State health agency orders Mass General Brigham to rein in costs

Warning of a "spending problem" at Mass General Brigham, the Health Policy Commission on Tuesday both voted to require the hospital system to implement a performance improvement plan addressing its costs and said MGB's expansion plans run counter to the state's goals of controlling health spending growth.

Mass General Brigham, the state's largest provider system, pushed back on both moves, saying the expansion comments "ignore the state's crippling healthcare capacity crisis" and expressing disappointment with the performance-improvement plan directive.

The vote marks the first time the HPC, created under a 2012 cost containment law, has exercised its authority to hold a provider or payer accountable for spending growth by requiring them to complete a performance improvement plan.

Massachusetts measures annual health care spending growth against a benchmark that is tied to growth in the state's economy. After two years of below-benchmark increases, health care spending growth outpaced the benchmark in 2018 and 2019.

The HPC said its examination found that from 2014 to 2019, MGB had more cumulative commercial spending in excess of the benchmark than any other provider, totaling $293 million.

"I think it's fair to say that because of the prominence of Massachusetts General Brigham and their rate of growth and their level of spending, given what they've been doing, not only are they exceeding benchmark, but their pattern is such as to to pull the whole state up," HPC Chair Stuart Altman told reporters. "And it's almost impossible for the state to meet its obligations of staying within the benchmark."

The vote to require a PIP, which Altman said was unanimous, came in a closed-door executive session. MGB will have 45 days to file a plan or request a waiver or extension, and the HPC must approve the final plan.

The HPC can assess a fine of up to $500,000 for noncompliance. David Seltz, the commission's executive director, said state law lays out "a standard of almost willful noncompliance" and the fine is intended as a last resort.

"Our full expectation is that MGB will be in compliance with state law," Seltz said.

Mass General Brigham issued a statement saying it "strongly disagreed" with the decision but is committed to working with the HPC on addressing heatlh care costs "while continuing our efforts to overcome the multiple crises brought by the pandemic."

The hospital system said the HPC's decision revolved around "outdated financial details" and that the agency was "selective" in using unadjusted spending figures "that ignore the role of our academic health centers in treating the sickest and most complex patients in the Commonwealth."

The PIP decision was based on an analysis of spending from 2016-2017 and 2017-2018, which Altman said are the most recent figures made available by the Center for Health Information and Analysis. He said there is "some legislation being discussed about getting us more recent information."

Seltz said the HPC examined "multiple years of data here that showed consistent trends of higher spending."

Separately, the commission voted unanimously Tuesday to issue a 75-page comment to the Department of Public Health on MGB's $2.25 billion expansion plan.

The Department of Public Health, through its determination of need program, is vetting the proposal, which includes ambulatory care centers in Woburn, Westwood and Westborough as well as projects at Massachusetts General Hospital. The HPC does not have a say over whether the expansions are approved.

Differing from an independent cost analysis released in December that found the projects align with the state's health care cost-control goals, the HPC found the proposals would yield higher spending and that other providers could lose $153 million to $261 million in commercial revenue each year as patients shift to MGB.

"Mass General Brigham has a spending problem," Altman said in a statement. "Its spending performance and plan for new expansions at their flagship hospitals and into the Boston suburbs raise significant concerns, as documented by the HPC today. In fact, continuing in this manner is likely to impact the state's ability to meet its spending benchmark and could do serious harm to the structure of the state's delivery system."

MGB has said that its proposed suburban locations would give its existing patients a lower-cost option than hospital care and save them a drive into Boston. The December cost analysis, part of the determination of need process, projected those three sites would result in a "small overall decrease" in health care spending.

"Today's comments by the Health Policy Commission (HPC) ignore this state's crippling healthcare capacity crisis -- which preceded the pandemic, as well as the fact that patients deserve the choice to access high quality care, closer to their homes, at a lower cost," MGB said in a statement.

The statement continued, "Even if one accepts the HPC's conclusion that Mass General Brigham's three Determination of Need applications will increase annual healthcare spending by as much as $90.1 M, such an increase would only represent 0.15% of the total annual health care spend in Massachusetts ... That is neither substantial nor significant as the HPC has alleged, especially when considered in the context of national inflation that is currently at 7%."

A collection of community, business and health care groups that oppose the ambulatory care proposal, dubbed the Coalition to Protect Community Care, said the HPC analysis "confirms what regulators, legislators, and community members have been warning about for months: Mass General Brigham's outpatient expansion will increase healthcare costs, threaten the viability of local, high-value healthcare providers, diminish access to critical safety net services, and exacerbate health inequities across the Commonwealth."

The advocacy group Health Care for All urged the Department of Public Health to consider concerns raised by the HPC and "ultimately disapprove the DON ambulatory expansion request."

"Additionally, Health Care For All commends the HPC for taking the important step of requiring Mass General Brigham to implement a Performance Improvement Plan (PIP) to rein in excessive cost growth for its Partners Community Physician Organization," executive director Amy Rosenthal said in a statement. "This is a critical test of whether our health care cost benchmark process can be an effective check on rising costs."

Rosenthal said lawmakers should update the PIP process to make sure the commission has the tools it needs to monitor system costs. She said the HPC's authority should be expanded to "review proposed hospital expansions, oversee increasing pharmaceutical costs and hold health insurers accountable for high consumer costs as well."

A bill the House passed on a 158-1 vote in November would reform the determination of need process to give the HPC authority to investigate cost and market impacts of hospital expansions.