Provider changes, including consolidations and alignments, have been shown to impact health care market functioning, and thus the performance of our health care system in delivering high quality, cost effective care. Chapter 224 of the Acts of 2012, An Act Improving the Quality of Health Care and Reducing Costs Through Increased Transparency, Efficiency and Innovation (Chapter 224), directs the Health Policy Commission (HPC) to monitor this aspect of the Massachusetts health care system.
Providers and Provider Organizations must submit notice to the Commission not fewer than 60 days before the proposed effective date of any proposed Material Change. A Material Change consists of:
- A Merger or affiliation with, or Acquisition of or by, a Carrier;
- A Merger with or Acquisition of or by a Hospital or hospital system;
- Any other Acquisition, Merger, or affiliation (such as a Corporate Affiliation, Contracting Affiliation, or employment of Health Care Professionals) of, by, or with another Provider, Providers (such as multiple Health Care Professionals from the same Provider or Provider Organization), or Provider Organization that would result in an increase in annual Net Patient Service Revenue of the Provider or Provider Organization of ten million dollars or more, or in the Provider or Provider Organization having a near-majority of market share in a given service or region;
- Any Clinical Affiliation between two or more Providers or Provider Organizations that each had annual Net Patient Service Revenue of $25 million or more in the preceding fiscal year; provided that this shall not include a Clinical Affiliation solely for the purpose of collaborating on clinical trials or graduate medical education programs; and
- Any formation of a partnership, joint venture, accountable care organization, parent corporation, management services organization, or other organization created for administering contracts with Carriers or third-party administrators or current or future contracting on behalf of one or more Providers or Provider Organizations.
These requirements and others are detailed in M.G.L. c. 6D, § 13 and the implementing regulation 958 CMR 7.00, Notices of Material Change and Cost and Market Impact Reviews, with additional clarifications in our Technical Bulletin and Frequently Asked Questions.
Based on criteria articulated in M.G.L. c. 6D, § 13 and informed by the facts of each Material Change, the HPC analyzes the likely impact of the Material Change, relying on the best available data and information. Our work includes review of the parties’ stated goals for the Material Changes and the information they provide in support of how and when the Material Change would result in efficiencies and care delivery improvements.
The HPC may also engage in a more comprehensive review of particular Material Changes anticipated to have a significant impact on health care costs or market functioning. The result of such Cost and Market Impact Reviews is a public report detailing the HPC’s findings. In order to allow for public assessment of the findings, the Material Change may not be finalized until the HPC issues its final report. Where appropriate, such reports may identify areas for further review or monitoring, or be referred to other state agencies in support of their work on behalf of health care consumers.
To the HPC’s knowledge, this is the first time any state has authorized a policy-oriented, prospective review of the impact of health care changes that is distinct from an administrative determination of need or law enforcement review of antitrust or consumer protection concerns. Consistent with the goals of Chapter 224, comprehensive and evidence-based reporting of provider organization performance brings important information to the public dialogue about how to develop a more affordable, effective, and accountable health care system.
For more information, see: