Published: Monday, August 06, 2012, 7:27 PM
Updated: Monday, August 06, 2012, 7:44 PM
By Dan Ring, The Republican
BOSTON — Gov. Deval L. Patrick on Monday signed a comprehensive new bill to control costs in health care, calling it the "next big step forward" in overhauling the health industry.
The 349-page legislation is complex enough that several leaders of hospitals in Western Massachusetts said they are unsure of the bill's financial effects on their institutions.
"This is your house," Patrick told a crowd that gathered inside Nurses' Hall at the Statehouse to celebrate the signing of the bill into law. "This is your day. This is your bill."
The bill, submitted by Patrick in February of last year, seeks to make Massachusetts the first state in the nation to limit the annual growth in health care costs to no more than the yearly growth in the state's economy.
"Today we become the first to crack the code on cost," said Patrick, who was flanked by members of his administration, House Speaker Robert A. DeLeo and Attorney General Martha Coakley.
Several hospital leaders in Western Massachusetts said they need more time to study the bill in order to determine its financial effects on the hospitals.
"We're still trying to understand the implications of this bill in terms of the financial impact,' said Dennis W. Chalke, chief financial officer for Baystate Health in Springfield, which includes Baystate Medical Center in Springfield. "We have a lot of questions. There are a lot of things that are not clear to us at this point."
Daniel P. Moen, president and CEO of the Sisters of Providence Health System in Springfield, which includes Mercy Medical Center, said he welcomed the new law even though he said he fears it may turn out to be top-heavy with regulations. “We need to make sure it is flexible so organizations can innovate,” Moen said Monday afternoon.
Moen said he likes the goal of restricting the increase in health care costs to basically the same rate of growth that exists in the state’s overall economy.
“I think it is a positive," Moen said. "It gets the discussion down on paper. It gives us a goal to work toward. I'm not sure those goals are totally realistic. But I think they are great targets for us to have.”
Hank J. Porten, president and chief executive of Holyoke Medical Center, declined to comment on the bill's possible financial impacts on the hospital.
Ronald P. Bryant, president and CEO of Noble Hospital in Westfield, said it is too soon to tell what impact the new law will have on the hospital's finances.
"We are already one of the lowest-cost hospitals in state," Bryant said. "We are already doing our part.”
Bryant said hospitals will be more affected if they have a higher percentage of patients with Medicaid, a federal-state program that finances health care for the needy and disabled.
He said the bill's cost-cutting goal is realistic. He said costs can't be reduced so much that it leads to a loss of jobs.
“If you set a goal that is too aggressive, then you are forcing hospitals to make cuts you may not want them to make," Bryant said.
To restrict annual growth in costs, the bill establishes a benchmark for growth in total health care spending from 2013 to 2017. The benchmark would be tied to the "potential gross state product," each year and would be 3.6 percent for 2013, according to Jay Gonzalez, the state secretary of administration and finance who also stood with Patrick at Monday's bill signing.
For 2018 to 2022, the benchmark is set at minus 0.5 percent of the growth in the economy.
The bill contains a mechanism for determining the potential gross state product each year.
If the annual growth in total health care expenditures can be limited, then growth in premiums for people and businesses should also be contained, according to Gonzalez.
A newly created, 11-member "health policy commission" can alter the benchmark. The commission includes Gonzalez, Secretary of Health and Human Services Dr. JudyAnn Bigby and three appointees apiece for the governor, the attorney general and the state auditor.
In an interview, Gonzalez said the bill also establishes temporary assessments or surcharges on certain providers and insurers that would raise $225 million over four years.
The money would pay for targeted programs such as information technology, a fund for distressed community hospitals to establish payment and delivery reforms and to pay for a program for competitive grants to community-based organizations, health care providers and regional planning organizations for public health and wellness programs.
The costs of the bill pale in comparison to some lofty projections for savings.
Patrick estimated the bill will save about $200 billion over 15 years from what would otherwise be spent if historic growth rates in health care costs continued.
Over that time period, Patrick said, the average family will see an estimated savings of $40,000 on their health care premiums.
Gonzalez said the growth in the costs of health care are unsustainable. In 2000, for example, health care costs were 23 percent of the total state budget. This year, health care costs are 41 percent of the $32.5 billion state budget for the fiscal year that started July 1, though some of that growth stems from increases in people seeking state subsidized care in the wake of a couple of severe recessions.
Patrick said the bill builds on past changes including the state's 2006 law providing near-universal coverage.
The 2006 state law has resulted in about 439,000 newly insured people, mostly with money from Medicaid, a federal-state health care program for the poor and disabled.
About 98 percent of Massachusetts residents have health insurance following approval of the state law.
Josh Archambault, the health care policy director at the Pioneer Institute, a public policy research group in Boston, warned that the bill is a reversion to past failed, top-down approaches by government on cost control.
"To make matters worse, they are adding hundreds of millions of dollars in new surcharges, fees and penalties that will increase the cost of health care and ultimately be passed on to consumers," Archambault said.
The bill also establishes some new tools for paying for health care and delivering services. Some of those tools include incentives for spending more on preventative care to reduce office visits and tests, bundling certain payments instead of a fee for each service and encouraging doctors and other providers to improve the coordination of care.
Many hospitals and insurers in the state are already involved in these efforts.
Baystate Medical Center, for example, has 15 medical practices involved in so-called "medical homes," which involve organizing care around patients, working in teams and coordinating and tracking care over time, according to the hospital. "We've already taken many steps," said Chalke, the chief financial officer at Baystate Health.
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