Health care payment reform bill includes important accommodations for small businesses

As I am apt to do when the Massachusetts House of Representatives votes on a controversial bill (see my commentary on the casino bill as an example: http://randyhuntcpa.blogspot.com/2011/10/casino-gaming-bill-will-pass-but-at.html), I like to provide insight into my reasons for my yea or nay vote.

Yesterday, the House passed H.4127, "An Act improving the quality of health care and reducing costs through increased transparency, efficiency and innovation" (that's a mouthful) on a 148 to 7 vote. The seven nay votes were from freshmen Republicans who are opposed to any expansion of government bureaucracy and skeptical of the claims of cost containment by the bill proponents.

I share these concerns. It gives me heartburn imagining what the proposed Division of Health Care Cost and Equality is going to look like in ten years. Regarding cost containment, even the crafters of this bill predict only the softening of the steep incline that health care costs have been on for the past decade (or more).

Here's the reality for anyone who is a state representative in Massachusetts, irrespective of party. We all knew that H.4127 and a number of the 275 amendments were going to pass yesterday. The Speaker of the House does not bring a major bill to the floor that might not pass.

For the Democrats, a vote against the bill would be political suicide, so no one expected any majority party members to fall out of line.

For the Republicans, we had a choice, the same choice we are faced with everyday on Beacon Hill as the party outnumbered 127 to 33: Go hard line, making this vote a stand for conservative principles, or work with our colleagues on the other side of the aisle to improve a bill that makes sweeping changes to our health care economy.

I chose the latter. As a pragmatic person, knowing that the bill was going to pass come hell or high water, I worked with a number of representatives to make important changes that will benefit small businesses across the commonwealth. Those people are Representatives Walsh (D) of Lynn, Forry (D) of Boston, Jones (R) of North Reading, Peterson (R) of Grafton, Kafka (D) of Stoughton, Keenan (D) of Salem, Peake (D) of Provincetown, Toomey (D) of Cambridge, Hogan (D) of Stow, Atkins (D) of Concord, Benson (D) of Lunenburg, McMurtry (D) of Dedham, DiNatale (D) of Fitchburg, Calter (D) of Kingston, Fox (D) of Boston, Coppinger (D) of Boston, Dykema (D) of Holliston, O’Connell (R) of Taunton, D’Emilia (R) of Bridgewater, Levy (R) of Marlborough, and Turner (D) of Dennis.

The amendment we crafted, which passed unanimously, does three important things for small businesses relative to the Fair Share Contribution (FSC) calculation. (If you don't know what this is, there is information at http://www.mass.gov/lwd/unemployment-insur/fair-share-contribution-fsc/. In a nutshell, companies with more than ten full-time-equivalent (FTE) employees must have at least 25% of their employees participating in their health insurance plan or show that their employees have turned down the offer of employer-provided health insurance subsidized by the company at a minimum of 33%.)

1)    Employees who have qualified health insurance coverage through a spouse, parent, veteran’s plan, Medicare, Medicaid or a plan or plans due to a disability or retirement shall not be included in the numerator or denominator for purposes of determining whether an employer is a contributing employer.

2)    The definition of a seasonal employee is changed to include seasonal employees of businesses that do not close down for a period of time each year. These seasonal employees are also excluded from the Fair Share Contribution calculation.

3)    The Fair Share Contribution threshold is increased from 10 FTE employees to 20 FTE employees.

These three changes will provide huge relief for businesses that have been hammered by the FSC auditors and pay an inordinate amount of the fines assessed. The problem has always been that the 10-employee threshold was unrealistic. My amendment called for a 50-employee threshold, which coincides with the national Affordable Care Act (ObamaCare), but every step forward in politics is a compromise.

We also fought valiantly for a more affordable "mandate lite" health insurance plan that could be offered for 25% less than the "Cadillac" plans that currently mandated, but lost the vote along party lines.

The next step is to fight to ensure that the small business amendment stays in the language of the compromise bill to be released by the conference committee after they meet to reconcile the senate and house versions of the act.

I made a pledge to fight for our small businesses when I campaigned for the state rep seat in 2010 and I am following through on that promise.

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The following is the official press release offered to representatives by the speaker's office.

FOR IMMEDIATE RELEASE                                                                           

June 5, 2012                                                                                     

           

House Passes Bill to Cut Health Care Costs

(BOSTON) –State Representative [Rep name] joined [his/her] colleagues in the Massachusetts House of Representatives today in passing legislation that addresses the unsustainable cost of health care while allowing the health care industry to continue to provide world-class quality care.

This legislation seeks to reduce health care costs while allowing our world renowned health care system to thrive. It provides for several areas: Division of Health Care Cost and Equality, transparency, Patient-Centered Medical Homes (PCMH), Accountable Care Organizations (ACO), alternative payment methodologies, consumer protection, Health Information Technology (HIT), health care cost growth targets, price variation, smart tiering, medical malpractice reform, workforce development, Medicaid, and administrative simplification.

“I hear frequently from businesses and consumers about the burden high health care costs put on them. Now we can provide relief. Just as Massachusetts leads the way in establishing health coverage for its residents, it will now lead the nation in finding a responsible way to curb health costs thanks to the tireless work of Chairman Walsh and the Joint Committee on Health Care Financing,” said House Speaker Robert A. DeLeo. “This legislation, years in the making, makes measured changes to our health care system, creates the opportunity for Massachusetts to create and attract jobs, and, most importantly, considers the basic needs of patients and providers in all corners of this state.”

“I applaud Speaker DeLeo and Chairman Walsh for their bold vision in tackling the skyrocketing cost of health care that is crippling state and local budgets, prohibiting businesses from reinvesting in their workforces, and unduly burdening the Commonwealth’s working families,” said House Majority Leader Ronald Mariano. “When we passed first-in-the nation health care reform in 2006, giving residents of the Commonwealth unprecedented access to care, this second phase of health care reform was always on the horizon. While we made great strides with small business cost containment legislation in 2010, the market has not moved fast enough to curb the rising costs of health care for consumers. This bill builds on the progress the health care industry has made and goes further by addressing the urgent fiscal needs of our community hospitals, providing them with an essential lifeline.”

“Massachusetts has the best health care system in the nation, but we also lead in medical spending,” said Chairman Steven Walsh.  “Health insurance premiums for a family average over $15,000 annually and mean lower wages, and less money for mortgages, rent, car payments, food, and tuition. This legislation focuses on increasing efficiency, eliminating waste, and curbing costs, all while enhancing the quality of care that our patients receive. We will not only save money for Massachusetts citizens, but we will save our health care system over $160 billion in the next fifteen years.”

The legislation provides patients’ tools to make informed health care decisions. Under this legislation, consumers will gain access to detailed comparative price and quality information; they will also gain important information from providers about services and payment.

The bill promotes health information technology and the use of electronic health records that will bring efficiencies and cost savings. The implementation of a fully interoperable health information exchange by 2017 will allow for secure electronic exchange of health records amongst providers.

This legislation provides further support to patients by allowing patients and providers to voluntarily join an ACO and ensuring that the ACO providers will be responsible for helping patients make decisions on their health care needs, including long-term care and supports like home care, nursing home care, and palliative care.

This bill also seeks to reduce miscommunication and fragmented care by establishing patient-centered medical homes, providing a patient with a single point of coordination for all their health care needs. This bill also provides consumers with new protections, giving patients the right to appeal medical decisions made by their ACO doctors and giving patients the right to receive a second opinion from any provider.

This bill reduces medical spending by setting a target for health care spending to grow less rapidly than the gross state product and allowing consumers to spend out-of-pocket, or through supplemental insurance, for any service or procedure they deem appropriate.

In these tough economic times, this legislation also helps our local hospitals, many of which are struggling to stay afloat. This bill requires high-cost providers to show quality or unique service to justify their higher prices and creates a one-time assessment on payers and providers with more than $1 billion in reserves to protect our community hospitals through a Distressed Hospital Fund. Community hospitals may apply for a competitive grant from this Fund, allowing them to thrive over the next 36 months before anticipated savings from the reform allow them to flourish on their own.

Under the bill, a number of functions will fall under the Division of Health Care Cost and Quality, which, like the existing Group Insurance Commission, will operate as an independent agency under the Department of Health and Human Services.

Other provisions of the bill include:

·        The adoption of alternative payment methodologies such as global and bundled payments for acute and chronic conditions as the industry transitions away from the fee-for-service reimbursement system that promotes quantity rather than quality;

·        The creation of a smart tiering system that makes services that are often unaffordable for some patients more accessible for patients by allowing payers to tier by service rather than facility and allowing patients to pay reasonable cost-sharing for more expensive unique services;

·        The implementation of the University of Michigan Health System’s Disclosure, Apology and Offer program, which resulted in a decrease of litigation costs and a reduction of malpractice claims;

·        The further development of a well-trained health care workforce through training, placement, and career ladder service programs, loan forgiveness grants for primary care providers, and residency funding in primary care settings;

·        The improvement of the operation of the Medicaid program; and

·         The simplification of administrative procedures in health care settings.

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