BOSTON — Senate Democrats will vote Thursday on a voluminous health care oversight reform bill inspired by the crisis at Steward Health Care as well as broader industry trends inflicting pressure on hospitals, providers and patients.
Nearly two months after the House approved an earlier version of the legislation, the Senate Ways and Means Committee on Monday teed up a 115-page redraft (S 2871) that similarly seeks bulked-up reporting requirements, stiffer penalties for failing to comply with state regulations, and greater scrutiny on private equity backers in health care.
Although both versions take aim at similar issues, Senate Democrats deployed a different approach than their counterparts in the House in several areas. They also added changes tackling prescription drug spending and pharmacy benefit managers, areas left largely untouched in the House.
The gaps between the two bills portend extensive House-Senate negotiations ahead with only 16 days remaining until legislative rules call for lawmakers to suspend any major business for the remainder of the two-year term.
Sen. Cindy Friedman, who co-chairs the Health Care Financing Committee, said the new legislation “significantly updates and enhances the state’s tools to safeguard the health care system.”
“The Massachusetts health care system is struggling and patients and providers are at risk. The recent events concerning Steward Health System have exacerbated a pre-existing crisis across all aspects of our health care delivery system — from primary care to emergency care,” Friedman said in a statement. “While there are many factors that are destabilizing the delivery system, the entry of profit-driven entities and models of care into the system has played a key role.”
“The bill focuses on the major actors in the health care market, including providers, insurers, pharmaceutical manufacturing companies, pharmacy benefit managers, and for-profit investment firms, to ensure that patient needs come first, and providers are supported in the delivering [of] high quality care our residents seek and deserve,” the Arlington Democrat added.
Financial woes at Steward Health Care burst into public view this year, and the for-profit (and once private equity-owned) system is in the process of trying to sell its seven operating Massachusetts hospitals during bankruptcy proceedings.
In an attempt to prevent similar problems from festering under the surface in the future, the Senate bill would craft new reporting and oversight requirements for private equity firms associated with health care providers.
Those entities would need to participate in the annual cost trends process, and regulators could also seek audited financial statements not just from hospitals but also from out-of-state parent organizations, private equity owners and real estate investment trusts.
The bill would also craft new “guardrails” around the amount of debt that a private equity-owned health care provider can have, according to a Senate official. The Health Policy Commission and Center for Health Information and Analysis would monitor financial health, and if a provider exceeds an allowable debt-to-earnings ratio, regulators could refer the matter to the attorney general’s office.
Like the House bill, the Senate proposal would require lessors to notify the state before repossessing any medical equipment or supplies. The Boston Globe reported in January about a woman who died after Steward doctors could not treat her internal bleeding with an embolism coil because it had been repossessed due to unpaid bills.
Both versions also increase penalties for failing to report financial data — like state officials allege Steward did for years — from $1,000 per week in violation to $25,000 per week in violation.
But on another Steward-related topic, the Senate took a different approach.
Representatives voted to prohibit hospitals from leasing the property of their main campus from real estate investment trusts, similar to Steward’s situation with Medical Properties Trust, which has reportedly been charging high rents that saddled the system with financial uncertainty.
The bill crafted by Senate Democrats does not outright bar sale-leaseback agreements with REITs, but it would require a formal material change notice before such a deal occurs and empower the HPC to modify those proposed transactions.
Steward’s upheaval has roiled Beacon Hill for months. Top officials have been tight-lipped about the outlook as the company’s bankruptcy case continues, but lawmakers — especially from communities served by Steward hospitals — will feel pressure to prevent closures or service disruptions if the bidding process leaves any gaps.
Beyond Steward, the Senate bill would direct more money to hospitals that serve high shares of publicly insured patients and therefore receive comparably low reimbursements. Those hospitals would receive enhanced MassHealth rates for two years, totaling no more than $45 million annually across all facilities — an increase from the $35 million per year in the House bill.
The legislation would also overhaul how regulators assess and manage health care costs by moving from a one-year benchmark cycle to a two-year benchmark cycle, adding more members to the HPC board, and authorizing CHIA to collect information from more facets of the industry such as pharmaceutical companies and pharmacy benefit managers.
It would tweak the “determination of need” process by requiring a variety of regulatory and watchdog agencies to review major proposed service changes, including expansions, before the Department of Public Health acts on an application. The HPC could also assess a civil penalty on health care entities whose spending is deemed excessive, a new option in addition to the existing but rarely-used ability to order a cost-cutting performance improvement plan.
Other features of the bill include creation of a task force to study stabilizing the primary care system, an area where patients across the state are struggling to secure appointments, and a new requirement for insurance carriers to honor another carrier’s prior authorization for at least 90 days after a patient newly enrolls.
Amendments to the bill are due by 3 p.m. Tuesday, and the Senate will embark on deliberations in a formal session Thursday.
Several other major health care-related proposals remain in legislative limbo with the clock quickly running out. The House for several sessions in a row has not acted on Senate-approved prescription drug pricing reforms, the latest version of which cleared the Senate in November, and representatives are also sitting on bills allowing pharmacists to prescribe pre-exposure prophylaxis and expanding access to menstrual products.
Senate Democrats similarly have not moved on House-approved bills dealing with parentage reforms, maternal health care, long-term care or the opioid epidemic. None of those topics are directly addressed in the hospital reform bill up for a vote this week.
