Massachusetts Governor Charlie Baker has restarted the discussion on health care cost containment in the Commonwealth with a proposed bill that contains a raft of initiatives. This is the first in a series of blog posts to invite discussion and testing of the proposals.
Click HERE to read about the Proposed Facility Fee Ban.
Click HERE to read about the MA Proposed Reporting Requirements for Drug Pricing Transparency.
Massachusetts Governor Charlie Baker introduced a bill designed to (among a number of other “cost containment” provisions) restrict off-campus “Facility Fee” billing in the Commonwealth. This proposal goes far beyond the federal Medicare limitations under Section 603 of the Bipartisan Budget Act of 2015 that we have covered here extensively or the Centers for Medicare and Medicaid Services (CMS) site neutrality regulation, which was recently struck down by a Federal District Court for being beyond CMS’ authority under federal law. For this reason, it is important for providers to understand what the Governor has proposed when evaluating the many components of his bill. Hospitals outside of the Commonwealth should also pay attention to developments, as the country often looks to Massachusetts, the state that developed “Romney Care” the predecessor to “Obama Care,” as it now grapples with how to manage cost containment in an era of expanded access to health care coverage.
In general, the Governor’s proposal includes an absolute ban on reimbursement for hospital facility fees rendered in (initially) off-campus locations, other than emergency departments. If enacted, only professional fees may be billed in such locations, with hospitals and other health care providers subject to covering all the costs of overhead for these facilities without any reimbursement, other than (it appears) through federal and employer-sponsored plans. It is curious what other sources of revenue hospitals will be able to access to cover the overhead of these community resources without the ability to bill third-party payors. While policymakers may believe that these hospital facilities could simply convert to freestanding medical offices, it seems foreseeable that the result would be closure of many of these facilities that are not sustainable with their case and payor mix reimbursed on professional fees only. Patients would be required to travel back to the main campus of the hospital for needed services, causing access problems for many of the most vulnerable populations, particularly in remote or rural locations.
Here is a summary of what the Governor’s proposal would do, along with some of the consequences (intended or unintended).
The bill adds a new section to the health care facility law (Chapter 111), applicable to any health care provider, not just hospitals. “Facility fees” are defined broadly, not just based on APC or revenue codes. The definition of a “facility fee” is “a fee charged, billed or collected by a health care provider for hospital services provided in a facility that is owned or operated, in whole or in part, by a hospital or health system that is intended to compensate the health care provider for operational expenses and is separate and distinct from a professional fee.”
Health care providers (again, not limited to hospitals) would be prohibited from charging any facility fees except for (1) services provided “on campus” (using the Medicare definition of 250 yards from the main buildings), (2) services provided in a facility that includes a licensed hospital emergency department, or (3) emergency services provided at a licensed satellite emergency facility.
The proposed bill gives the Health Policy Commission the power to extend the facility fee prohibition to outpatient services at on-campus facilities if the HPC finds that a service “may reliably be provided safely and effectively in settings other than hospitals.” The bill contemplates that these services will be extremely broad, including evaluation and management services and diagnostic imaging.
Health care providers may be required to provide extensive written patient notifications of facility fee billing, both on and off-campus. For scheduled appointments more than 10 days out, these notices must be provided in advance of the service.
As if the statutory billing prohibition were insufficient, the bill also mandates that health insurers, including HMOs, PPOs, Blue Cross and Blue Shield, as well as the Group Insurance Commission not pay for a prohibited facility fee, and invites further cuts by the payors beyond the ban in the law.
Finally, the bill adds language to the state False Claims Act (FCA) that would tee up a potential FCA violation for receiving a prohibited facility fee payment or presenting a prohibited facility fee for payment. This addition exposes a hospital to refund the full amount of the benefit or payment made, and for reasonable attorneys’ fees and costs, inclusive of costs of investigation.
In addition to fees under the amended state FCA, providers who violate the facility fee ban may be punished by a fine of not more than $1,000 per occurrence.
Providers and insurers alike should take careful note of the Governor’s proposed bill, as the facility fee ban would have serious implications on provider reimbursement. In addition to the facility fee prohibition, the bill would require providers and insurers to spend 30% more on primary and behavioral health care, impose restrictions on surprise billing, increase coverage of telehealth and behavioral health services, and implement drug pricing provisions. Foley will cover the bill’s key initiatives in subsequent Health Care Law Today posts.