Massachusetts 2025-2026 Regular Session

Massachusetts House Bill H1384 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	1 of 1
2	2	HOUSE DOCKET, NO. 3798 FILED ON: 1/17/2025
3	3	HOUSE . . . . . . . . . . . . . . . No. 1384
4	4	The Commonwealth of Massachusetts
5	5	_________________
6	6	PRESENTED BY:
7	7	John J. Lawn, Jr.
8	8	_________________
9	9	To the Honorable Senate and House of Representatives of the Commonwealth of Massachusetts in General
10	10	Court assembled:
11	11	The undersigned legislators and/or citizens respectfully petition for the adoption of the accompanying bill:
12	12	An Act updating the health care cost growth benchmark and associated market oversight
13	13	activities.
14	14	_______________
15	15	PETITION OF:
16	16	NAME:DISTRICT/ADDRESS :DATE ADDED:John J. Lawn, Jr.10th Middlesex1/17/2025 1 of 15
17	17	HOUSE DOCKET, NO. 3798 FILED ON: 1/17/2025
18	18	HOUSE . . . . . . . . . . . . . . . No. 1384
19	19	By Representative Lawn of Watertown, a petition (accompanied by bill, House, No. 1384) of
20	20	John J. Lawn, Jr. relative to health care cost growth benchmark and associated market oversight
21	21	activities. Health Care Financing.
22	22	The Commonwealth of Massachusetts
23	23	_______________
24	24	In the One Hundred and Ninety-Fourth General Court
25	25	(2025-2026)
26	26	_______________
27	27	An Act updating the health care cost growth benchmark and associated market oversight
28	28	activities.
29	29	Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority
30	30	of the same, as follows:
31	31	1 SECTION 1. Section 1 of chapter 6D of the General Laws, most recently amended by
32	32	2sections 5 through 11, inclusive, of chapter 343 of the acts of 2024, is hereby further amended by
33	33	3inserting after the definition of “Alternative payment methodologies or methods” the following
34	34	4definition:-
35	35	5 “Benchmark cycle”, a fixed, predetermined period of 3 consecutive calendar years during
36	36	6which the projected average annual percentage change in total health care expenditures in the
37	37	7commonwealth is calculated pursuant to section 9 and monitored pursuant to section 10.
38	38	8 SECTION 2. Said section 1 of said chapter 6D, as so amended, is hereby further amended
39	39	9by striking out the definition of “Health care cost growth benchmark” and inserting in place
40	40	10thereof the following definition:- 2 of 15
41	41	11 “Health care cost growth benchmark”, the projected average annual percentage change in
42	42	12total health care expenditures in the commonwealth during a benchmark cycle, as established in
43	43	13section 9.
44	44	14 SECTION 3. Said section 1 of said chapter 6D, as so amended, is hereby further amended
45	45	15by inserting after the definition of “Surcharge payor” the following definition:-
46	46	16 “Technical advisory committee”, the technical advisory committee of the health policy
47	47	17commission established by section 4A.
48	48	18 SECTION 4. Said chapter 6D is hereby further amended by inserting after section 4 the
49	49	19following section:-
50	50	20 Section 4A. (a) There is hereby established a technical advisory committee consisting of
51	51	21appointed members with demonstrated experience in a broad range of provider sectors and
52	52	22public and private health care payers. The technical advisory committee shall: (i) establish the
53	53	23adjustment factor as part of the health care cost growth benchmark setting process pursuant to
54	54	24subsection (c) of section 9; (ii) provide technical advice to the commission upon request; (iii)
55	55	25provide the commission with operational, policy, regulatory or legislative recommendations for
56	56	26the commission’s consideration; and (iv) produce an annual report and other reports pursuant to
57	57	27subsection (c).
58	58	28 (b) The technical advisory committee shall consist of the following 16 members: the
59	59	29executive director of the commission, who shall serve as non-voting chairperson; the assistant
60	60	30secretary for MassHealth, or a designee; the executive director of the commonwealth health
61	61	31insurance connector authority, or a designee; the executive director of the group insurance
62	62	32commission, or a designee; and 12 members appointed by the executive director of the 3 of 15
63	63	33commission for their technical experience in specific health care sectors, 1 of whom shall be
64	64	34selected from a list of 3 nominees submitted by the Massachusetts Hospital Association, Inc., 1
65	65	35of whom shall be selected from a list of 3 nominees submitted by the Massachusetts Senior Care
66	66	36Association, Inc., 1 of whom shall be selected from a list of 3 nominees submitted by the
67	67	37Massachusetts Medical Society, 1 of whom shall be selected from a list of 3 nominees submitted
68	68	38by the Massachusetts League of Community Health Centers, Inc., 1 of whom shall be selected
69	69	39from a list of 3 nominees submitted by the Massachusetts Biotechnology Council, Inc., 1 of
70	70	40whom shall be selected from a list of 3 nominees submitted by the Massachusetts Association of
71	71	41Health Plans, Inc., 1 of whom shall be selected from a list of 3 nominees submitted by Blue
72	72	42Cross Blue Shield of Massachusetts, Inc., and 5 of whom shall be selected by the executive
73	73	43director from applications submitted by candidates with demonstrated experience in health care
74	74	44delivery, health equity advocacy, health care economics, health care data analysis, clinical
75	75	45research and innovation in health care delivery, health care benefits management or expertise in
76	76	46behavioral health, substance use disorder, mental health services and mental health
77	77	47reimbursement systems. In selecting members, the executive director shall ensure that the
78	78	48composition of the committee reflects a diversity of expertise in health care providers,
79	79	49purchasers, and consumer advocacy groups. Each member of the committee shall serve without
80	80	50compensation for a term of 3 years, or until a successor is appointed; provided, that no member
81	81	51shall serve more than 2 consecutive terms. Members of the committee shall be special state
82	82	52employees subject to chapter 268A. The technical advisory committee shall meet at least
83	83	53quarterly or at other times as specified by the commission and shall annually elect 1 of its
84	84	54members to serve as vice-chairperson. 4 of 15
85	85	55 (c) The technical advisory committee shall report a summary of its activities to the
86	86	56commission at least annually, and shall submit additional reports with technical
87	87	57recommendations, as requested by the commission. In developing any reports or
88	88	58recommendations to the commission, the technical advisory committee shall consider the
89	89	59availability, timeliness, quality and usefulness of existing data, including the data collected by
90	90	60the center under chapter 12C, and assess the need for additional investments in data collection,
91	91	61data validation or data analysis capacity to support the committee in performing its duties.
92	92	62 SECTION 5. Subsection (a) of section 8 of said chapter 6D, most recently amended by
93	93	63section 16 of chapter 343 of the acts of 2024, is hereby further amended by striking out the
94	94	64words “for the previous calendar year” and inserting in place thereof the following words:-
95	95	65established under section 9.
96	96	66 SECTION 6. Subsection (f) of said section 8 of said chapter 6D, as so appearing, is
97	97	67hereby amended by striking out, in the first sentence, the words “exceeded the health care cost
98	98	68benchmark in the previous calendar year” and inserting in place thereof the following words:- in
99	99	69the previous calendar year exceeded the average annual growth established in the health care cost
100	100	70growth benchmark.
101	101	71 SECTION 7. Said section 8 of said chapter 6D, most recently amended by section 29 of
102	102	72chapter 343 of the acts of 2024 , is hereby further amended by striking out subsection (g) and
103	103	73inserting in place thereof the following subsection:-
104	104	74 (g) The commission shall compile an annual health care cost growth progress report
105	105	75concerning spending trends, including primary care and behavioral health expenditures, and the
106	106	76underlying factors influencing said spending trends. The commission shall issue a final 5 of 15
107	107	77benchmark cycle report after the third year of a benchmark cycle which shall analyze spending
108	108	78trends for the entire benchmark cycle. The reports shall be based on the commission’s analysis of
109	109	79information provided at the hearings by witnesses, providers, provider organizations and payers,
110	110	80registration data collected pursuant to section 11, data collected or analyzed by the center
111	111	81pursuant to sections 8 to 10A, inclusive, of chapter 12C and any other available information that
112	112	82the commission considers necessary to fulfill its duties under this section, as defined in
113	113	83regulations promulgated by the commission. The reports shall be submitted to the chairs of the
114	114	84house and senate committees on ways and means and the chairs of the joint committee on health
115	115	85care financing and shall be published and available to the public not later than December 31 of
116	116	86each year. The reports shall include recommendations for strategies to increase the efficiency of
117	117	87the health care system and, in the case of annual progress reports, recommendations on the
118	118	88specific spending trends that impede the commonwealth’s ability to meet the health care cost
119	119	89growth benchmark and draft legislation necessary to implement said recommendations.
120	120	90 SECTION 8. Said chapter 6D is hereby further amended by striking out sections 9 and
121	121	9110, as appearing in the 2022 Official Edition, and inserting in place thereof the following 2
122	122	92sections:-
123	123	93 Section 9. (a) The board shall establish a health care cost growth benchmark for the
124	124	94average annual growth in total health care expenditures in the commonwealth during a period of
125	125	953 consecutive calendar years. The commission shall establish the health care cost growth
126	126	96benchmark not later than April 15 of the year immediately preceding the first calendar year of a
127	127	97benchmark cycle. 6 of 15
128	128	98 (b) The health care cost growth benchmark shall be equal to the growth rate of potential
129	129	99gross state product established under section 7H½ of chapter 29, plus the adjustment factor
130	130	100adopted by the commission upon the recommendation of the technical advisory committee
131	131	101pursuant to subsections (c) and (d). The commission shall establish procedures to prominently
132	132	102publish the health care cost growth benchmark on the commission’s website.
133	133	103 (c) The technical advisory committee shall recommend an adjustment factor to the
134	134	104commission not later than February 15 of the year immediately preceding the first calendar year
135	135	105of the benchmark cycle; provided, that the adjustment factor shall not be greater than 1 per cent
136	136	106or less than minus 1 per cent. The adjustment factor shall be based on economic and market
137	137	107factors specific to the health care industry including, but not limited to, the following factors: (i)
138	138	108medical inflation as measured by the medical care index within the consumer price index
139	139	109calculated by the United States Bureau of Labor Statistics; (ii) labor and workforce development
140	140	110costs; (iii) the introduction of new pharmaceuticals, medical devices and other health
141	141	111technologies; (iv) historical growth rate in the commonwealth’s gross state product; and (v) any
142	142	112other factors as determined by the technical advisory committee. The recommended adjustment
143	143	113factor shall be approved by a majority vote of the technical advisory committee; provided,
144	144	114however, that should the technical advisory committee fail to approve a recommended
145	145	115adjustment factor, the adjustment factor shall be 0 per cent. The technical advisory committee
146	146	116shall submit its recommendation to the commission in a public report that shall include an
147	147	117analysis supporting the technical advisory committee’s recommended adjustment factor.
148	148	118 (d) The commission shall hold a public hearing prior to accepting or rejecting the
149	149	119technical advisory committee’s recommended adjustment factor. The public hearing shall be
150	150	120based on the report submitted by the technical advisory committee pursuant to subsection (c), the 7 of 15
151	151	121report submitted by the center pursuant to section 16 of chapter 12C, any other data provided by
152	152	122the technical advisory committee and the center, and such other pertinent information or data as
153	153	123may be available to the commission. The commission shall provide public notice of such hearing
154	154	124at least 45 days prior to the date of the hearing, including notice to the joint committee on health
155	155	125care financing. The joint committee on health care financing may participate in the hearing. The
156	156	126commission shall identify as witnesses for the public hearing a representative sample of
157	157	127providers, provider organizations, payers and such other interested parties as the commission
158	158	128may determine. Any other interested parties may testify at the hearing. The hearing shall
159	159	129examine health care provider, provider organization and private and public health care payer
160	160	130costs, prices and cost trends, with particular attention to factors that contribute to cost growth
161	161	131within the commonwealth’s health care system, and whether, based on the testimony,
162	162	132information and data presented at the hearing, it is appropriate to accept the recommended
163	163	133adjustment factor.
164	164	134 (e) The commission shall approve the recommended adjustment factor by a majority vote
165	165	135of the board.
166	166	136 Section 10. (a) As used in this section the following words shall, unless the context
167	167	137clearly requires otherwise, have the following meanings:
168	168	138 “Health care entity”, a clinic, hospital, ambulatory surgical center, physician
169	169	139organization, or accountable care organization required to register under section 11.
170	170	140 (b) The commission shall provide notice to a health care entity identified by the center
171	171	141under section 18 of chapter 12C that the commission may analyze the cost growth and the health 8 of 15
172	172	142care spending performance of the individual health care entity and that the commission may
173	173	143require certain actions, as established in this section, from health care entities so identified.
174	174	144 (c) If the commission finds, based on the center’s benchmark cycle report issued under
175	175	145subsection (d) of section 16, that the percentage change in total health care expenditures during
176	176	146the benchmark period exceeded the health care cost growth benchmark, the commission may
177	177	147require certain health care entities to file and implement a performance improvement plan,
178	178	148subject to the factors in subsection (f).
179	179	149 (d) In addition to the notice provided under subsection (b), the commission shall provide
180	180	150written notice to a health care entity it determines must file a performance improvement plan.
181	181	151Within 45 days of receipt of such written notice, the health care entity shall either:
182	182	152 (1) file a performance improvement plan with the commission; or
183	183	153 (2) file an application with the commission to waive or extend the requirement to file a
184	184	154performance improvement plan.
185	185	155 (e) The health care entity may file any documentation or supporting evidence with the
186	186	156commission to support the health care entity’s application to waive or extend the requirement to
187	187	157file a performance improvement plan. The commission shall require the health care entity to
188	188	158submit any other relevant information it deems necessary in considering the waiver or extension
189	189	159application; provided, however, that such information shall be made public at the discretion of
190	190	160the commission.
191	191	161 (f) The commission may waive or delay the requirement for a health care entity to file a
192	192	162performance improvement plan in response to a waiver or extension request filed under 9 of 15
193	193	163subsection (d) in light of all information received from the health care entity, based on a
194	194	164consideration of the following factors:
195	195	165 (1) the baseline spending and trends relative to cost, price, utilization and payer mix of
196	196	166the health care entity over time, independently and as compared to similar entities, and any
197	197	167demonstrated improvement to reduce health status adjusted total medical expenses;
198	198	168 (2) any ongoing strategies or investments that the health care entity is implementing to
199	199	169improve future long-term efficiency and reduce cost growth;
200	200	170 (3) whether the factors that led to increased costs for the health care entity can reasonably
201	201	171be considered to be unanticipated and outside of the control of the entity. Such factors may
202	202	172include, but shall not be limited to, age and other health status adjusted factors and other cost
203	203	173inputs such as pharmaceutical expenses, medical device expenses and labor costs;
204	204	174 (4) the overall financial condition of the health care entity;
205	205	175 (5) a significant difference between the growth rate of potential gross state product and
206	206	176the growth rate of actual gross state product, as determined under section 7H½ of chapter 29; and
207	207	177 (6) any other factors the commission considers relevant.
208	208	178 (g) If the commission declines to waive or extend the requirement for the health care
209	209	179entity to file a performance improvement plan, the commission shall provide written notice to the
210	210	180health care entity that its application for a waiver or extension was denied and the health care
211	211	181entity shall file a performance improvement plan.
212	212	182 (h) A health care entity shall file a performance improvement plan: (1) within 45 days of
213	213	183receipt of a notice under subsection (d); (2) if the health care entity has requested a waiver or 10 of 15
214	214	184extension, within 45 days of receipt of a notice that such waiver or extension has been denied; or
215	215	185(3) if the health care entity is granted an extension, on the date given on such extension. The
216	216	186performance improvement plan shall be generated by the health care entity and shall identify the
217	217	187causes of the entity's cost growth and shall include, but not be limited to, specific strategies,
218	218	188adjustments and action steps the entity proposes to implement to improve cost. The proposed
219	219	189performance improvement plan shall include specific identifiable and measurable expected
220	220	190outcomes and a timetable for implementation. The timetable for a performance improvement
221	221	191plan shall not exceed 3 years.
222	222	192 (i) The commission shall approve any performance improvement plan that it determines
223	223	193is reasonably likely to address the underlying cause of the health care entity’s cost growth and
224	224	194has a reasonable expectation for successful implementation.
225	225	195 (j) If the board determines that the performance improvement plan is unacceptable or
226	226	196incomplete, the commission may provide consultation on the criteria that have not been met and
227	227	197may allow an additional time period, up to 30 calendar days, for resubmission; provided,
228	228	198however, that all aspects of the performance improvement plan shall be proposed by the health
229	229	199care entity and the commission shall not require specific elements for approval.
230	230	200 (k) Upon approval of the proposed performance improvement plan, the commission shall
231	231	201notify the health care entity to begin implementation of the performance improvement plan.
232	232	202Public notice shall be provided by the commission on its website, identifying that the health care
233	233	203entity is implementing a performance improvement plan. All health care entities implementing
234	234	204an approved performance improvement plan shall be subject to additional reporting requirements
235	235	205and compliance monitoring, as determined by the commission. The commission shall provide 11 of 15
236	236	206assistance to the health care entity in the successful implementation of the performance
237	237	207improvement plan.
238	238	208 (l) All health care entities shall, in good faith, work to implement the performance
239	239	209improvement plan. A health care entity may file amendments to the performance improvement
240	240	210plan at any point during the implementation of the performance improvement plan, subject to
241	241	211approval of the commission.
242	242	212 (m) At the conclusion of the timetable established in the performance improvement plan,
243	243	213the health care entity shall report to the commission regarding the outcome of the performance
244	244	214improvement plan. If the commission finds that the performance improvement plan was
245	245	215unsuccessful, the commission shall either: (i) extend the implementation timetable of the existing
246	246	216performance improvement plan; (ii) approve amendments to the performance improvement plan
247	247	217as proposed by the health care entity; (iii) require the health care entity to submit a new
248	248	218performance improvement plan, including requiring specific elements for approval,
249	249	219notwithstanding the limitation in subsection (j) on the commission’s authority during its review
250	250	220of an initial plan proposal; (iv) waive or delay the requirement to file any additional performance
251	251	221improvement plans; or (v) conduct a cost and market impact review of the health care entity
252	252	222under section 13.
253	253	223 (n) Upon the successful completion of the performance improvement plan, the identity of
254	254	224the health care entity shall be removed from the list of entities currently implementing a
255	255	225performance improvement plan on the commission’s website.
256	256	226 (o) The commission may submit recommendations and draft legislation necessary to
257	257	227implement said recommendations to the joint committee on health care financing if the 12 of 15
258	258	228commission determines that further legislative authority is needed to achieve the
259	259	229commonwealth’s health care quality and spending sustainability objectives, assist health care
260	260	230entities with the implementation of performance improvement plans or otherwise ensure
261	261	231compliance with the provisions of this section.
262	262	232 (p) If the commission determines that a health care entity has: (i) willfully neglected to
263	263	233file a performance improvement plan with the commission within 45 days as required under
264	264	234subsection (d); (ii) failed to file an acceptable performance improvement plan in good faith with
265	265	235the commission; (iii) failed to implement the performance improvement plan in good faith; or
266	266	236(iv) knowingly failed to provide information required by this section to the commission or
267	267	237knowingly falsified the same, the commission may: (i) assess a civil penalty to the health care
268	268	238entity of not more than $500,000 for a first violation, not more than $750,000 for a second
269	269	239violation and not more than $1,000,000 for a third or subsequent violation; (ii) stay consideration
270	270	240of any material change notice submitted under section 13 by the health care entity until the
271	271	241commission determines that the health care entity is in compliance with this section; and (iii)
272	272	242notify the department of public health that the health care entity, if applying for a notice of
273	273	243determination of need, is not in compliance with this section. The commission shall seek to
274	274	244promote compliance with this section and shall only impose a civil penalty as a last resort.
275	275	245 (q) The commission shall promulgate regulations necessary to implement this section;
276	276	246provided, however, that notice of any proposed regulations shall be filed with the joint
277	277	247committee on health care financing at least 180 days before adoption. 13 of 15
278	278	248 SECTION 9. Section 13 of said chapter 6D, most recently amended by section 24 of
279	279	249chapter 343 of the acts of 2024 , is hereby further amended by striking out subsection (b) and
280	280	250inserting in place thereof the following subsection:-
281	281	251 (b) In addition to the grounds for a cost and market impact review set forth in subsection
282	282	252(a), if the commission finds, based on the center’s final benchmark cycle report under subsection
283	283	253(d) of section 16 of chapter 12C, that the percentage change in total health care expenditures
284	284	254during the benchmark cycle exceeded the health care cost growth benchmark in the previous
285	285	255calendar year, the commission may conduct a cost and market impact review of any provider or
286	286	256provider organization identified by the center under section 18 of said chapter 12C.
287	287	257 SECTION 10. Section 1 of chapter 12C of the General Laws, most recently amended by
288	288	258sections 31 through 36, inclusive, of chapter 343 of the acts of 2024, is hereby further amended
289	289	259by inserting after the definition of “Ambulatory surgical center services”, the following
290	290	260definition:-
291	291	261 “Benchmark cycle”, a fixed, predetermined period of 3 consecutive calendar years during
292	292	262which the projected average annual percentage change in total health care expenditures in the
293	293	263commonwealth is calculated pursuant to section 9 of chapter 6D and monitored pursuant to
294	294	264section 10 of said chapter 6D.
295	295	265 SECTION 11. Said section 1 of said chapter 12C, as so amended, is hereby further
296	296	266amended by striking out the definition of “Health care cost growth benchmark” and inserting in
297	297	267place thereof the following definition:- 14 of 15
298	298	268 “Health care cost growth benchmark”, the projected average annual percentage change in
299	299	269total health care expenditures in the commonwealth during a benchmark cycle, as established in
300	300	270section 9 of chapter 6D.
301	301	271 SECTION 12. Section 16 of said chapter 12C, most recently amended by section 25 of
302	302	272chapter 342 of the acts of 2024, is hereby further amended by inserting after subsection (c) the
303	303	273following subsection:-
304	304	274 (d) The center’s report on the third year of a benchmark cycle shall be a final benchmark
305	305	275cycle report and shall compare the costs and cost trends for the entire benchmark cycle with the
306	306	276health care cost growth benchmark established by the health policy commission under section 9
307	307	277of chapter 6D.
308	308	278 SECTION 13. Said chapter 12C is hereby further amended by striking out section 18 and
309	309	279inserting in place thereof the following section:-
310	310	280 Section 18. (a) For the purposes of this section, “health care entity” shall mean a clinic,
311	311	281hospital, ambulatory surgical center, physician organization or an accountable care organization
312	312	282required to register under section 11.
313	313	283 (b) The center shall perform ongoing analysis of data it receives under this chapter to
314	314	284identify any health care entity whose:
315	315	285 (1) contribution to health care spending growth, including but not limited to, spending
316	316	286levels and growth as measured by health status adjusted total medical expense, is considered
317	317	287excessive and who threaten the ability of the state to meet the health care cost growth benchmark
318	318	288established by the health policy commission under section 9 of chapter 6D; provided, that the 15 of 15
319	319	289center shall identify cohorts for similar health care entities and establish differential standards for
320	320	290excessive growth rates, based on a health care entity’s baseline spending, pricing levels and
321	321	291payer mix; or
322	322	292 (2) data is not submitted to the center in a proper, timely or complete manner.
323	323	293 (c) The center shall confidentially provide a list of the health care entities to the health
324	324	294policy commission such that the commission may pursue further action under section 10 of
325	325	295chapter 6D. Confidential referrals under this section shall not preclude the center from using its
326	326	296authority to assess penalties for noncompliance under section 11.
327	327	297 SECTION 14. Subsection (b) of section 7H½ of chapter 29 of the General Laws, as so
328	328	298appearing, is hereby amended by striking out the first sentence and inserting in place thereof the
329	329	299following sentence:- On or before January 15 in the year immediately preceding the start of a
330	330	300benchmark cycle, as defined in section 1 of chapter 6D, the secretary of administration and
331	331	301finance shall meet with the house and senate committees on ways and means and shall jointly
332	332	302develop a growth rate of potential gross state product for the ensuing benchmark cycle which
333	333	303shall be agreed to by the secretary and the committees.