United States: House Approves Sweeping Health Care Legislation

Last Updated: July 3 2018
Article by Julie Cox and Maxwell J. Fathy

On Tuesday, June 19, 2018, the Massachusetts House of Representatives passed comprehensive health care legislation by a vote of 117-32. The bill, titled The Honorable Peter V. Kocot Act to Enhance Access to High Quality, Affordable, and Transparent Health Care in the Commonwealth, (HB4617) was approved after the House considered 174 amendments proposed to the legislation initially released by the Health Care Financing Committee, ultimately approving 24. The House’s approval of the legislation follows the Senate’s passage of its own health care bill (SB2202) last November (see our coverage of the Senate bill here).

The bill notably levies assessments on insurers and large hospitals to generate funds for stabilizing community hospitals, increases transparency around pharmaceutical drug pricing, erects protections for consumers against out-of-network billing, and removes barriers to the use of telemedicine. Below is a summary of the bill’s main provisions:

Hospital Assessment

  • The bill includes assessments of $247.5 million on insurers and $90 million on certain large hospitals to fund grants for community hospitals. The funds generated through the assessments would be deposited into the Community Hospital Reinvestment Trust Fund. Assessments may be paid in one lump sum or over a three year period beginning on June 30, 2019. During debate, the House adopted an amendment reducing the size of the assessments – $330 million on insurers and $120 million on large hospitals – proposed in the Health Care Financing Committee’s bill.
  • The assessment applies to hospitals with more than $700 million in total net assets in FY2017 and a public payer mix below 60 percent in FY2016. The assessment on each hospital will be levied in proportion to a hospital’s operating surplus in FY2016 as a share of total operating surpluses for all hospitals subject to the assessment. A hospital’s assessment may be reduced by up to 50 percent if the hospital receives more than 25 percent of its reimbursement for Medicaid and the hospital’s net assets do not exceed $1 billion.
  • The insurer surcharge is paid based on an entity’s total payments for hospital services as a share of all such payments by surcharge payers.

Pharmaceutical Drugs

  • Effective 2020, the Center for Health Information and Analysis (CHIA) is authorized to report annually on outpatient prescription drugs that account for a significant share of state spending as well as those that experienced an increase in Wholesale Acquisition Costs (WAC) greater than 25 percent over the previous year’s cost. CHIA is directed to establish an annual list of 10 such prescription drugs. Manufacturers of those drugs must disclose relevant information to CHIA concerning the factors that contributed to the increase in WAC. CHIA must publish an annual report that analyzes the disclosed information.
  • CHIA is directed to conduct an analysis of pharmacy benefit manager (PBM) data, including: (1) year-over-year WAC changes; (2) year-over-year trends in formulary, maximum allowable costs list & cost-sharing design, including establishment & management of specialty product lists; (3) information on discounts, utilizations limits, rebates, manufacturer administrative fees, and other financial incentives or concessions related to pharmaceutical products or formulary programs; (4) information on aggregate amount of payments made to pharmacies owned or controlled by the PBM and the aggregate amount of payments made to pharmacies that are not owned or controlled by the PBM; and (5) other information deemed reasonable and necessary by CHIA.
  • PBMs are added to the list of health care entities represented on the HPC Advisory Council.
  • CHIA and the Health Policy Commission (HPC) are authorized to assess a fee on pharmaceutical manufacturing companies and PBMs to cover the costs of these analyses.
  • Three pharmaceutical companies, including one publicly traded company, a generic drug company, and a company in existence for less than ten years, are required to testify at the HPC’s annual cost trends hearings on factors underlying prescription drug costs and price increases. Information resulting from the testimony is to be incorporated in the HPC’s annual cost trends report.
  • Cost trends data from pharmaceutical manufacturing companies and PBMs is included in the information to be examined by the HPC in connection with annual public hearings on the health care cost growth benchmark.
  • The HPC is authorized to conduct an annual study of pipeline drugs, including brand, generic, or biosimilar drugs that may significantly impact state costs.
  • Responsibility for the academic detailing program is transferred from the Department of Public Health (DPH) to the HPC. The program, which is to be established by July 1, 2019, must be designed to improve drug prescribing practices, improve communication with MassHealth providers, and reduce costs related to unnecessary prescriptions.
  • Pharmaceutical manufacturing companies and PBMs are included among the entities to be consulted by CHIA in connection with the adoption of rules and regulations.
  • Pharmacies are required to inform customers that they may request the retail price for any pharmaceuticals they plan to purchase. If the retail price is less than the cost-sharing amount, the customer can choose to pay the retail price. Pharmacists must comply regardless of contractual obligations, and the pharmacist can submit a claim to the consumer’s health plan if the medication is covered.
  • Contracts between pharmacy benefits managers and pharmacies are prohibited from prohibiting/restricting the right of a pharmacist to provide an insured person with information about their cost share for a prescription or a more affordable alternative. Contracts are also prohibited from allowing pharmacy benefits managers from charging a fee related to the adjudication of a claim.
  • Several amendments relevant to the pharmaceutical industry were withdrawn during debate, including: amendment #3 on formulary posting; amendment #9 on medication management; amendment #25 on data exemptions from disclosure; amendment #53 on patient adherence to medication; amendment #79 on non-medical switching; amendment #112 on direct-to-consumer advertising; amendment #115 on maximum allowable drug costs; amendment #120 on biosimilar applications; amendment #128 on wholesale acquisition cost floors; amendment #145 on technical corrections; amendment #150 on the section 1115 waiver; and amendment #164 on prescription drug transparency.
  • A technical amendment (amendment #174) was adopted that establishes ongoing funding for the Community Hospital Trust Fund starting in 2023 by directing 10 percent of the amounts in the Marijuana Regulation Fund and renewing a $10 million annual transfer from CHIA.

Out-of-Network/Surprise Billing

  • Out-of-network billing protections are extended to instances where a patient chooses to receive services from an out-of-network provider.
  • Carriers must disclose information on out-of-network service costs and cost sharing in the Explanation of Benefits.
  • In the case of a network provider that contracts to participate in the carrier’s network but is out-of-network in an enrollee’s specific health benefit plan, emergency services will be reimbursed at the carrier’s in-network contracted rate. For all other out-of-network services, if the provider failed to meet the consumer protection requirements under surprise billing, the out-of-network provider will be paid the greater of: (A) 115 percent of the carrier’s average rate, or (B) 125 percent of the Medicare rate.
  • The Department of Insurance (DOI) is directed to establish a fair and efficient dispute resolution process for emergency or surprise bills.

Telemedicine

  • Group Insurance Commission (GIC) plans are required to cover telemedicine services, and the GIC is required to ensure that carriers or third-party administrators use the Standard Quality Measure Set (SQMS) established by CHIA.
  • The Board of Registration in Medicine is directed to develop regulations regarding the appropriate use of telemedicine.
  • MassHealth is allowed to provide coverage for appropriate telemedicine services.
  • Individual insurance policies are prohibited from declining coverage for services due to the fact that the services were delivered by telemedicine.

HPC/CHIA Mandates

  • The bill requires that any legislation aimed at changing the scope of practice of a health care provider be reviewed and evaluated by CHIA and be subject to a recommendation by the HPC.
  • The Health Planning Council within the Executive Office of Health and Human Services is eliminated and reestablished under the HPC.
  • Monitoring the location and distribution of health care services and resources is added to the charge of the HPC.
  • Proposals that appropriately redirect inpatient/post-acute care to community settings are added to the list of proposals that the HPC can consider for the use of Health Care Payment Reform Funds.
  • Control of the Prevention and Wellness Trust Fund is transferred from DPH to the HPC, and the allowable expenditures for the fund are amended.
  • The Prevention and Wellness Trust Fund is designated an eligible source of CHIA assessment funds.
  • CHIA is directed to develop and adopt a uniform method for communicating information on the assignment of tiers to health care providers, health care services, PBMs, and carriers.
  • CHIA is directed to annually evaluate and report on the Prevention and Wellness Trust Fund.
  • Requirements and penalties related to information disclosures to CHIA are amended to increase weekly penalties for failure to comply from $1,000 to $5,000 and the maximum penalty from $50,000 to $200,000.

Other Provisions

  • Licensing fees for Physicians, Nurses, Pharmacists, Dentists, Genetic Counselors, Optometrists, and Podiatrists are increased by 25 percent over the amount charged on July 1, 2017, and again by 25 percent over the amount charged on July 1, 2019.
  • DOI rate approval processes are to include warranted and unwarranted factors related to price variation. If a contract is deemed to be influenced by unwarranted price variation, DOI is to refer the matter to the HPC for a PIP.
  • Three changes are made to the Accountable Care Organization (ACO) certification process: (1) the care coordination standard is amended to replace references to success in reducing “adverse events and emergency room visits” with “adverse events, rates of institutional post-acute care, and unnecessary emergency room visits or extended emergency department boarding;” (2) references to the Prevention and Wellness Trust Fund are amended to reflect the move under HPC; and (3) a new standard is added for certification of evidence-based delivery programs.
  • Rule or regulation changes proposed by the Board of Registration in Medicine must be approved by DPH. Rules or regulations not approved by DPH within 30 days are deemed disapproved.
  • Changes are made to the Community Hospital Reinvestment Fund limiting the relative price eligibility standard for payment to the 90th percentile (currently the 120th percentile), directing payments to eligible acute care hospitals, and requiring an annual expenditure of at least $15 million from the fund to community health centers.
  • A Mobile Integrated Health Care Trust Fund is created to be administered by DPH to support administration and oversight of the mobile integrated health program.
  • Changes are made to the mission of the e-Health Institute directing it to partner with the health care and technology community to accelerate digital health sector activity, expanding the scope of the institute’s activities to include the advancement of the commonwealth’s economic competitiveness, and authorizing the institute to prioritize improving the Commonwealth’s use of electronic health records.
  • The DPH is directed to establish rules, regulations, and standards for the licensing of office-based surgical centers and urgent care centers. The bill sets certain requirements for these rules, including: licenses are to be issued/renewed for two year terms; DPH can suspend or revoke licenses at its own discretion in the best interests of health, safety, or public welfare; licensure violations are subject to fines of $10,000 per day; and DPH may issue provisional licenses to urgent care centers meeting certain accreditation/certification requirements.
  • MassHealth is required to disregard income up to 150 percent of the federal poverty line for the purpose of determining eligibility for Medicare Savings or Medicare Buy-In programs.
  • DOI is directed to issue a report at least once every five years on the performance of the merged non-group and small-group health insurance market.
  • Special commissions are created to study and make recommendations on how to license foreign-trained medical professionals and examine factors that contribute to unnecessary administrative costs in the health care system.
  • An emergency task force is created to review the financial sustainability of nursing homes in the Commonwealth.
  • Amendments of interest to the hospital industry adopted include: amendments #54, 55, and 56 related to default rates and notifications of patients with respect to out-of-network billing; amendment #118 establishing a task force to develop recommendations to improve collection and dissemination of provider information, streamline the interactions between providers and payers, enhance updates to provider information, and research the feasibility of making real-time updates to provider directories; and amendment #125 that would establish pre-hospital care protocols, evaluate and design designation models for Massachusetts hospitals treating stroke, and design a new reporting system to evaluate stroke care.
  • Amendments of interest to the hospital industry that were withdrawn include: amendment #38 aligning facility-fee notification standards with existing Medicare standards; amendment #116 prohibiting insurers from passing through any portion of their new surcharge assessment to self-insured acute care hospitals; amendment #127 on telemedicine; amendment #135 adding a hospital member to the HPC; and amendment #64 altering ICU penalties.

Next Steps

The House and Senate will now attempt to resolve the differences between their respective bills, which are significant, before the end of the legislative session on July 31. Negotiations on reconciling the bills will take place in a six-member conference committee whose members have yet to be named. Any final legislation that the House and Senate ultimately approve must be signed by Governor Charlie Baker.

ML Strategies will continue to monitor and periodically report on issues relevant to the health care industry throughout the remainder of the legislative session.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions