioner Carole Allen who was unable to attend Wednesday’s meeting. Seltz noted that Commissioner Allen’s committee had a great discussion at their last meeting regarding patient-centered medical homes (PCMH) and the status of the certification process in MA. The committee plans to update the full commission on the proposed PCMH certification standards at the next full commission meeting.
Next up was an update from the Quality Improvement and Patient Protection (QIPP) committee. The committee’s chair, Commissioner Marylou Sudders, reported that the CDPSR and QIPP committees would next meet jointly to discuss the PCMH program and opportunities for behavioral health integration. Commissioner Sudders then turned over the microphone to the HPC’s General Counsel, Lois Johnson, to discuss the proposed amendments reflected in the OPP final regulation governing health plan internal and external appeals procedures (958 CMR 3.000). Johnson categorized the major changes under five topics: 1) voluntary extension and reconsideration, 2) medical necessity criteria, 3) language access, 4) transparency, and 5) reporting requirements (slides 12 and 13). After confirming compliance with the Affordable Care Act, the OPP proposed to keep the original language that allowed consumers and carriers to voluntarily extend time limits for internal review and reconsideration of decisions. As for the medical necessity criteria, Johnson noted that the health care services company McKesson objected to this requirement because it unnecessarily interfered with property rights and was inconsistent with other provisions of Chapter 224. As a result, the final regulations were amended to specify that medical necessity criteria be provided to the consumer along with adverse determinations, to insurers and their providers upon request, and effective July 1, 2014, to members of the public at no charge.
After considering input from market participants, the OPP modified the language access requirements so that consumers may request all subsequent notices about an appeal to be in Spanish, as opposed to any requested language. Consumers may also request translation and interpretation into any language as needed.
Johnson noted that carriers in the state claimed the original language access provisions would cause an administrative burden and delay the ability to process requests. Commissioners Marylou Sudders and Paul Hattis both raised important points regarding language access. Commissioner Sudders advised that given the changing demographics in the Commonwealth, the HPC, along with the Division of Insurance, would examine data on language access requests, and the QIPP committee would revisit and revise the regulations if necessary to make sure barriers to language access are addressed. Echoing this sentiment, Commissioner Hattis stated that he wants to make sure the HPC is dedicated to amending language in the regulation to further strengthen the language access provisions down the line if the data shows this necessity, and he added that with Commissioner Sudders “at the helm” he is confident this will be taken care of at the committee level.
Finally, in an effort to balance requirements that increased transparency with the desire for administrative simplification, the final regulation requires carriers to provide clear and detailed information about a denied claim in a final adverse determination notice, but several duplicative reporting requirements were eliminated or streamlined where appropriate. The HPC voted unanimously to approve and issue the final regulation, which will subsequently be filed with the Secretary of State and become effective upon publication.
Before moving into the highly anticipated topic of mergers and acquisitions, the HPC heard a very brief update from Commissioner Hattis about the status of his Community Health Care Investment and Consumer Involvement committee. Commissioner Hattis reported that the committee will meet next Monday to discuss updates from Phase I of the Community Hospital Acceleration, Revitalization, & Transformation (CHART) Investment Program as well as the framework for Phase II of the program.
Last, but definitely not least, Karen Tseng, HPC Director of Policy for Market Performance, presented the final report on the Partners Healthcare System/South Shore Hospital/Harbor Medical Associates Cost and Market Impact Review. Commissioner David Cutler and Chairman Stuart Altman set the stage by offering how pleased they both were with how the HPC went about looking at this data, and the productive manner in which the parties involved seriously engaged in the process. Chairman Altman added that the HPC’s role is to make the health care market more efficient in MA, and to reduce total medical expenditures. Admitting to oversimplifying the issue, Chairman Altman said that it comes down to a balance of efficiency versus power. He recognized that in order to provide effective, population-based medical care some institutions might need to get bigger, but the question the HPC had to answer was “how big?”
Next, Tseng carefully summarized the final report as follows:
These transactions are anticipated to increase total medical spending by $23 million to $26 million each year for the three major payers, excluding the potentially significant cost impact of increased ability to leverage higher prices and favorable contract terms, due to the following impacts:
- Increases in Harbor/South Shore Physician Hospital Organization (SSPHO) physician prices that increase total medical spending by $15.8M per year.
- Shifts in referrals to Partners/South Shore Hospital (SSH) facilities that increase total medical spending by an additional $7.4M to $10.6M per year.
- These figures represent impact to only the 80% of the market represented by the three largest commercial payers (slide 20).
Care Delivery Impact:
Partners’ experience in accountable care initiatives demonstrates potential for improving the cost and quality of care.
- Crediting every data-driven example of the parties’ experience in accountable care initiatives, these transactions could result in savings of up to $6.6M per year, driven by expansion of Medicare programs.
- The parties have not provided concrete evidence of additional efficiencies that would be driven by these transactions.
- The parties’ new figures of average savings of $19.8M per year over eight years are not substantiated by underlying evidence, and raise substantive and methodological concerns.
- Given SSH and SSPHO’s historically strong performance and experience managing risk, it is unclear how corporate ownership of the parties is instrumental to raising quality performance in the South Shore (slide 21).
- SSH and the Partners hospitals generally care for a higher mix of commercially insured patients and a lower mix of Medicaid patients than other area hospitals, and SSH provides a smaller share of inpatient behavioral health services and a greater share of deliveries than other area hospitals.
- While the parties have generally described goals for care delivery transformation, including integrating behavioral health services into patient-centered medical homes, the HPC did not receive sufficient evidence to make a finding either way regarding specific changes in access at SSH as a result of these transactions (e.g., plans to make specific service line changes at SSH, or to increase SSH’s mix of behavioral health services).
- Partners recently indicated it plans to expand adult inpatient and adolescent residential treatment capacity at McLean SouthEast, and to expand Massachusetts Child Psychiatry Support to pediatricians and school nurses in the South Shore (slide 22).
Tseng then laid out the referral to the Attorney General. First looking at market share, Partners has the highest hospital and physician market share of any providers statewide, and SSH and Partners respectively have the first and second largest market shares for commercial inpatient services in SSH’s primary service area. The HPC anticipates that the system resulting from the acquisition would have 50% commercial inpatient market share in SSH’s primary service area, and up to 30% of statewide physician revenue. With regard to price, the HPC anticipates the resulting system will have increased ability to leverage higher prices. Finally, based on the HPC’s findings on cost, quality, and access impact, the HPC anticipates the proposed transaction will increase health care spending, reduce market competition, and increase premiums for employers and consumers (slide 23).
After Tseng’s briefing, the commissioners took the opportunity to weigh in on the final report sharing one common theme: The HPC is concerned first and foremost with reducing total medical expenditures in the state, and aspirational ideas about increased efficiency without strong data to support it just won’t cut it. On the other hand, Commissioner Sudders pointed out that this report shouldn’t be construed to suggest the HPC is unwilling to entertain mergers and acquisitions, and Commissioner Cutler echoed this sentiment by cautioning the HPC against the attitude of “ if it hasn’t been shown in the past, it can’t be in the future.”
Commissioner Hattis added that every transaction has its burdens and benefits, and with respect to a CMIR, the HPC is charged with the job of using the best available data to weigh the burdens and benefits of the proposed transaction. He then asked Tseng a series of questions that suggested that the data that Partners provided to the HPC was either erroneous, contained misdirected comparisons, or in some instances not backed by any objective data from their experience or the literature.
Chairman Altman emphatically urged that future parties should take note and be prepared to demonstrate “how efficiencies directly translate into reductions in expenditures” if they wish to gain the HPC stamp of approval. At least in this instance, without sufficient data to support increased efficiencies, the HPC found that Partners’ proposed acquisition of South Shore Hospital will result in a system that is too big and too costly for our state.
The next full HPC meeting is scheduled for March 5, 2014.