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HPC Goes Deep Into Partners Acquistion

HPC Conclusions on Partners/Hallmark CMIR 9-3-14

HPC Goes Deep Into Partners Acquistion

September 7, 2014

The Health Policy Commission (HPC) met on Wednesday, September 3, 2014 with a packed agenda covering topics such as the upcoming Cost Trends Hearings, their Final Report on the Partners proposed acquisition of Hallmark Health, new legislation affecting the HPC, and the CHART Investment Program. The detailed meeting slides are online and and takes just a click below to find our summary of the highlights and discussion points.

Executive Director David Seltz' ED report began with an overview of the recently released Center for Health Information and Analysis (CHIA) Annual Report, which includes the first-ever calculation of the state’s total health care expenditures (THCE). Seltz presented some of the major findings of the report, including that the overall per capita growth in THCE (2.3%) was below the Commonwealth’s 2013 health care cost growth benchmark (3.6%) (slides 5-6). Commissioner David Cutler relayed that the news coverage of the report had been too negative, as THCE was well below the state’s aggressive benchmark and MA will likely also beat the nation in containing health care cost growth.  HPC Board Chair Stuart Altman agreed that the findings were positive but was not yet prepared to declare victory. He pointed out that the report showed a decrease in commercial members covered by alternative payment methodologies, which is not a trend in the right direction.  Seltz relayed that CHIA’s Executive Director Áron Boros will be presenting a more in-depth report of the findings during the HPC’s upcoming 2014 Health Care Cost Trends Hearing scheduled for October 6 and 7, which will provide an opportunity for further questions and discussion.  Seltz then went over the dates for upcoming HPC Board and Committee meetings (slide 7).

Next up was an update from the Cost Trends and Market Performance (CTMP) Committee, chaired by Commissioner David Cutler.  Marian Wrobel, Director of Research at the HPC, first reviewed recommendations from the HPC’s July 2014 Cost Trends Supplement and how the HPC plans to address these recommendations for the remainder of 2014 (slide 10). She then provided a summary of some of the main points coming out of Committee discussions on the Cost Trends Supplement (slide 11) and reviewed the five potential topics for 2014 cost trends research: health care cost growth benchmark and current trends; delivery system; insurance markets; special studies of opportunities to increase efficiency and value; and transparency, accountability and measurement (slide 12).  She concluded her presentation with an overview of the draft agenda for the 2014 Health Care Costs Trends Hearing and a timeline of next steps for the hearing and final report (slides 13-14). 

Following this update, the Commissioners engaged in a discussion of hearing topics and future research. Commissioner Wendy Everett stated her expectations that the hearing will reveal more information on the drivers of the shift from HMO to PPO plans and hopes that the panelists will be more knowledgeable than last year on how to turn around that shift. Commissioner Marylou Sudders suggested having a panel of employers in order to dive deeper into that topic. Cutler suggested examining the high rate of utilization of post-acute care.  Altman raised that there is a big debate across the country regarding ways to decrease spending, and the HPC should be examining both the provider-driven side and the consumer-driven side, where consumers take a more active role in cost containment through high deductible and tiered network health plans.  Commissioner Carole Allen pointed out that another way to reduce consumer demand is to keep the population healthier.  

Karen Tseng, Policy Director for Market Performance, continued the CTMP Committee presentation with an update on material change notices. She provided an overview of the types of transactions for which the HPC received notices from April 2013 to the present and the notices under preliminary review, which include the proposed merger between Tufts Medical Center/NEQCA and their affiliates and Circle Health, which operates Lowell General Hospital and its affiliates; and the proposed acquisition of the Visiting Nurse Association of Middlesex-East in Wakefield by Lahey Health System (slides 16-17).

Tseng then presented on the Final Cost and Market Impact Review (CMIR) of Partners HealthCare System’s Proposed Acquisition of Hallmark Health Corporation (slides 19-24).  She detailed the key findings of the final report regarding cost, quality and access impact. For cost impact, the 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 is not expected to be offset by proportionate savings from decreased utilization through population health management. While the differences in Partners’ and Hallmark’s historic quality performance indicate potential for the transaction to drive quality improvement, it is unclear how this merger is necessary to improve clinical quality in ways the parties’ longstanding affiliation has not. Finally, while the parties have proposed significant changes to care delivery that have the potential to expand access to a number of services in northeastern MA, their plans lack critical information necessary to evaluate the extent to which such potential will be realized. Given Hallmark and NSMC’s high government payer mix, the proposed reconfiguration and relocation of services is anticipated to impact especially vulnerable populations as they seek to access services at new, more distant locations.

 Given these findings, the HPC reached the following conclusions:

  • Negative cost and market impacts are projected notwithstanding the settlement negotiated by the parties (slide 21)
  • The parties have not demonstrated the likelihood that savings from their PHM initiatives will offset spending increases from the transaction (slide 22)
  • There is general potential for this transaction to improve access to care, but the extent to which the parties realize such potential will be driven by key decisions and firm commitments the parties have not yet made (slide 23)

Tseng noted that the parties have consistently advocated for the proposed transaction on the basis that it will lower total medical spending, and have publicly stated their purpose in consolidating is not to raise prices. Given this perspective, she recommended that the parties consider committing to additional or alternative measures to mitigate this transaction’s cost and market impacts. During the discussion, Commissioner Paul Hattis cited the letter to the Court submitted by the Greater Boston Interfaith Organization, calling on the transaction to be delayed until there is more ability to assess the impact of the merger. He called on the parties to voluntarily hold off on the deal until more data is available.

The HPC Board then voted unanimously in favor of issuing the final CMIR report and referring the report to the MA Attorney General’s Office, with the abstention of Commissioner Veronica Turner due to a conflict of interest. The HPC Board further voted unanimously for Executive Director Seltz to submit the final CMIR report to the Superior Court as part of the ongoing settlement (slides 25-26).

Tseng then moved on to discuss the proposed regulation on notices of material change and cost and market impact reviews (CMIRs) (958 CMR 7.00). She reviewed the definitions section of the proposed regulation and the processes for reviewing notices of material change and conducting CMIRs (slides 28-31). The proposed next steps for the regulation include a public comment period that runs through the end of October with a public hearing scheduled for October 1, 2014. The final regulation will be considered by the CTMP Committee on December 3, 2014 and by the full HPC Board for approval on December 17, 2014 (slide 32).  The HPC Board then voted unanimously to authorize the issuance of the proposed regulation.

 HPC behavioral health agenda 8-3-14

Next on the agenda was an update from the Quality Improvement and Patient Protection (QIPP) Committee, chaired by Commissioner Marylou Sudders.  Commissioner Sudders first skipped ahead in the slides to discuss the new law on nurse staff staffing which becomes effective September 28, 2014 (slide 40). The next steps include background research and analysis, stakeholder meetings and public listening sessions, and the promulgation of draft regulations with a public comment period in the late fall/early winter (slides 41-42). Commissioner Sudders then turned it over the ED Seltz to provide an update on the HPC’s behavioral health agenda, which reflects discussion from the last QIPP meeting. Seltz walked through next steps for the following items:

  • Promoting clinical standards through accountable care models
  • Promoting integrated care delivery models through investment
  • Research, evaluation, and analysis
  • Health planning activities
  • Public forum for policy discussion
  • Protecting patient access to necessary care (slides 35-37)

He then provided an overview of the new substance use disorder (SUD) legislation affecting the HPC (Chapter 258 of the Acts of 2014). The new law requires CHIA to conduct a review of the accessibility of SUD treatment and the adequacy of insurance coverage for such treatment and issue a report by February 15, 2015. The law then requires the HPC to issue a further report recommending policies to ensure access to and coverage for SUD treatment throughout the Commonwealth by May 30, 2015 (slide 39).

Up next was an update from the Care Delivery and Payment System Transformation (CDPST) Committee.  Carole Allen, Committee Chair, announced that the HPC hired a new Policy Director for Accountable Care, Ipek Demirsoy.  The CDPST Committee is moving forward with its work on PCMH certification criteria and alignment with ACOs. During the last CDPST Committee meeting, Thomas Traylor, Vice for Federal, State and Local Programs and David Beck, Vice President and General Counsel at Boston Medical Center (BMC) presented on BMC’s efforts and progress on transitioning the hospital’s integrated delivery system model into an Accountable Care Organization (ACO).  Commissioner Allen then turned it over to ED David Seltz and Kara Vidal, Program Manager for System Performance, to provide an update on the Registration of Provider Organizations Program. On July 2, the Board voted to approve 958 CMR 6.00, Registration of Provider Organizations. The regulation became effective on Friday, July 18, marking the official launch of the RPO Program. The Commission released a Helpful Information memo and the Data Submission Manual for Initial Registration: Part 1 on July 23 (slides 45-46). The HPC held two training sessions in August with 34 unique provider organizations represented and plans to hold another session in late September.  Over the next two months, the RPO Program’s focus will be on providing guidance and support to registering entities (slides 47-48). 

The final Committee update came from the Community Health Care Investment and Consumer Involvement (CHCICI) Committee, chaired by Commissioner Paul Hattis. Cecilia Gerard, Deputy Director of System Performance at the HPC, walked through an update of the Community Hospital Acceleration, Revitalization and Transformation (CHART) Investment Program operations.  The HPC is currently in the process of procurement and has received 31 prospectus submissions from 30 qualified acute hospitals, which reflect the phase goals for the program (slides 51-52). Proposed initiatives generally reflected the HPC’s focus on care delivery models with a community and population orientation and many initiatives had a core behavioral health focus (slide 53). Sam Wertheimer, Senior Policy Associate at the HPC, then provided a status report on CHART Phase 1 projects and described the recent CHART Leadership Summit, which all CHART hospitals attended, including over 200 hospital executives (slides 55-56). Each hospital received a customized “CHART book,” which covered topics such as quality performance relative to inpatient operating expenses per admission by hospital (slide 57). Gerard concluded the CHCICI Committee presentation with an update on the Community Hospital Survey, developed to take action on the future of community hospitals in MA. She walked the Board back through the objectives of the study, which include conducting an analysis of acute care supply and identifying opportunities to meet community needs and identifying challenges to and opportunities for transformation in community hospitals (slide 59).  To date, HPC staff have conducted preliminary respondent interviews to inform key study questions and the scope (slide 60). In the discussion, several commissioners raised questions about the study, asking whether it duplicates the work of the Health Planning Council, and whether it would divert the HPC from its statutory goals. EOHHS Secretary John Polanawicz responded, saying there was consultation among the two HPCs, and that the work will be complementary.

The next HPC Board meeting is scheduled for October 22, 2014.

   - Alyssa Vangeli