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