BOSTON (SHNS) – Regulators and industry groups are hopeful that lawmakers will prioritize action to slow the sharp rise in costs for health care services, medications and other major necessities as the COVID-19 pandemic worsens long-term pressure and opened up new issues of affordability.
The Health Policy Commission, created in a 2012 health care cost control law, and the Legislature’s Joint Committee on Health Care Financing decided Wednesday to review what figure they will set as a benchmark for the total increase. of health care spending in 2024, although some policymakers questioned whether it is even useful to set a forward-looking target based on actual spending data from several years ago.
For 2023, regulators agreed on a target to limit total health care spending growth to 3.6 percent, though it could be a challenge to achieve that amid high inflation, staff shortages and other cost-driving pressures higher and greater costs. State analysts estimated Monday that per capita health care spending rose 9 percent in 2021, after falling 2.3 percent in 2020 due to the pandemic.
Sen. Cindy Friedman, who co-chairs the Health Care Financing Committee, pondered toward the start of Wednesday’s hearing whether the standard process, as designed more than a decade ago, is still the right approach.
“Do we need a new goal? Are we counting the right things?” Friedman said. “If our goal is to keep costs affordable for people, if you look at the cost of health care and talk to the people out there who buy and use health care and health insurance, there is such a discrepancy. They just can’t do it anymore. They can’t pay for it.”
“I fully appreciate the tremendous complexity of this, but they will look at something and say, ‘the cost has gone up 3.6 per cent, but my premium has gone up 11.5 per cent and my payments are out of sight.’ , she added.
HPC Executive Director David Seltz responded that he agrees, saying the commission is interested in supplementing the rising health care cost standard with additional information that can better capture cost concerns at an individual household level.
“We’ve been at this for 10 years. We have made significant progress, but there are real affordability challenges that remain,” Seltz said. “How do people feel about health care costs? There are premiums, payments and discounts. All of these have continued to go up and up. They don’t feel it the way we measure total growth in health care spending, and they’re not always one-to-one.”
Voices representing diverse, sometimes competing interests across the health care landscape largely agreed that costs are rising and putting more pressure on individual consumers than the big picture might show.
When it comes to bucking the downward trend line, many of the ideas that regulators, hospital and insurance industry groups and business leaders floated Wednesday are familiar ones that Beacon Hill Democrats have yet to fully embrace.
HPC officials reiterated their recommendations available for monthsmany of which call on lawmakers to sharpen the tools regulators can use.
The commission wants the ability to impose escalating financial penalties on health care providers, payers and other industry segments found to be contributing to excessive spending growth.
Currently, the HPC’s main option for holding entities accountable is to subject them to a performance improvement plan (PIP) process that can result in mandatory spending cuts, and the commission has taken that action complete only once before including Mass. Brigham General in 2022.
Seltz said he also wants regulators to have more leeway to determine which spending increases are allowable and which should be curbed to help the state meet its benchmark.
“Right now, we’re very contained in the statute in terms of how that standard is set and how it’s used. I think that more flexibility and more numbers that we can bring to that process can help send a signal to the market about areas where we want investment and areas where maybe, over time, we want to be able to hold back growth. ,” he said.
The HPC’s legislative recommendations also include actions to limit excessive pricing for both healthcare services and prescription drugs, limit hospital price gouging, subject the pharmaceutical sector to greater scrutiny and to hold health insurers accountable for passing savings on to consumers.
Representing insurers, Massachusetts Association of Health Plans Senior Vice President Liz Leahy said the rise in health care costs has been driven by “the continued increase in prices that doctors, hospitals and other providers charge,” the concentration of services in areas higher costs and “excessive increases in prescription drug spending.”
The organization endorsed HPC’s push to subject pharmaceutical manufacturers and pharmacy benefit managers to additional data reviews and to bring that industry together to hear annual cost trends.
“It is a serious disservice to our state’s cost containment efforts that pharmaceutical companies continue to be absent from the conversation, especially as prescription drug prices continue to outpace inflation and price increases for any other medical commodity or service,” he said. Leahy.
Seltz, touching on a similar theme, said pharmaceutical spending “is a huge part” of the state’s health care footprint, but “is excluded from all other mechanisms of accountability and transparency.”
Last year, the Senate passed an extensive bill aimed at lowering prescription drug costs and increasing access to medications, building on similar legislation the chamber advanced in 2019. In both sessions, the measure died in the House.
Leahy said MAHP supports the pharmaceutical spending oversight reforms contained in that bill, a version of which Friedman reintroduced this session (S 749).
Pharmaceutical industry groups did not testify at Wednesday’s hearing.
In it annual report released on MondayThe Center for Health Information and Analysis said pharmacy spending outpaced all other categories and rose from $10.6 billion in 2019 to $12.7 billion in 2021 before accounting for rebates.
The head of the Massachusetts Biotechnology Council, Zach Stanley, said in response to the report that “increased use is the most likely cause, not increased drug costs.”
“During a pandemic, an increase in the use of medicines that can keep people healthy and out of the hospital should be seen as money well spent,” Stanley said.
As hospitals and other providers face severe staffing shortages that could make services even more inaccessible, Massachusetts Health and Hospitals President and CEO Steve Walsh said he is concerned that the state’s approach to controlling health care spending “has not kept pace with our approach to building our workforce and changing our delivery system.”
“Temperature is simply not designed to measure the biggest cost drivers in today’s market. Health care providers have done whatever is necessary to adapt to those cost pressures and remain accessible to their patients, and those measures have come at staggering prices,” Walsh said.
He cited several factors behind the trend, including rising inflation, Bay Staters seeking care delayed during the pandemic and high pharmaceutical prices, but workforce challenges topped the list.
Walsh said that in fiscal year 2022, Massachusetts hospitals spent more than $1.5 billion on “travel labor” to fill needed openings with temporary workers, reflecting a 610 percent increase from before the COVID-19 pandemic.
“If you take that out of the equation to create the benchmark, we absolutely crush it,” he said. “That’s the single biggest cost pressure on every hospital and health system as we speak, and there’s no way to account for it in the current way we approach the standard.”
The HPC plans to vote on April 12 whether to modify the benchmark for 2024, ahead of an April 15 legal deadline to set the target.
