BOSTON – State Representative Richard M. Haggerty (D-Woburn) joined his colleagues both in the House and Senate to pass legislation that will close loopholes in the health care market regulatory process exposed by the collapse of Steward Health Care, increase financial transparency by gathering more information regarding hospital finances, and assist in maintaining a more stable and sustainable health care system.
“The reforms in this bill address the regulatory loopholes and blindspots that our healthcare system can become vulnerable to,” said Representative Haggerty. “With enhanced oversight and mandatory financial disclosure requirements from healthcare organizations like Steward Health Care, we’re making sure that our healthcare system better protects patient care across our state.”
Strengthening Oversight
The bill makes important updates to the Commonwealth’s laws governing the oversight of hospital systems and provider organizations so the gaps exploited by Steward Health Care cannot be exploited again. Oversight measures include:
- Bolstering the reporting authority of the Center for Health Analysis and Information (CHIA) and scope of the oversight of the Health Policy Commission (HPC) by adding reporting requirements for hospitals and registered provider organizations (RPOs), including significant equity investors. Audited financial statement reporting is mandated for out-of-state operators of a hospital or RPO parent company, private equity investors, and management services organizations (MSOs).
- Enhancing penalties for not complying with CHIA data reporting requirements, including increasing and removing the cap on financial penalties.
- Requiring CHIA to notify HPC and the Department of Public Health (DPH) of failure to report, which will be considered during a review by the HPC in the Cost and Market Impact Review (CMIR) process and by DPH when considering a Determination of Need (DON) application or when reviewing licensure and suitability.
- Expanding DPH authority over the Board of Registration in Medicine to improve oversight and align Board activities with broader state market oversight goals.
- Requiring DPH to hold a public hearing prior to hospital and essential service closures, and authorizing DPH to seek an impact analysis of a hospital closure of any essential health service from HPC.
The legislation expands the Attorney General’s authority to monitor health care trends and enforce the False Claims Act by allowing the office to seek information from significant equity investors, real estate investment trusts (REITs), and MSOs, and to hold entities with an ownership or controlling interest in a provider organization liable if they are aware of false claims submitted to the government.
The bill makes significant reforms to prevent acute care hospitals from selling land to REITs. When Steward Health Care sold hospital properties to Medical Properties Trust (MPT) in 2016 for $1.25 billion, the hospital network agreed to lease back their former properties from MPT for exorbitant rents, siphoning away necessary resources and depriving the hospital operations and patients of needed investments. The legislation prohibits the future leasing of an acute hospital’s main campus from REITs. It requires increased disclosure of other lease arrangements as part of the licensure process with DPH.
In October 2023, a new mother tragically died at a Steward hospital after medical equipment that could have saved her life was repossessed because Steward couldn’t pay its bills. To prevent a similar tragedy, the legislation requires creditors, vendors, and hospitals to notify the state 60 days before any possible repossession of medical or surgical equipment, and makes any incident like this a reportable event to the state, similar to reporting of medical and drug errors. To improve patient safety, the bill also expands the Betsy Lehman Center’s medical error and patient safety data collection and reporting authority and modernizes the state’s Standard Quality Measure Set to improve provider reporting on patient care.
Increasing Financial Transparency & Addressing the Rising Cost of Health Care
To address the rising cost of health care in Massachusetts, the bill reforms the HPC and expands the HPC cost trends examination while also raising expectations on providers to meet the Commonwealth’s cost containment goals. Provisions to combat the rising costs of health care include:
- Reconstituting the membership requirements for the HPC to include more current, relevant experience and insight into the trajectory of the healthcare market.
- Broadening the scope of HPC’s annual cost trends hearings and report to capture significant equity investors, health care REITs, MSOs, pharmaceutical manufacturing companies and pharmacy benefit managers (PBMs), MassHealth, the Division of Insurance (DOI), the Health Connector, and to request testimony from the Centers for Medicare and Medicaid Services.
- Expanding the HPC cost trends examination to include the new data collected by CHIA through the RPO process, and require submissions from significant equity investors, health care REITs, and MSOs.
- Requiring that expansions in capacity, transactions involving equity investor ownership, significant asset and real estate transfers, and for-profit conversions be added to the material change notice process.
- Requiring the submission of information including capital structure, general financial condition, ownership and management structure, and audited financial statements in transactions that involve a significant equity investor.
- Authorizing the HPC to examine the size and market share of any corporate affiliates or significant equity investors of the provider or provider organization, the inventory of health care resources maintained by the DPH, and any related data or reports from the office of health resource planning as part of a CMIR.
- Requiring that any final CMIR report issued by HPC must be referred to DPH for consideration during any pending determinations of need involving the provider or provider organization.
This legislation broadens CHIA’s duty to monitor acute hospitals’ financial conditions by requiring them to file margins, investments, and information on any relationships with significant equity investors, health care REITs, and MSOs. It also codifies DPH regulation to pause the DON timeline for an independent cost analysis (ICA), CMIR, and performance improvement plan and authorizes DPH to choose the entity conducting the ICA from a list of three entities submitted by the applicant.
Stability and Sustainability
The bill moves state health resource planning to the HPC by establishing a new Office of Health Resource Planning to produce a state health plan as a forecast of anticipated demand, production, supply and distribution of health care resources on a state-wide and regional basis. The office will also conduct focused assessments of supply, distribution and capacity in relation to projected need of health care services.
The legislation directs DOI to consider affordability when reviewing rates, while adhering to principles of actuarial soundness and solvency. It also creates a Primary Care Task Force to make recommendations to improve primary care access, delivery, and financial stability. The task force comprises 25 members and is chaired by the HPC and Executive Office of Health and Human Services (EOHHS). The task force’s recommendations will include defining primary care services, creating standardized data reporting, establishing a primary care spending target for public and private health care payers, assessing impacts of health plan design on health equity, and devising ways to increase the primary care workforce and improve employment conditions. The state will publish relevant data on a primary care dashboard maintained by CHIA and Massachusetts Health Quality Partners.
Having passed both chambers of the Legislature, the bill now goes to the Governor for her signature.
