Health Policy Commission to provide comment on Attorney General and Partners HealthCare final resolution
The Health Policy Commission (HPC) met on Wednesday, July 2nd, 2014 to cover a packed agenda of HPC activities including a preliminary report on the Cost and Market Impact Review (CMIR) of the proposed Partners acquisition of Hallmark Health System and a discussion around the Commission’s comments to the Attorney General and Partners final resolution currently in front of Suffolk Superior Court judge, Janet L. Sanders. The Commission posted its slides from the meeting. Keep on reading on for a summary of the agenda points and discussion.
As usual, Executive Director David Seltz opened the meeting giving his report to the Board. Seltz first announced the upcoming 2014 Annual Health Care Cost Trend Hearing taking place October 6th and 7th, 2014 at Suffolk University Law School (slide 5). In addition to cost trends for public and commercial payers as well as hospitals and other providers, the 2014 hearing will focus on the state’s performance under the health care cost growth benchmark. Seltz then provided an update on recent budgetary and legislative successes such as a one-time allocation of $2 million for the integration of behavioral health with patient-centered medical homes (PCMH) and the nurse staffing ratio signed into law by Governor Deval Patrick for which the HPC will be involved in developing the acuity tool. He closed his report by commending the young agency for its important work and continuing impact in Massachusetts.
Commission Chair, Stuart Altman, then introduced Cost Trends and Market Performance Committee Chair, David Cutler, who provided a brief summary of the Material Change Notices (MCN) received since April 2013 (slide 10) and currently pending notices (slide 11). Cutler then turned it over to Karen Tseng, Policy Director for Market Performance, who presented the preliminary CMIR for the Partners-Hallmark Health System acquisition (slides 12-58).
Tseng began by thanking Partners HealthCare and Hallmark Health System for both entities’ cooperation and willingness to share information throughout the CMIR process and provided an overview of the CMIR process and outputs (slide 14), highlighting the purpose of the CMIR to “promote transparency and accountability in engaging in market changes, and encourage market participants to minimize negative impacts and enhance positive outcomes of any given material change,” (slide 13). Tseng reminded the audience of the structured CMIR approach consisting of a baseline review in regards to the costs, quality, and access to health services which is then used to conduct an impact analysis of the proposed market change along the same domains. She was also sure to mention that the CMIR analysis did take into account the recently filed agreement between the Attorney General and Partners HealthCare.
Descriptions of Partners and Hallmark indicated that Partners’ geographic service area overlaps with Hallmark’s, meaning the two entities are current competitors, and that the two entities have been clinically and contractually affiliated for the past two decades (slides 15-16). Under the proposed fully-integrated agreement, however, Hallmark would become a community-based member of Partners and a number of initiatives would be undertaken such as program and facilities rationalization, population health management (PHM) and primary care network development, and IT and infrastructure investments (slide 17). The HPC analysis provides a diagram of the proposed program and facilities rationalization, pictured below, which shows the transfer of all area behavioral health services to North Shore Medical Center Union Hospital in Lynn. Slides 19 through 39 provide the characteristics of both Partners and Hallmark which were used in the HPC’s baseline review.
The HPC analysis determined that the proposed transaction will reinforce Partners’ position as the provider with the highest market share in its northeastern Massachusetts service areas and strengthen Partners’ ability and incentives to negotiate price increases and other favorable contract terms (slide 43). Further, as the Hallmark physicians become more integrated with Partners, changes in physician prices are anticipated to increase total medical spending in northeastern Massachusetts; if Partners seeks parity between Hallmark’s prices and those at its already owned community hospitals, these changes in hospital prices will also increase total medical spending in northeastern Massachusetts (slides 44-45). HPC analysis also determined that shifts in site of care as Hallmark joins Partners would likely be multidirectional, rather than from Massachusetts General Hospital to Hallmark as a Partners hospital as the parties suggest, and net changes are unlikely to result in significant savings (slides 46-47).
In sum, the HPC impact review found that though the proposed population health management initiatives have the potential to reduce unnecessary utilization and wasteful spending, the scope of potential savings is likely smaller than predicted by the parties and is not expected to offset anticipated increases in total medical spending (slides 48-49). The HPC estimates that, over time, this transaction is anticipated to increase spending in northeastern Massachusetts by an estimated $15.5 million to $23 million per year for the three major commercial payers which are not expected to be offset by commensurate savings (slide 57).
HPC analysis found that opportunities for improvement in Hallmark’s quality performance through the exchange of policies and best practices do exist and the parties have identified areas they intend to target as well as plans for clinical integration. However, it is unclear how corporate ownership is instrumental to achieving these aims as the parties are already clinically and contractually affiliated (slide 53).
The HPC impact review also found potential for the parties’ plans to improve access to targeted services but the current plans lack sufficient detail for the HPC to determine whether this is likely to be realized. The HPC further found that the proposed repurposing and rationalization plan to relocate inpatient general acute care services is unlikely to impair regional access to these services, but that relocating inpatient behavioral health services may in fact adversely affect access particularly in vulnerable populations as the distance to a care site may dramatically increase (slide 56).
In comments following this presentation, Commissioner David Cutler raised the point that legitimate differences in opinion exist as to the appropriate method of analysis when estimating market impacts of this nature; he asked that both Partners and Hallmark elaborate on the types of commitment they are willing to make to ensure the goals of cost savings, quality improvement, and increased access are realized. Commissioner Paul Hattis, on the other hand, expressed doubt about the likelihood of these goals being achieved. Commissioner Marylou Sudders brought up the extremely important need for clarity on whether the proposed behavioral health center for excellence at North Shore Medical Center – Union (slide 18) will be a free-standing site or be a part of MGH. This distinction is important because of lifetime caps on services delivered at free-standing sites versus no such cap on services delivered in a general hospital setting. This conversation culminated in a vote to release the preliminary CMIR.
Commission Chair Stuart Altman then opened for discussion the subject of the HPC providing comment to the Attorney General as a part of the public comment period ordered by Suffolk Superior Court judge Janet L. Sanders regarding the proposed final resolution between Partners HealthCare and the Attorney General. Judge Sanders has invited comments as to the substance of the agreement as well as the appropriate standard of review to be submitted to the Attorney general by July 21. Altman then proposed to the Commission that the HPC staff draft such a comment submission to be considered and voted on by the full board. Commissioner Hattis proposed an amendment to the motion (text available in the slide set between 59 and 60) to allow for “other relevant comments” in the HPC submission. This proposed amendment was voted down, however, and the HPC staff was directed to draft a comment summarizing the HPC’s data driven CMIRs involving Partners HealthCare and the 2013 Annual Cost Trends Report and the 2014 Supplement.
The Commission will need to schedule a meeting before the July 21 deadline to approve their submission to the court. Hattis suggested July 17 or 18 as likely dates.
Commissioner Altman then opened the floor for public comment. First was Rev. Burns Stanfield on behalf of the Greater Boston Interfaith Organization who thanked the Health Policy Commission for its important work advocating for the interests of patients and consumers. Next, Alan Macdonald, Executive Vice President of Strategy and External Affairs at Hallmark Health System, spoke to the need for this corporate affiliation with Partners HealthCare to address the changes occurring in state and national health policy, particularly the need to invest in capital improvements. A number of the commissioners in turn asked that Hallmark, in its response to the preliminary CMIR, address with specificity the types of commitments it is willing to make to ensure that the community benefits from the proposed transaction. Peter Forman, President and CEO of South Shore Chamber of Commerce, next urged the Commission to focus on making its comments to the Attorney General useful moving forward rather than reiterating concerns already raised in its CMIR.
Guy Spinelli, President of Granite Medical Group and Chairman of the Board at Atrius Health, Michael Wagner, President and CEO of Tufts Medical Center and Floating Hospital for Children, and David Spackman, General Counsel and Senior Vice President, Governmental Relations at Lahey Health then made comments asking the Commission to “go broad” with its comments to the Attorney General and address the issues of component contracting, physician growth and where such growth will pull physicians from, and price growth. Laura Sullivan of Cambridge Health Alliance asked the HPC to pay particular attention to the differences in reimbursement rates of Partners affiliated health centers and non-Partners affiliated organizations such as CHA, as it will be even harder to compete with Partners for skilled physicians as Partners grows. Celia Wcislo, on behalf of 1199SEIU then highlighted the need for more information as to how Partners and Hallmark intend to transition its skilled medical workforce from general medical services to behavioral health services as a part of the proposed repurposing and rationalization initiative. Finally, Brent Henry, Vice President and General Counsel at Partners HealthCare affirmed Partners’ commitment to participate in the Commission’s CMIR process and reach an appropriate resolution with the Attorney General.
Due to time constraints from the lenghty Cost Trends and Market Performance discussion and public comment time, updates on the Community Health Care Investment and Consumer Involvement, Quality Improvement and Patient Protection, and Care Delivery and Payment System Transformation committees were cut short. Information regarding those activities can be found in the HPC slide set (slides 64-75). The Commission did vote to release the July 2014 Supplemental Cost Trends Report as well as approve the Registration of Provider Organizations (RPO) final regulations (overview at slides 70-75). A more in-depth presentation of the approved RPO regulations can be found in the Care Delivery and Payment System Transformation Committee slide set.
The meeting finished with a brief Administration and Finance update and approval of the FY15 operating budget (slides 83-85). Discussion under this agenda item centered on some concern on the inclusion of gaming funds – funds from one-time licensing fees of gaming establishments – in the FY15 budget should those funds not come to fruition. It was reported, however, that inclusion of these funds in the operating budget is consistent with the legislative budget and other agencies slated to receive such funds.
The next full regularly scheduled Health Policy Commission meeting will be September 3rd, 2014. An additional meeting to approve the HPC’s public comments on the Attorney General and Partners HealthCare final resolution will be scheduled to take place before July 21st.
- Kelly Elder