Massachusetts Health Care Act Dies at the End of Legislative Session But Previews Sweeping Changes for the Health Care Industry

The Massachusetts legislative session officially closed on August 1, 2024 after an unusual half day extension. The 193^rd legislative session left many omnibus bills unpassed, including S.B. 2881, “an Act enhancing the market review process” (Act). The proposed Act includes many provisions aimed at strengthening regulatory oversight. It could also have significant implications for health management services organizations, including many private equity-backed platforms and telehealth companies. Although we do not expect the Act to be comprehensively revisited before 2025, certain elements are still on the table and may be considered by the legislature during the informal sessions this winter.

The Massachusetts House and Senate passed iterations of the Act with virtually unanimous votes (the Massachusetts House’s version (H.B. 4653) passed with a 152-1 vote on May 16, and the Massachusetts Senate’s amended version (S.B. 2881) passed with a 38-2 vote on July 18), highlighting the strong desire to reform oversight of the health care system in Massachusetts, and previewing what to expect in the next legislative session.

The Act sought to introduce sweeping changes to numerous areas of health care regulation within Massachusetts, including the following:

• Expanding the scope of transactions subject to Health Policy Commission (HPC) oversight to include private equity actors, real estate investment trusts, and management services organizations;
• Creating new license categories for office-based surgical centers, and urgent care centers;
• Refresh the process to establish and enforce compliance with the Health Care Cost Growth Benchmark;
• Update and expand the requirements and content of annual agency reports created by HPC and the Center for Health Information and Analysis (CHIA); and
• Increase coordination between the state agencies including the Attorney General’s Office, CHIA, Division of Insurance (DOI), HPC, the Massachusetts Department of Public Health (DPH).

In addition, the Senate’s version of the Act added some closely watched proposals, including the following:

• Strengthen corporate practice of medicine restrictions and restrict the authority of management services organizations over the health care entities to which they provide services;
• Restrict who can employ registered practicing clinicians (physicians, advanced practice providers, psychiatric nurse mental health clinical specialists, nurse anesthetists, nurse-midwives, psychologists, and licensed clinical social workers) and impose registration requirements for the permitted employers (licensed health care facilities or health care practices);
• Establish two task forces to evaluate and recommend ways to (1) stabilize the primary care system and (2) streamline the prior authorization process; and
• Propose a new health insurance bureau within the DOI.

State Agency Coordination

Given the numerous regulatory processes and actors within the health care industry, a key focus of the Act was to increase coordination among state agency themselves and with market players. Senator Cindy F. Friedman stated that this bill “affords our health care regulatory agencies the needed flexibility and scope to oversee the industry as it evolves and increases the financial transparency of major market players.” The law’s new councils, expanded studies, increased data collection, and additional opportunities for inter-office communication highlights this as a new priority for the Commonwealth.

For example, the Act would have created an advisory council for the HPC comprised of appointed industry personnel and called for HPC to develop a state health plan at least once every five years that recommends ways to promote the equitable distribution of health care resources across the Commonwealth. The Act specifically tasked HPC with coordinating with appropriate state agencies including the Executive Office of Health and Human Services, DPH, the office of Medicaid, the Department of Mental Health, DOI, the Executive Office of Elder Affairs, and CHIA.

Further, the Act would codify HPC, CHIA, the Attorney General, and other relevant agencies’ right to supply information to DPH in connection with the Determination of Need process to ensure DPH has all the necessary and available data to make an informed decision.

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House Speaker Mariano stated that he is “pretty confident that the health care bills will get through” during the informal sessions.

Foley will monitor legislative activity in the Commonwealth to help Massachusetts-based health care organizations prepare for what reforms are ultimately passed. Foley is here to help you address the short and long-term impacts in the wake of regulatory changes. We have the resources to help you navigate these and other important legal considerations related to business operations and industry-specific issues. Please reach out to the authors, your Foley relationship partner, or to our Health Care Practice Group and Health Care & Life Sciences Sector with any questions.

*The authors acknowledge the contributions of Francesca Camacho, a student at the Boston University School of Law and 2024 summer associate at Foley & Lardner LLP