And this is in a state where the biggest players \u2014 hospitals and health insurers \u2014 are nonprofits.<\/p>\n
The dilemma around reining in the cost of health care has loomed over a fierce Beacon Hill debate about the Health Policy Commission\u2019s makeup. Last year, lobbyists for hospitals and biotechs pushed for seats on the HPC<\/a>, while insurers and employer groups resisted. Legislators finally passed a health care reform bill<\/a> in the last days of December, with the session about to end. Out the door: seats for an employer rep and for a primary care doc. Incoming: representatives from the hospital and biotech sectors.<\/p>\n Proponents argued that the commission had been largely made up of academics and retirees, and would benefit from more real-world experience. Critics, meanwhile, kept making the \u201cfox in the henhouse\u201d analogy \u2014 why ask someone whose organization could benefit from rising prices to be responsible for keeping them in check?<\/p>\n With the change in seats baked into law, it seemed all but inevitable that the debate would reemerge when it came time for Governor Maura Healey to make her appointments<\/a>. <\/p>\n Sure enough, it did. <\/p>\n In this case, the uproar last month<\/a> was mainly caused by Healey\u2019s intention to appoint Steve Walsh, head of the Massachusetts Health & Hospital Association, to the commission. <\/p>\n Despite a last-minute lobbying blitz to stop it, Healey went ahead and named Walsh to the commission \u2014 with Walsh saying he\u2019ll recuse himself from issues concerning his members, likely a long list. (To some extent, this endeavor is personal for Walsh because he helped write the original 2012 law establishing the HPC, as a state rep at the time.) The new biopharma seat, meanwhile, went to Biogen executive Chris Leibman; his sector isn\u2019t directly regulated by the HPC like Walsh\u2019s. <\/p>\n With those two seats in play, some had hoped Healey would pick someone who doesn\u2019t currently work in the sector they represent; the governor did this for two other seats by appointing Umesh Kurpad, former chief financial officer of insurer Point32Health, and Sandra Cottrell, recently retired CEO of the Codman Square Health Center.<\/p>\n Patty Houpt, who held the \u201cemployer rep\u201d seat until it was legislated out from under her, isn\u2019t thrilled that an employer-friendly voice will be missing now. Before Houpt, formerly the head of the New England Employee Benefits Council, the seat was held by Rick Lord, the longtime Associated Industries of Massachusetts president. From Houpt\u2019s perspective, the nearly 4 million people in the state with employer-sponsored insurance should still be at the table, especially as employers and workers pay an increasingly disproportionate share of health care costs.<\/p>\n This game of musical chairs frustrates Jon Hurst, the president of the Retailers Association of Massachusetts. He has long decried the burden that insurance premiums place on his struggling small-business members. This grand HPC experiment simply isn\u2019t living up to expectations, from his perspective, not if the mom-and-pop shops in his association keep facing double-digit increases. He doesn\u2019t believe the HPC\u2019s limited penalties are anywhere near large enough to meaningfully affect hospital budgets, and there aren\u2019t any penalties at all for drug and med-device companies.<\/p>\n So how does the HPC keep a lid on costs? The 65-person agency regularly analyzes the major drivers and reports on them, sometimes issuing policy recommendations. There\u2019s also intense oversight work: Any big merger or acquisition gets scrutinized. And then there\u2019s the threat of a Performance Improvement Plan: The HPC secretly grills dozens of health care providers and insurers each year if they exceed the benchmark inflation rate. While these reviews don\u2019t sound fun, they haven\u2019t been financially painful, either: Only one provider, Mass General Brigham, has had to trim its costs to patients because of a PIP<\/a>, paring them back over an 18-month period that wrapped up early last year.<\/p>\n The end-of-2024 legislation does give the HPC a few more responsibilities, including the remit to analyze the impact of drug costs and more oversight over transactions involving private equity firms or real estate investment trusts. To some extent, lawmakers were reacting to the debacle involving Steward Health Care hospitals<\/a>, not to mention the rise of PE firms in parts of the health care system.<\/p>\n One thing this legislation did not do: increase the punishment for noncompliance. The maximum fine for dodging a PIP is $500,000, a rounding error for a hospital group like MGB, with its $20 billion annual budget. Paul Hattis, a former HPC member who works with the Lown Institute health care think tank, says the weak penalties give providers too much leeway to decide whether or not they truly need to rein in their health care spending growth.<\/p>\n Then there\u2019s the fact that some of the biggest drivers of health care costs \u2014 labor, pharmaceuticals, medical supplies \u2014 aren\u2019t directly regulated by the HPC.<\/p>\n As Healey was assembling her new lineup of commissioners, an email went out to hospital networks that raised eyebrows. The note came from Sarah Iselin, chief executive of Blue Cross Blue Shield of Massachusetts, the state\u2019s largest health insurer. Iselin\u2019s message: No more messing around<\/a>. She takes the benchmark seriously, and wants hospital CEOs to do the same in upcoming contract negotiations with Blue Cross. The insurer plans to hold the average increase for providers across its network below the 3.6 percent threshold.<\/p>\n While hospital executives may disagree with this ultimatum, it\u2019s hard to argue with its sense of urgency. Big cuts in Medicaid<\/a> and other federal funding sources are on the horizon, making it more important than ever to get costs under control. <\/p>\n The threats posed by the federal spending pullback and the intrusion of national for-profit players<\/a> would ideally bring our hospitals and insurers together to work on solutions. But maybe not, if the dustup over Walsh\u2019s appointment is any indication.<\/p>\n The bottom line: While the most recent legislation brings some new faces to the table, it\u2019s not yet clear how it brings the HPC any closer to its ultimate goal.<\/p>\n Jon Chesto can be reached at jon.chesto@globe.com<\/a>. Follow him @jonchesto<\/a>.<\/p>\n