HB2175/SB513, HB489, SB520, SB509, SB525/HB486, HB499/SB572, SB529 Health Insurance Matters

Joint Committee on Financial Services

MHA supports HB2175/SB513, which will allow patients to be treated without fear that the subscriber for their insurance plan will have unapproved access to their private health information through an explanation of benefits (EOB). Currently, when a health plan member sees a provider, it is possible that the health plan will send the EOB, which may contain detailed information about the services received, to the subscriber rather than directly to the member receiving the services. This can result in patients being afraid to seek treatment for fear that a parent, spouse, or ex-spouse may receive their confidential health information. This legislation will alleviate this concern by allowing patients to direct the health plan to send the EOB to a specific address and ensure that it is addressed only to the patient. The bill also reduces the amount of sensitive information that would be contained in the EOB.

MHA supports HB489, as the intent of the legislation mirrors efforts in MHA’s own priority legislation, SB520. Both of these bills seek to enhance transparency requirements in the annual comprehensive financial statement that health insurers must submit to the Division of Insurance (DOI) pursuant to section 21 of Chapter 176O. HB489 also establishes a process that would require a percentage of insurer reserves to be transferred to providers who are bearing downside risk, and will assist hospitals with commercial reimbursement below .85 of relative price by transferring additional surpluses to these entities.

Under HB489, carriers are required to inform DOI of the percentage of downside risk transferred to a risk-bearing provider organization (RBPO) as a result of a contractual agreement using a payment methodology with downside risk. DOI will use this information to establish a formula to determine the amount of reserves to be transferred by each carrier to each RBPO that has entered into an alternative payment methodology with downside risk. The amount to be allocated shall be based on the proportion of risk that the carrier is shifting to the certified RBPO. HB489 also requires carriers exceeding 600 percent of required risk-based capital requirements to provide documentation on the continued need for additional accumulated reserves and how those reserves will be used to support hospitals that are below .85 relative price for commercial carriers.

Insurer reserves are significantly different than reserve accounts for healthcare providers, which are meant to address such potential and important matters as technology investments, reductions in reimbursement for clinical services, facility updates, requirements of bond covenants, etc. Healthcare provider reserves were not created to address downside risk that is increasingly part of contracts with insurers. To be clear, HB489 leaves in place insurer reserves that are required to cover their risk-based capital; it would transfer to provider organizations only those reserves directly related to the provision of adequate protection to the provider organizations that have accepted risk as defined in
Chapter 224.

Out of 13 major commercial carriers doing business in Massachusetts, 8 had risk-based capital ratios more than double the 200% minimum company action level DOI prescribed. Blue Cross Blue Shield of Massachusetts, Celticare, and Tufts Health Plan were all at or above 500%. While these carriers have been adding to their reserves, the healthcare marketplace has been moving away from fee-forservice payment and towards alternative payment methodologies, as Chapter 224 of the Acts of 2012 recommended. Chapter 224 defined “downside risk” as the risk taken on by a provider organization as part of an alternate payment contract with a carrier or other payer in which the provider organization is responsible for either the full or partial costs of treating a group of patients that may
exceed the contracted budgeted payment arrangements.

The commonwealth, through the Group Insurance Commission (GIC), Health Policy Commission (HPC), and MassHealth, is pushing provider organizations towards developing accountable care organizations (ACOs) and accepting budget-based contracts that include shared savings and/or downside risk. To be successful in improving health status and reducing costs, ACOs and patient centered medical homes require new and costly strategies and technologies to manage the care of a population, assess social determinants of health, stratify risk, create effective collaborations with healthcare providers, and more. This means that while insurers are paying providers based on a global budget, healthcare providers and provider organizations are responsible for some or all of the
medical, surgical, behavioral health, home care, and pharmaceutical costs of the patients they care for; increasingly the insurer bears little downside risk under these arrangements.

Insurers are increasingly shifting downside risk to healthcare providers and consumers but continuing to maintain their same high levels of reserves. According to the Center for Health Information and Analysis (CHIA), the proportion of members whose care was paid for using alternative payment methodologies in the commercial market in Massachusetts was 35.1% in 2015. Insurers are also shifting more costs onto consumers, with member cost sharing rising 4.4% in 2015 and enrollment in high deductible health plans now accounting for 21% of the commercial market (CHIA 2016 Annual Report). These trends will accelerate as provider organizations enter into ACO arrangements with MassHealth and become certified as ACOs through the HPC.

As the amount of risk that insurers assume decreases, so does the need for insurer reserves. Conversely, as healthcare providers take on more risk, such as those assumed in ACOs and patientcentered medical home models of care, their need for reserves grows. Put another way, as downside risk is increasingly shifted from insurers to providers under new payment methodologies, it is essential that a process be established to equitably address a commensurate movement of reserves to providers who now carry the risk.

In addition, if community hospitals are to stay a vibrant source of healthcare, they need to be adequately compensated for their services. HB489 will support the development of ACOs and alternative payment methodologies and protect patients by mitigating the financial risk for provider organizations through the transfer of a proportional amount of reserves from insurers to providers. It will also ensure that community hospitals continue to be able to be a primary source of lower-cost, high-quality care in their communities.

MHA supports the general approach to healthcare provider performance assessment contained in SB509. MHA’s own principles for measuring, reporting and improving the quality and safety of healthcare emphasize the following:

The methods and data used in evaluations must be completely transparent. All data and information about the analytical methods – including micro-level detail – must be applied to organizations that are being evaluated so that independent analyses and validation of the data and analytical methods may be conducted in advance of the release/use of the information.

 Evaluations of the quality of care used to inform the public, to make purchasing decisions, or to reward/sanction organizations must rely on a complete clinical picture of the patient and the care delivered. Administrative or billing databases are known to provide an incomplete picture of the care delivered and may also contain erroneous information. Requiring prior review of the data by the provider being measured is one way to identify and remove incomplete or erroneous data so that the public is not misinformed and the provider is treated fairly.

 Differences in measures across providers that are not statistically significant and clinically meaningful should not be portrayed to consumers as grounds for making healthcare decisions.

 Organizations that assume a responsibility to inform the public about the quality of care have a responsibility to identify the limitations of their measures and methods, and to accompany publication of its own analyses with responsible challenges to, alternate analyses of, or other explanations of their findings.

MHA and the insurance companies in Massachusetts have worked together on developing a common measure set for health insurers to use in hospital quality tiering in order to promote simplification and consistency in measure sets across all products. These measures are part of the standardized quality measure set. This is an approach that we would support and encourage for physicians as well.

Additionally, MHA supports the recommendations from the state’s Special Commission on Provider Price Variation that endorsed the need for improved transparency regarding health plans’ provider tiering. MHA believes that these recommendations would also be useful for physician practices. Regarding tiering display, the commission endorsed health plans developing a uniform method for displaying a hospitals’ assigned benefit tier so that information on how the hospital performed on cost and quality benchmarks is presented in a consumer-friendly format for patients and providers. Regarding tiering transparency, the commission requested that, upon a request by a hospital, health plans should provide the methodology used for a hospital’s tier placement, including the criteria, measures and data sources, as well as hospital-specific information used in determining the hospital’s quality score, how the hospital’s quality performance compares to other hospitals, and the data used in calculating the hospital’s cost efficiency.

MHA supports SB525/HB486. This bill would require private health insurance programs and the Group Insurance Commission to provide access to and coverage for emergency medical services in the community for patients who need medically necessary mental health services. The major obstacle in the effort to eliminate preventable hospital readmissions is the lack of available community-based resources to support patients upon discharge from an acute care setting, or when they are dealing with a major breakdown in their conditions. SB525/HB486 represents an important step in closing this gap. MHA would respectfully urge the committee to insert clarification to the bill text by amending Section 1 of the bill to add after the word “all” the following: “community based crisis

MHA supports HB499/SB572. Under this legislation, insurers would be required to pay noncontracted ambulance service providers directly for emergency services rendered to patients. In an emergency situation, it is both impossible and potentially life-threatening for a patient to try and determine which ambulance company is under contract with his or her health insurer. Placing the patient in the middle by paying him or her for the ambulance services rendered in an emergency rather than paying the ambulance company directly is unfair, inconsistent, and creates additional administrative complexity for both the patient and the provider.

MHA opposes SB529 since it would modify existing patient protection laws under Chapter 176O by removing the requirement that insurers notify providers electronically or in writing of an approval to authorize services. Without either electronic or written verification that a service has been approved, healthcare providers would have no way to document that a particular service has received prior approval from an insurance carrier. Such documentation is essential, especially in light of the use of prior authorization by the insurance industry. MHA urges the committee to reject this bill.

Thank you for the opportunity to offer comments on these important matters. If you have any questions or concerns or require further information, please contact Michael Sroczynski, MHA’s Vice President of Government Advocacy, at (781) 262-6055 or msroczynski@mhalink.org.