Massachusetts Enacts Health Care Reform Legislation Aimed at Cost Containment
Tuesday, August 14, 2012
Massachusetts’ Governor Deval Patrick enacted legislation that targets the growth of health care costs while improving health care quality and patient care. The bill, which is the third major health care legislative effort in Massachusetts since 2006, sets the first statewide target for health care spending in the United States.
In particular, Massachusetts aims to limit the growth of health care costs to the same level as the state’s economy. The bill creates mechanisms for capping growth in health care expenditures and for restructuring the delivery system to encourage coordinated care, quality and incentives to adopt alternatives to the current fee-for-service methodologies. Major highlights are provided below.
Health Care Cost Goals– Through 2017, the bill limits health care spending to the Commonwealth’s economy (i.e., the gross state product). For the five-year period starting in 2018, spending would generally be limited to a half percentage below the gross state product. These limits are expected to reduce health care costs in the Commonwealth by $200 billion.
Employer Incentives– The bill creates a new wellness tax credit (up to $10,000 per employer) for employers that implement recognized workplace wellness programs. In addition, health insurance companies must provide a premium adjustment for small businesses that adopt approved workplace wellness programs.
Transparency of Health Costs – The legislation directs health insurance carriers to disclose the out-of-pocket costs for a proposed health care service and prevents patients from being subsequently charged more than the disclosed amount. Moreover, health insurance carriers must provide a summary of benefits to health care consumers in an easily understandable format that shows the consumer’s obligation to pay for any portion of the claim.
New Insurer Surcharge– The bill imposes a new $225 million surcharge on insurers to raise money for small community hospitals struggling to provide low-cost alternatives, create a Prevention and Wellness Trust Fund, and help small providers buy electronic health records. This surcharge will be passed on to consumers in the form of somewhat higher premiums.
Restructuring Health Care Payment System– The bill requires the Commonwealth’s Medicaid program, employee health care program, and all other state-funded health care programs to transition to new health care payment methodologies. The new payment models incentivize the delivery of high-quality coordinated, efficient and effective health care while reducing waste, fraud and abuse.
Reforming Medical Malpractice Laws – The legislation creates a 182-day cooling off period for the parties to a medical malpractice lawsuit to seek a negotiated settlement, and requires the exchange of certain information between the plaintiff and defendant to promote early settlement. During this period, health care providers may admit to a mistake or error and such admission may not be used as an admission of liability in court, unless the provider lies under oath. The law also creates a task force to study defensive medicine and medical overutilization.
Pharmaceutical Cost Containment – The law directs state agencies responsible for the purchase of prescription drugs to form a uniform procurement unit for bulk purchasing, and creates a commission to determine methods by which the Commonwealth can reduce the cost of prescription drugs for public and private payers.
Once again, the nation will be watching Massachusetts as it implements novel health care reform initiatives aimed at limiting health care costs and improving health care quality and patient care.
*Content provided courtesy of The Wagner Law Group.