Over the weekend, Massachusetts House and Senate conferees reached agreement on two major pieces of legislation oriented to controlling health care costs and stabilizing the health care system.
- An Act relative to pharmaceutical access, costs and transparency
- An Act enhancing the market review process (focus on private equity)
These bills were both enacted today and are now before the Governor for her signature. Below, please find plain language summaries of each bill and additional technical resources.
Summary of pharmaceutical bill
Excerpted from joint House-Senate press release:
S.3012, An Act relative to pharmaceutical access, costs, and transparency, requires health insurers to cover life-saving medications for diabetes, asthma, and certain heart conditions with no or limited out-of-pocket costs for patients. The measure is particularly critical for residents of color, who disproportionately face chronic illnesses.
The bill takes bold action to lower out-of-pocket costs and ensure access to life saving medications by offering immediate price relief for prescription drugs used to treat diabetes, asthma, and certain heart conditions. For each condition, the bill requires insurers to eliminate cost-sharing requirements for one generic drug and to cap co-payments on one brand-name drug at $25 per 30-day supply.
It further brings down consumer costs by ensuring that consumers are not charged a cost-sharing amount, such as a co-pay, if it would be cheaper for them to purchase the drug without using their insurance.
Approximately nine per cent of Massachusetts residents have diagnosed diabetes and 6.2 per cent of adults over 35 live with heart disease. In 2015, more than 10 per cent of residents lived with asthma. Black residents face each at a higher rate—over 12 per cent live with diabetes and nearly 14 per cent of Black adults live with asthma.
The bill drastically increases state oversight of pharmacy benefit managers (PBMs), which currently negotiate prescription drug prices with little oversight, making it unclear if they consistently act in the best interest of consumers. To do so, the legislation authorizes the Division of Insurance (DOI) to license and regulate PBMs. PBMs are also prohibited from making payments to pharmacy benefit consultants or brokers who work on behalf of health plan sponsors during a contracting or bidding process.
To create a more complete data-driven picture of drug costs in Massachusetts, the Center for Health Information and Analysis (CHIA) will collect a range of drug cost information from pharmaceutical manufacturers and PBMs. With the data, CHIA can offer a more complete examination of the drivers of health care costs in its annual health care cost report, allowing policymakers and consumers to better understand the role of pharmaceutical manufacturers and PBMs in the health care system.
In addition to CHIA’s cost analysis, pharmaceutical manufacturers and PBMs will be included in the Health Policy Commission (HPC)’s Annual Health Care Cost Trends Hearing for the first time. Participation in the hearings will require manufacturers and PBMs to provide public testimony on the factors that influence drug costs, allowing those factors to be taken into account as the commission identifies how to improve care and reduce costs for residents.
Further, the legislation establishes the Office for Pharmaceutical Policy and Analysis within HPC, which will be tasked with analyzing trends related to pharmaceutical access, affordability, and spending in Massachusetts. The office will publish an annual report with recommendations for strategies to mitigate pharmaceutical spending growth, promote affordability and enhance pharmaceutical access.
Summary of market oversight bill
Excerpted from joint House-Senate press release:
Strengthening Oversight
The bill makes important updates to the Commonwealth’s laws governing the oversight of hospital systems and provider organizations so the gaps exploited by Steward Health Care cannot be exploited again. Oversight measures include:
- Bolstering the reporting authority of the Center for Health Analysis and Information (CHIA) and scope of the oversight of the Health Policy Commission (HPC) by adding reporting requirements for hospitals and registered provider organizations (RPOs), including significant equity investors. Audited financial statement reporting is mandated for out-of-state operators of a hospital or RPO parent company, private equity investors, and management services organizations (MSOs).
- Enhancing penalties for not complying with CHIA data reporting requirements, including increasing and removing the cap on financial penalties.
- Requiring CHIA to notify HPC and the Department of Public Health (DPH) of failure to report, which will be considered during a review by the HPC in the Cost and Market Impact Review (CMIR) process and by DPH when considering a Determination of Need (DON) application or when reviewing licensure and suitability.
- Expanding DPH authority over the Board of Registration in Medicine to improve oversight and align Board activities with broader state market oversight goals.
- Requiring DPH to hold a public hearing prior to hospital and essential service closures, and authorizing DPH to seek an impact analysis of a hospital closure of any essential health service from HPC.
The bill expands the Attorney General’s authority to monitor health care trends and enforce the False Claims Act by allowing the office to seek information from significant equity investors, real estate investment trusts (REITs), and MSOs, and to hold entities with an ownership or controlling interest in a provider organization liable if they are aware of false claims submitted to the government.
The bill makes significant reforms to prevent acute care hospitals from selling land to REITs. When Steward Health Care sold hospital properties to Medical Properties Trust (MPT) in 2016 for $1.25 billion, the hospital network agreed to lease back their former properties from MPT for exorbitant rents, siphoning away necessary resources and depriving the hospital operations and patients of needed investments. The legislation prohibits the future leasing of an acute hospital’s main campus from REITs. It requires increased disclosure of other lease arrangements as part of the licensure process with DPH.
In October 2023, a new mother tragically died at a Steward hospital after medical equipment that could have saved her life was repossessed because Steward couldn’t pay its bills. To prevent a similar tragedy, the legislation requires creditors, vendors, and hospitals to notify the state 60 days before any possible repossession of medical or surgical equipment, and makes any incident like this a reportable event to the state, similar to reporting of medical and drug errors. To improve patient safety, the bill also expands the Betsy Lehman Center’s medical error and patient safety data collection and reporting authority and modernizes the state’s Standard Quality Measure Set to improve provider reporting on patient care.
Increasing Financial Transparency & Addressing the Rising Cost of Health Care
To address the rising cost of health care in Massachusetts, the bill reforms the HPC and expands the HPC cost trends examination while also raising expectations on providers to meet the Commonwealth’s cost containment goals. Provisions to combat the rising costs of health care include:
- Reconstituting the membership requirements for the HPC to include more current, relevant experience and insight into the trajectory of the healthcare market.
- Broadening the scope of HPC’s annual cost trends hearings and report to capture significant equity investors, health care REITs, MSOs, pharmaceutical manufacturing companies and pharmacy benefit managers (PBMs), MassHealth, the Division of Insurance (DOI), the Health Connector, and to request testimony from the Centers for Medicare and Medicaid Services.
- Expanding the HPC cost trends examination to include the new data collected by CHIA through the RPO process, and require submissions from significant equity investors, health care REITs, and MSOs.
- Requiring that expansions in capacity, transactions involving equity investor ownership, significant asset and real estate transfers, and for-profit conversions be added to the material change notice process.
- Requiring the submission of information including capital structure, general financial condition, ownership and management structure, and audited financial statements in transactions that involve a significant equity investor.
- Authorizing the HPC to examine the size and market share of any corporate affiliates or significant equity investors of the provider or provider organization, the inventory of health care resources maintained by the DPH, and any related data or reports from the office of health resource planning as part of a CMIR.
- Requiring that any final CMIR report issued by HPC must be referred to DPH for consideration during any pending determinations of need involving the provider or provider organization.
This bill broadens CHIA’s duty to monitor acute hospitals’ financial conditions by requiring them to file margins, investments, and information on any relationships with significant equity investors, health care REITs, and MSOs. It also codifies DPH regulation to pause the DON timeline for an independent cost analysis (ICA), CMIR, and performance improvement plan and authorizes DPH to choose the entity conducting the ICA from a list of three entities submitted by the applicant.
Stability and Sustainability
The bill moves state health resource planning to the HPC by establishing a new Office of Health Resource Planning to produce a state health plan as a forecast of anticipated demand, production, supply and distribution of health care resources on a state-wide and regional basis. The office will also conduct focused assessments of supply, distribution and capacity in relation to projected need of health care services.
The bill directs DOI to consider affordability when reviewing rates, while adhering to principles of actuarial soundness and solvency. It also creates a Primary Care Task Force to make recommendations to improve primary care access, delivery, and financial stability. The task force comprises 25 members and is chaired by the HPC and Executive Office of Health and Human Services (EOHHS). The task force’s recommendations will include defining primary care services, creating standardized data reporting, establishing a primary care spending target for public and private health care payers, assessing impacts of health plan design on health equity, and devising ways to increase the primary care workforce and improve employment conditions. The state will publish relevant data on a primary care dashboard maintained by CHIA and Massachusetts Health Quality Partners.
I’m assuming someone will put out an intelligible summary of the bills’ effects at some point?
Yes. Done.
It does not appear to me that any of the links above provides a high-level description of what either of these two bills actually does. The Section by Section links are far too in the weeds, and two statements are incredibly vague.
Can you please give us a couple plain-language paragraphs about what these bills do?
Fair ask! Done.
Thank you for your response. I appreciate the detailed explanation of the bills.
It would be beneficial if we get a layman’s summary for what exactly has been pushed to the Governor in these Bills.
Done! Added above.
Will, please post HERE the actual final House and Senate votes (Yay & Nay) on these two bills.
Sometimes bills are processed along but not actually voted on, which of course is unconstitutional.
You know that.
Hardly anyone else does.
I find it hard to believe that a quorum (a majority of each chamber) actually showed up a day before New Year’s Eve.
But maybe I’m wrong.
Actual vote, please, and the number of each chamber that actually appeared in person.
These bills were both rollcalled earlier in the session. You can see the pharma roll calls at this link. and the market oversight rollcalls at this link. The final reconciled package was passed on voice votes in both chambers with less than a quorum present. This is routine.
and here we go again how do anyone in office vote on anything concerning another human life with involving the folks it may affect,like judges and so forth any position that can affect another beings life should only be voted in as they call it be WE THE PEOPLE. at least that’s what the U.S constitution states congress nor a
representative,and no way in H shall I be paying my out of pocket for folks coming here to get their’s for free
I voted for you Althea.
Above I asked for 2 simple things that Will so far has not provided:
1. Will, please post HERE the actual final House and Senate votes (Yay & Nay) on these two bills.
2. Actual vote, please, and the number of each chamber that actually appeared in person.
If the vote was legitimate (which many votes are not because they are simply voice votes with only 1or 2 people present) then Will should be able to answer.
The Mass Constitution requires a quorum in each chamber for any legislative business:
“Article XXXIII.
A MAJORITY of the members of each branch of the general court shall constitute a QUORUM for the transaction of business, but a less number may adjourn from day to day, and COMPEL the attendance of absent members. All the provisions of the existing constitution inconsistent with the provisions herein contained are hereby annulled.”
More corruption during the Informal Session, I presume?
This is outrageous!
Or, correct the record: did you get this legislation passed via the UNCONSTITUTIONAL informal sessions?
Thanks Will – much better with the simplified summaries!
I’m glad to see these bills being passed. They seem to address important issues in the healthcare system.
I read the Boston Globe article today (Tuesday) on the 2 health bills.
It said the 2 bills were passed in “informal sessions” which means there was NO quorum, a requirement of the Mass. Constitution I cited its Article XXXIII above. Read it, Will.
Article XXXIII says no business (such as passing a bill) can be conducted without a quorum.
It does not matter what is “routine.”
The Globe article also said that any legislator could have objected to the lack of quorum, but did not in the case of the 2 bills.
That means there was NO QUORUM. That’s a clear violation of Article XXXIII.
You can dodge this matter any way you want, Will, but the legislature acted illegally and does this constantly.
People don’t know.
That is why I am posting this.
Will said “The final RECONCILED package was passed on voice vote.”
This means that the legislation was changed and yet the FINAL vote was NOT by roll call.
The earlier roll calls do not count, Will.
The FINAL vote has to be done on the FINAL forms of the bills with a QUORUM present.
There was no quorum.
You know this is unconstitutional, Will.
Article XXXIII is clear.
What about that article do you not understand?
When I started my business as a sole proprietor in 2001, my insurance premium was just over $200 a month, zero deductible, $5 copay to see any doctor, including a specialist.
Now, to obtain health insurance as a sole proprietor, the premium cost for me to obtain a policy at my age (57) is $900 a month, for a restrictive policy that won’t let me go to the top-tier hospitals like Mass General Brigham or Dana Farber. That same $900 premium also now requires me to meet a $9,000 deductible per year before a penny is paid for any doctor I visit outside of regular preventative annual care.
I don’t see anything in these bills to address the prohibitive costs of paying for insurance. I am middle class. I am not rich. But if I were poor, I’d be getting all my health care for free in MA.
Now healthcare is a thing..hmmm
I applaud the fact that the legislature is collecting more information. And also making non compliance with reporting more costly for organizations that do not comply. Not sure how effective the other reforms will be. However, my basic thought is that We, the people and our representatives have allow the creation of monopoly or oligopoly providers of service in the medical area. I would like to see the legislature create a commonwealth of Massachusetts owned Pharmacy Benefits Manager for employees, retirees, and Medicaid recipients to compete with the oligopoly and ensure that prices are understood and fair. California has taken this step. If possible it should also be open to Massachusetts based Insurance companies, and employers. In our society, nothing works better at controlling excessive profiting than a competitor that does not. My thought is the same when it comes to provision of insurance coverage. Think how we do auto insurance. The form and the standard coverage are set out, and add on coverage is easy to see and understand. Controlling how coverage works, would also allow a greater degree of automation of the administration of healthcare, which is one of the largest controllable costs for providers. Not paying claims requires providers to have extra employees to fight with insurance because of complexity how different insurance works and “not necessary” care is a large problem and a major source of profits for insurance, especially for profit insurance. Finally the vertical and horizontal combination of insurance, like United Health Care, owning Insurance, owning Atrius medical, Owning Change Pharmacy Management software,which pays pharmacies and is putting independent pharmacies out of business or maybe it is the PBM, owning the largest PBM, Owning pharmacies in Atrius healthcare locations, Owning a company with a medical AI to review claims and is being sued because the AI is wrong most of the time. There is way more work to reform how we do healthcare in the Commonwealth. I think this legislation is a tiny start at reform.
Congratulations on a difficult job done thoroughly with astonunding patience and skill. John Merrifield