Nov 07, 2017

LEGISLATIVE ALERT: Proposed Massachusetts Law Includes Comprehensive Health Care Reforms, but with Limited Effects upon Employers and Trade Associations

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On October 17, the Massachusetts Senate released “An Act Furthering Health Empowerment and Affordability by Leveraging Transformative Health Care” (the “Act”), legislative proposal with the declared goal of reducing healthcare costs and improving the quality of medical services in the state. The Act includes proposals that would impact many different sectors of the healthcare system, from the licensing and certification procedures for certain healthcare providers, to the billing practices used by hospitals, to the promotion of telemedicine as a method of expanding medical services in rural areas. The Senate is expected to vote on the bill November 15, 2017. If the Act is approved by the Senate, the bill will go to the House for further consideration and possible amendments. Accordingly, the summary below of the Senate bill is far from final.

The Senate proposal would reform many aspects of the Massachusetts healthcare system and has the potentially of impacting group health coverage. The following are highlights from the proposed Senate bill:

  • PBMs: The bill includes a host of new regulatory requirements for Pharmacy Benefit Managers, including a requirement that pharmacies notify consumers if the pharmacy retail price for a prescription medication is less than the cost of the drug purchased through the consumer’s health insurance and the pharmacy would be required to charge the lower price.
  • Pricing: The bill aims to reduce unwarranted price variation among hospitals and out of network providers and includes certain efforts to set price benchmarks for hospital readmissions and incentives to reduce the use of out of network providers. 
  • Carrier Coverage Requirements: The bill would require carriers, among other things, to provide specific types of coverage in certain geographic issues with specific discounts and limited the ability of providers to opt out from a health insurance plan that establishes separate tiers for health care services that can be shopped.
  • Other Features:
    • The Center for Health Information and Analysis would be required to file an annual report identifying the 50 employers in the state that have the highest number of employees receiving medical benefits through the Health Safety Net Trust Fund. This report, which would be publicly available, would likely provide a disincentive to employers who may seek to avoid offering medical insurance to employees.
    • Employers would be required to provide the Division of Medical Assistance, upon request, with information about any employee that applies for benefits from a state subsidized health insurance program. Employers would also be required to file an annual report describing the offers of health insurance that they make to employees, including the cost of premiums and the cost sharing details of such insurance.
    • A small group incentive program would be created to expand the prevalence of employee health plans offered by small businesses. Under this incentive program, small business groups that purchase group coverage through the Massachusetts Health Connector and which meet certain criteria would receive an annual subsidy of up to 50% of eligible employer health care costs. The Act does not define what types of employers would be considered “small” for purposes of receiving these subsidies, but it directs the Health Connector to draft regulations implementing this incentive program.

This legislation is far-reaching and, if enacted, has the potential of changing the health delivery system in Massachusetts and beyond. AWANE will continue to monitor this legislation and provide updates as developments become public.