Health Care Payment Reform – House and Senate Distinctions

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Contact Debra A. Boronski, President (617) 512-9667

Health Care Payment Reform – House and Senate Distinctions

Boston MA – June 27, 2012 – The Massachusetts Chamber of Commerce has made a thorough assessment of the major differences between the House and Senate versions of payment reform legislation.  Debra A. Boronski, President of the Massachusetts Chamber said ” We have included  distinctions that may be of particular interest to businesses in Massachusetts.”  This legislation is extremely involved, and this assessment is our effort to assist the business community in understanding the ramification of this proposed legislation.” 

• Cost Containment.Each bill declares that health care costs should rise in concert with the growth in the state’s economy.
  • Benchmarks.
    • The House sets a benchmark of 3.6% growth for 2012 and 2013, while in 2014 and 2015 this percentage would be equal to the growth in the state’s economy, as reflected by Gross State Product (“GSP”). From 2016 to 2026, the benchmark would be equal to a half percentage point below GSP and equal to one point above GSP after 2027.
    • The Senate sets a benchmark that would be equal to half a percentage point below GSP through 2015 and equal to GSP from 2016 to 2026.
• Accountability Controls.
  • House imposes a penalty on providers whose costs are 20% higher than the benchmark. In addition, the state would have the ability to force providers to reopen contracts that it considers to be contributing to excessive spending.
  • Senate would require groups that exceed benchmarks to file improvement plans.
  • State Oversight.Both pieces of legislation create a new state agency to certify provider groups and collect information on quality measures and costs; the House agency is placed within the executive branch, under the Executive Office of Health and Human Services while the agency contemplated by the Senate would be an independent entity.
    • Certification of Physician Groups.
      • House requires physician groups of 25 or more to be certified by the Department of Public Health. Provider groups of 10 or more are subject to a market review.
      • Senate requires certification for all providers entering into alternative contracts.
• Attorney General Powers.
  • House gives the attorney general the power to block both unreasonable increases in rates and also changes that adversely affect patient access and quality of care.
  • Senate gives the attorney general the power to prevent excess consolidation and collusion.
  • Electronic Health Records.Physicians are required to be proficient in electronic health records (“EHRs”).
    • House requires providers to adopt EHRs that are fully interoperable and connect to the statewide health information exchange, but there is no hard compliance deadline set.
    • Senate requires physicians to demonstrate and skills to comply with the federal government’s meaningful use requirements (and demonstrate proficiency by 2015), while also creating an institute to facilitate the implementation of interoperable records statewide and promote the use of other health information technologies.
    • Employer Incentives / Business Impact.
      • Prevention and Wellness Trust Fund. Both House and Senate bills establish a Prevention and Wellness Trust Fund that employers could potentially access for the purpose of increasing the adoption of workplace-based wellness or health management programs that result in positive returns on investment for employees and employers.
      • Tax Incentives. House bill would provide employers that participate in a wellness program to take a credit against income taxes in an amount equal to 25% of the costs associated with implementing the program with a maximum credit of $10,000.
      • Fair Share Employer Contribution.Both bills adjust the “fair share” employer contribution requirements provided for in Mass. Gen. Laws ch. 149, section 188.
        • The House bill would cap the total contribution at $295 per employee, per year.
        • The Senate bill removes employees who have coverage from some other source from the equation for the purposes of determining whether or not the employer is a contributing employer.
• Free Rider Surcharge. Both bills would implement a free rider surcharge, which would require non-providing employers to pay at least 10%, but not more than 100%, of the costs to the state that are associated with services provided to a state-funded employee in a year. Such a surcharge is triggered once the services provided hit a $50,000 threshold.

The Massachusetts Chamber of Commerce is the State Chamber providing legislative advocacy,  information and support to businesses throughout the Commonwealth

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