Amendment ID: S2769-11
Amendment 11
Hospital Alignment and Review Council
Mr. Collins moves that the proposed new draft be amended by inserting the following new section:
Section XX: The General Laws are hereby amended by inserting after chapter 176V the following chapter:
CHAPTER 176W.HOSPITAL ALIGNMENT AND REVIEW COUNCIL.
Section 1. For the purposes of this chapter, the following words shall have the following meanings unless the context clearly requires otherwise:
“Carrier”, an insurer licensed or otherwise authorized to transact accident or health insurance under chapter 175, a nonprofit hospital service corporation organized under chapter 2086 176A, a nonprofit medical service corporation organized under chapter 176B, a health maintenance organization organized under chapter 176G and an organization entering into a 2088 preferred provider arrangement under chapter 176I; provided, however, that “carrier” shall not 2089 include an employer purchasing coverage or acting on behalf of its employees or the employees 2090 of any subsidiary or affiliated corporation of the employer; provided further, that unless specifically stated otherwise, “carrier” shall not include an entity that offers a policy, certificate or contract that provides coverage solely for dental care services or vision care services.
“Center”, the center for health information and analysis established in chapter 12C.
“Commission”, the health policy commission established in chapter 6D.
“Council”, the hospital alignment and review council established in section 2.
“Division”, the division of insurance.
“Growth in hospital spending”, the annual growth in total commercial hospital inpatient 2098 and outpatient spending as reported by the center.
“Hospital”, the teaching hospital of the University of Massachusetts medical school and 2100 any hospital licensed under section 51 of chapter 111 that contains a majority of medical-surgical, pediatric, obstetric and maternity beds, as defined by the department of public health.
“Hospital spending”, total commercial spending on hospital inpatient and outpatient services.
“Relative price”, the contractually negotiated amounts paid to providers by each private and public carrier for health care services, including non-claims-related payments, and expressed in the aggregate relative to the payer's network-wide average amount paid to providers, as determined pursuant to the methodology under section 52 of chapter 288 of the acts of 2010.
“Target growth in hospital spending”, the percentage of growth in hospital spending 2109 determined by the council.
“Target hospital rate distribution”, a measure of the degree of hospital rate variation within the provider networks administered by a carrier..
Section 2. (a) There shall be a hospital alignment and review council. The council shall consist of the following members or their designee: (i) the commissioner of insurance, who shall serve as chair; (ii) the executive director of the center for health information and analysis; and (iii) the executive director of the health policy commission.
The council shall review growth in hospital spending and receive information from the center, commission and division for its overall consideration.
(b) The council may: (i) make, amend and repeal rules and regulations for the management of its affairs; (ii) make contracts and execute all instruments necessary or convenient for the carrying on of its business; (iii) enter into agreements or transactions with any federal, state or municipal agency or other public institution or with any private individual, partnership, firm, corporation, association or other entity; and (iv) enter into interdepartmental agreements with any other state agencies the council considers necessary to implement this chapter.
(c) Information received by the council from the center, commission and division shall be confidential and shall not be a public record under clause Twenty-sixth of section 7 of chapter 4 or chapter 66 unless the information received by the council is otherwise made publicly available.
(d) The council shall be subject to chapter 30A.
The center, commission and division shall enter into a memorandum of understanding that outlines the information each may share with the other agency for use pursuant to this chapter and ensures that any information received by an agency that it would not otherwise receive shall be used solely for the purposes of this chapter.
Section 3. (a) The council shall review the progress of carriers and hospitals towards demonstrating: (i) the target hospital rate distribution; and (ii) growth in hospital spending that does not exceed target growth in hospital spending.
(b) The council shall review the growth in hospital spending and the statewide commercial relative price distribution for the previous year to determine whether the carriers and hospitals have met the goals established under subsection (a).
(c) Annually, the center, in consultation with the commission, shall submit a report to the council on the statewide commercial relative price distribution and growth in hospital spending not later than October 1. The council shall review the report and certify, not later than December 1, whether the conditions established under subsection (a) were satisfied for the previous year.
Section 4. (a) Carriers shall annually certify to the division that: (i) all rates filed comply
with the target hospital rate distribution; and (ii) if any hospital has received an increase in its rate of reimbursement, all hospitals contracting with the carrier have received an increase greater than 0 per cent. If the division determines that a carrier does not meet the certification requirements, the division shall notify the carrier and presumptively disapprove the rates filed by the carrier.
(b) In any year that the council determines that either carriers have not demonstrated the target hospital rate distribution or the growth in hospital spending exceeded the target growth in hospital spending, the council shall: (i) assess a carrier referred to the council by the division that did not meet the certification requirements of subsection (a) in an amount equal to the product of: (i) the total change in rates for the fewest number of contracted hospitals necessary for the carrier to achieve the target hospital rate distribution; and (ii) the projected utilization of those same hospitals provided, however, that a carrier shall not be assessed unless the division certifies that the carrier was notified that the carrier’s rates did not meet the certification requirements of said subsection (a) and did not refile compliant rates; or (ii) assess a penalty on each of the 3 hospitals that contributed the most to hospital spending. The penalty shall equal the product of the difference between the actual growth in hospital spending and the target growth in hospital spending multiplied by each of such hospital’s proportionate share of commercial hospital spending.
(c) In any year that the council determines that carriers and hospitals have not demonstrated the target hospital rate distribution or growth in hospital spending that does not exceed target growth in hospital spending, the council may define “target hospital rate distribution” and “target growth in hospital spending”; provided, however, that the council shall solicit input from the advisory committee, receive testimony and solicit public input and review the definition every 3 years. The council shall submit proposed definitions to the clerks of the senate and house of representatives, the joint committee on health care financing and the senate and house committees on ways and means not less than 4 months prior to their effective date.
The joint committee on health care financing may, not later than 30 days after the submission of the proposed definitions with the clerks of the senate and house of representatives, the joint committee on health care financing and the senate and house committees on ways and means, hold a public hearing on the proposed definitions. The joint committee may report its findings to the general court, together with drafts of legislation necessary to implement those findings. In the report, the joint committee may include its recommendation on whether to affirm or modify the proposed definitions. The joint committee shall issue any findings not later than 20 days after the public hearing and shall provide a copy of the findings and any proposed legislation to the board. If the general court does not enact legislation with respect to the recommendations within 65 days after the commission has submitted the recommendations to the joint committee, the proposed definitions shall be in effect until the definitions proposed take effect.
(d) If the council amends the definition of “target hospital rate distribution” or “target growth in hospital spending”, the council shall consider: (i) factors resulting in a hospital’s relative price and any weighting assigned by the council to those factors; (ii) alternative payment methodologies in place between a hospital and carrier; (iii) the volume and mix of services provided; (iv) a hospital’s patient population and payer mix; (v) hospital inpatient and outpatient rates as compared to the commercial relative price levels; and (vi) any other information deemed necessary by the council.
(e) Amounts assessed by the council under this section shall be deposited into the Hospital Alignment and Review Trust Fund established in section 2ZZZZ of chapter 29.
(f) Any amounts assessed by the council and then distributed through the Hospital Alignment and Review Trust Fund shall be excluded from the calculation of growth in hospital spending for a year in which the funds are distributed.
Section 5. There shall be an advisory committee to the council. The committee shall support its responsibilities under this section. The council shall be chosen by the council and shall ensure broad representation of carriers and hospitals across regions, of different sizes and, if a hospital, payer mix and other stakeholders.
Section 6. The council may establish regulations or guidance to implement this chapter.