Speech  Health Care Cost Trends Hearing 2014: Remarks of State Auditor Suzanne M. Bump

Boston — Good morning.  Thank you, Wendy, for that introduction and thanks to the leadership of HPC for inviting me to join you today.

For many years, the Massachusetts health care system has been a blend of blessing and burden. High quality care, medical innovation, high employment growth, and health care access for 98% of Massachusetts residents are some of its blessings.

While these are successes of which we should be proud, they have not come without a cost. Actually, they have come with increasing costs – to businesses, to individuals and to state and local government – and those cost increases have become unsustainable.

That recognition provided impetus for the administration, the Legislature and industry to create a set of incentives, controls, and regulatory oversight.

Auditor’s role in Chapter 224 (Section 251)

The State Auditor’s office is part of this program because the drafters of the law realized that such an expansive undertaking needs built-in monitoring and accountability mechanisms. So, it is the State Auditor’s responsibility under the law to determine whether it produces the desired effects and what are its unintended consequences. Let me tell you today how we are approaching this task.

Specifically, my office has been charged with conducting a comprehensive review in the following 5 areas of expected impact:

• cost containment
• access to and overall quality of care
• the quality of care in specific service areas such as primary care, substance abuse disorders and mental health services
• the health care workforce, and
• the state of public health.

Because every one of these areas is susceptible to nearly endless inquiry and analysis, we will use the same principles of risk and relevance in order to determine our approach to each impact area.

Within the area of Cost Containment, by which I mean premiums and out-of pocket costs incurred by individuals and families and health care costs borne by the state, we know that we can rely on the good work of others as to whether we are meeting the benchmark of 3.6% in cost increases.

And, we will use the work of CHIA, HPC, the Attorney General’s Office and others to assess the trends and activities in the marketplace and health care facility to understand what policy changes might be needed in this area.

The recent cost trends report released by CHIA last month showed that the Massachusetts health care system performed favorably in a number of indicators including Total Health Care Expenditures (or THCE), which was below the established benchmark.

In spite of this good news, there is a concern that THCE actually exceeded inflation by .8%. While the increase from 1.5% to 2.3% may not be alarming, we are looking to determine whether there are significant reductions in fee-for-service payments and as well as how Alternative Payments Methodology are being implemented in some of your organizations.

In addition to cost containment, the second area in our review is Access and Quality of Care across regions of the Commonwealth and as experienced by specific populations including children, the elderly, low income and individuals with disabilities.

Another area of review for our office is Specific Service Quality of Care, in particular, primary care and behavioral health.  Among other issues, we will look at the integration of services for behavioral health and chronic medical conditions.

Our office will also review the implementation of the Patient Centered Medical Home efforts and whether this approach to primary care is working to achieve high quality and accessible health care for some of the most vulnerable citizens in the Commonwealth.

Our work also focuses on the Health Care Workforce, as we seek to provide a comprehensive picture of recruitment, training, education, retention, worker shortages and even job satisfaction of these workers.

We have already prepared a baseline study that examines key aspects of the health care workforce at both the state and local levels.  We intend to build on that work by developing a special topics report and completing an impact report.

Finally, we will review the law’s Impact on Public Health and determine to what extent we are reducing preventable health conditions like pediatric asthma, hypertension, and diabetes. We are interested in charting efforts to improve employee wellness and what is being done to reduce racial and ethnic disparities in health outcomes.  

Our office will not only have to meet its statutory obligation of assessing the impact of Chapter 224 in these five areas, but we are also establishing audit activity to determine whether the state entities involved in administering the implementation of Chapter 224 are doing so in the most cost- effective manner and consistent with all applicable laws and regulations.

The results of our review and any recommendations must be reported to the Legislature by March 2017. It is our intention, however, to issue interim reports prior to that date so that any necessary adjustments can be made as various components come on line.

This work is a big task and a new mission for us. Our work has already begun, gathering baseline data as well as identifying data sources across state and federal government agencies that will enable us to do these analyses.

We have assembled an advisory committee consisting of parties representing many facets of the health care market: providers, payers, the business community, representatives of the health care workforce, health care advocates, and representatives from academia who conduct research in the health care and/or public health fields.

Its purpose is to provide us with feedback on our research plan, on the data that is being generated for this project, and the initial analysis being conducted on that data.  We need this broad-based Advisory Committee to help ensure that the right questions are being asked, that assumptions are challenged where appropriate, and ultimately, that the report and recommendations to the legislature are meaningful and useful toward the end-goal of achieving cost containment in the healthcare market.

Since the beginning of my administration, we have made a committed investment in data analytics. In the past three years, we have received additional support through the IT Bond to strengthen our technology infrastructure so we can increase our capacity for handling big data and utilizing data from disparate sources.

This increased capacity serves us well in our Chapter 224 work and it allows us to prioritize our audit work based upon risk, so that we are focusing our limited resources where the greatest problems likely exist. This capacity has made our work much more effective and our recommendations for reforms much more meaningful.

In conclusion, the health care cost containment law of 2012 is just as groundbreaking and ambitious as the health care access law of 2006. Again, Massachusetts is in the forefront of efforts to address the many complex dimensions of meeting a basic human need for health care without strangling an industry that is an engine of economic growth – or the rest of the economy.

As the discussions today focus on challenges and opportunities for coordinated care, and promoting value-based markets in both the insurance and provider sectors, let us not forget that all of us are committed to innovation, transparency and most of all, accountability.

We in state government know we have to get this right, and not just for health-related reasons. Our economic future may hang in the balance.