The Massachusetts Health Policy Commission reached an agreement with General Brigham of Massachusetts on a cost-cutting plan. The state agency wants more powers to control hospital costs, including financial penalties.
A state agency in Massachusetts has signed on to Brigham General’s cost-cutting plan, and the agency would like more power to control health care costs.
The Massachusetts Health Policy Commission, an agency focused on reducing the growth of health care costs, voted this week to approve a Brigham General plan designed to generate $127.8 million in annual savings.
The Massachusetts commission hailed the plan as the first ever required by the agency and the first of its kind in the nation. Citing concerns about Brigham General’s spending, the commission ordered the health system to develop a performance improvement plan in January.
Mass General Brigham aims to generate most of the savings ($90 million) from price reductions. The rest of the savings are expected to come from reducing utilization ($32.4 million) and shifting care to lower-cost sites ($5.4 million). The proposal also calls for improved accountability through value-based care, the committee said.
The State Commission and General Brigham have been arguing over the cost-savings plan for some time. Mass. General Brigham initially proposed a plan that would have provided $70 million in annual savings, but then revised the proposal at the commission’s behest.
Mass General Brigham is embarking on a nearly $2 billion plan to expand its facilities, a plan that has also been modified after state officials raised concerns. Mass General Brigham is also expanding its home hospital program.
The Massachusetts Health Policy Commission, which was created 10 years ago, has also been pushing for greater powers to control health care prices.
The commission said in a statement that it should have “greater oversight tools, including powers to impose escalating financial penalties, to deter excessive spending.”
In addition, the commission calls on Massachusetts to take further steps to reduce the growth of health care costs, including caps on hospital price increases; more control over supplier mergers and expansions; and greater oversight of the pharmaceutical sector, including pricing. (Read the agency’s full report and recommendations.)
Massachusetts has higher hospital utilization than the national average, the commission said. Inpatient stays in Massachusetts are 7% higher than the US as a whole, while emergency room visits are 11% higher and outpatient visits are 42% higher than the national average. The commission said the gap has narrowed somewhat in recent years.
“The long-term systemic factors underlying high spending growth persist, and the ongoing impact of the COVID-19 pandemic has only added new headwinds,” Deborah Deveau, chair of the health policy committee, said in a statement. “We must continue to address affordability challenges or the Commonwealth will not be able to meet its cost containment targets. Today’s report makes strong recommendations to all stakeholders to address these challenges.”
The Commission cites rising prices as a need for more action. From 2018 to 2020, hospital prices for inpatient procedures rose 7.9% and for outpatient services rose 7.1%. During this time, the prices of services in doctors’ offices have increased by 3.2%.
From 2017 to 2020, consumers paid 50 percent more for a 30-day supply of prescription drugs for chronic conditions, according to the commission.
David Seltz, executive director of the health policy committee, said the agency is looking for new ways to contain the rise in health care costs.
In a statement, he said the committee’s recommendations reflected “a will to change course and deliver a new, progressive plan to address the most important challenges facing our health care system today.”
Hospitals reported that they were facing serious financial difficulties.
Hospitals are projected to lose billions of dollars this year, and more than half of all hospitals are expected to end 2022 with negative margins, according to a recent report from the American Hospital Association. Hospitals are reporting higher labor costs as well as staff shortages across the country.