Many states are transforming their health care delivery systems to improve health and control costs. Reducing health disparities — and addressing their social and economic causes — is at the heart of many of these efforts.
Amid intense scrutiny of 2020 Presidential election results, little attention has been paid to health-related state ballot initiatives. While COVID-19 limited citizens’ ability to collect signatures to get questions on the ballot, citizens and legislatures in nine states placed health care-related issues on their state ballots.
In Oklahoma, voters rejected a proposal to divert a portion of the state’s tobacco settlement dollars to help fund Oklahoma’s recent Medicaid expansion, which was recently enacted following a successful citizen referendum.
Marijuana initiatives: Three states – Mississippi, South Dakota, and Louisiana – joined the 33 states that have legalized medical marijuana, and Arizona joined the 11 states that allow recreational marijuana. Arizona’s marijuana sales revenues will support community colleges, municipal services, highways, and a new Justice Reinvestment Fund. Oregon has legalized psilocybin mushrooms and will use revenues to support drug treatment and community recovery centers.
Family leave: In Colorado, voters enacted a paid family leave law, funded by payroll taxes of employers and employees.
While 2020 had fewer state ballot questions, policymakers will note the re-emergence of taxes on tobacco and marijuana sales that may signal strategies for budget deliberations to come.
Inequities in oral health and health outcomes are driven by upstream factors, including diet, education, transportation, and access to care. A growing number of states are working to improve the oral and physical health of Medicaid enrollees and reduce costs by addressing these social determinants of health in their managed care contracts.
A 50-state review by the National Academy for State Health Policy (NASHP) of Medicaid dental and medical managed care contracts, requests for proposals, and other similar documents publicly available through September 2020, identified how states address social determinants of oral health. Dental contracts were reviewed for a comprehensive list of social determinants and medical contracts were analyzed for references to care coordination, community resources, food access, social determinants of health screening, and coordination with dental contractors. In total, NASHP scanned dental contracts in 19 states and medical contracts in 38 states.
Of the dental contracts, nine referenced coordination between dental plans and medical plans and 13 referenced coordination with social and community services. Other common references in dental contracts included equity/cultural competence, education, and transportation (each referenced in 10 state contracts).
All but one of the 38 medical contracts referenced coordination with social and community services. Thirty-three states referenced food in their medical contracts, 25 referenced adverse experiences (such as domestic violence and child abuse), and 15 referenced care coordination between dental and medical care. Three states (Florida, Michigan, and Virginia) referred to food in both their dental and medical contracts, while only one (Virginia) referenced adverse experiences in both contracts.
State Medicaid Program Delivery of Dental Care
While Medicaid covers some form of adult dental care in 47 states and Washington, DC, and all states cover dental care for children under 21 as part of the Early Periodic Screening, Diagnosis and Treatment (EPSDT) program, adult dental coverage is optional for state Medicaid programs. Currently, 35 states provide limited dental benefits for adults and 19 states offer extensive adult dental benefits.
States have different options for delivering dental care. Some states with managed care use a carve-in model, where the dental benefit is integrated into medical managed care programs. With a carved-in benefit, managed care organizations (MCOs) may administer the dental benefit or subcontract the dental benefit to another vendor. In carve-out dental programs, states contract with a dental MCO or dental benefits manager (DBM). Alternatively, states with Medicaid managed care medical delivery systems may have fee-for-service dental systems.
Medicaid dental and medical contracts illustrate how states can consider social determinants affecting oral health and overall health through:
- Screening, referral tracking, and follow-up;
- Educational initiatives;
- Staffing and training requirements;
- Data sharing and technology;
- Coordination between dental and medical systems; and
- Performance improvement.
Social Determinants of Health in Dental and Medical Medicaid Contracts
Almost all states scanned have some requirement for plans to refer members to community resources and social services. NASHP focused specifically on requirements that are applicable to the general population, rather than individuals designated as high risk or high needs. States use a variety of strategies to encourage investment in SDOH.
Screening for SDOH Needs
Sixteen states use routine screenings for certain social determinants, including employment status and access to food and transportation. The scan of 14 medical contracts and two dental contracts indicate that states are more likely to require medical plans to conduct needs assessments, often within a specified time frame after enrollment, than dental plans. States may also require medical plans to use this data to appropriately target interventions to meet enrollees’ needs.
While dental plans do not necessarily have the same explicit requirement to conduct a screening, some states do ask their dental plans to use SDOH data to target their educational and outreach activities.
- Michigan’s dental plan is required to use social determinants of oral health data from the state in order to target interventions, outreach, and education efforts.
- Nevada’s dental contract requires the contractor to complete a community-based needs assessment to inform their health promotion and educational activities, including ensuring that any interventions are culturally appropriate and meet the needs of the target population.
Referral Tracking and Follow-up
While screening is an important first step in identifying members’ social needs, it also raises a question of how states use the data to address social determinants. NASHP found that in almost every state with publicly available contracts, Medicaid agencies partner with community-based organizations to meet the social needs of enrollees. For example, plans may facilitate referrals to these community agencies based on information collected through SDOH screenings. States can use tracking, follow-up, and reporting requirements to ensure that referrals to community resources and organizations are effective and successful. Contractors can support these efforts by documenting “closed-looped” referrals that ensure that an enrollee is successfully connected with a community-based organization to address other health and social needs.
- In Louisiana, the Dental Benefit Program Manager is required to connect enrollees with community-based service providers and document referrals and referral outcomes in enrollees’ dental records.
Dental contracts are less likely to require or encourage the plan to monitor referral follow-up. However, dental plans could adopt some of the medical MCOs’ language in order to track the status of referrals, strengthen care coordination between insurance plans and community resources, and ensure individuals are receiving adequate social services that meet their evolving needs. For example, New Hampshire requires MCOs to track the effectiveness of community-based providers and resources, and Oregon requires reporting on referrals to culturally diverse social and support services.
Healthy People 2020 identified health literacy as a component of SDOH, noting that individuals’ ability to access and understand relevant health information affects their health and health outcomes. To help improve health literacy, many states require managed care plans to implement educational initiatives. For dental plans, this includes educating members about the importance of oral health or launching community oral health initiatives designed to help eliminate barriers to dental services and improve population oral health.
- In both Nevada and Texas, the dental contractor must develop and implement programs designed to educate members about nutrition, the importance of oral health, and the relationship between oral health and overall health.
- Florida’s dental plan includes incentives for participation in health education classes. Examples of incentives members can receive that support healthy child development include clothes, food, books, safety devices, publications, and memberships in health and education clubs.
- In its response to Nebraska’s request for proposals (RFP), dental contractor MCNA referenced a program it implemented in Texas that uses the fotonovela (a comic book-style communication popular in the Latinx community) to distribute health information materials to children of migrant farm workers.
Staffing and Training Requirements
Plans may also be responsible for training their employees to better meet members’ needs. In their contracts, states can prioritize the type of training that a plan’s staff receive.
- Nebraska’s dental contract requires all staff to be trained on how social determinants (including food, housing, education, violence, and physical and sexual abuse) affect members’ health and wellness. Staff also receive training on how to find community resources and make referrals.
Both medical and dental plans also employ staff members who are responsible for care coordination, addressing social determinants, and improving access to care for historically marginalized populations.
- Nebraska’s dental contract requires the plan to employ a tribal network liaison to coordinate and expand dental services to Native Americans and connect them to community resources. Arizonaand New Mexico both require medical MCOs to employ someone to coordinate services with Native Americans.
Examples of other medical plans’ required staff positions include a community liaison in Illinois, who connects enrollees with community-based services, and a service coordination director in Kansas, who oversees quality improvement initiatives related to SDOH. Dental contractors could potentially leverage medical MCO positions and their expertise to streamline care experiences for enrollees across medical and dental systems.
Coordination between Dental and Medical Systems
To better integrate dental and medical care, dental and medical managed care use staff members to connect physical health and oral health services across contracts. These staff members also connect Medicaid enrollees to community services to meet social needs.
- In its dental contract, Tennessee requires a coordinator to work with the medical MCO and develop a system to exchange data with the MCO.
- Florida requires MCOs to have a liaison for their prepaid dental health plan to help integrate medical care, behavioral health, and long-term benefits with the dental plan.
- Iowa requires the dental contractor to send a care facilitation plan to the state with information on how the plan will facilitate coordination between dental and medical plans and providers.
Data Sharing and Technology
Eleven states require some form of data sharing between dental and medical plans, or between plans and community organizations. Requirements for integrating different agencies’ social determinant data and sharing information across systems allow medical, dental, and social services to work together to coordinate care for members and encourage referrals and follow-up tracking.
- In Tennessee, the dental benefits manager must facilitate data exchange with school-based health programs to coordinate any needed follow-up care.
- Washington State tasks its dental contractors with using health information technology and health information exchanges to coordinate care between physical health, behavioral health, and social services and other community-based organizations.
Other states are creating their own online platform or mobile applications to improve access to social services for their Medicaid enrollees. These platforms are mentioned specifically in medical managed care plan contracts, but have the potential to be used by dental contractors as well.
- Kansas developed a web-based, mobile-friendly application that connects service coordinators to community resources, such as food banks and pantries, housing, clothing, legal resources, and transportation.
- Medicaid Prepaid Health Plans in North Carolina will use a telephonic, online, and interfaced IT platform to refer members to social services and track the outcomes of these referrals.
A number of states encourage both dental and medical plans to engage in performance improvement projects (PIPs) in order to address SDOH.
- In Nevada, dental vendors are required to conduct both a clinical and non-clinical PIP every year. Non-clinical PIPs can focus on cultural competency and accessibility of services, among other SDOH.
- Oregon Coordinated Care Organizations (CCOs) must implement PIPs that address at least four of eight designated focus areas, which include addressing SDOH and equity, and integrating primary care, behavioral health care, and/or oral health care.
Through these PIPs, state managed care plans (both dental and medical) can launch pilot interventions to improve health outcomes by addressing SDOH and reducing barriers to care.
Research shows that addressing individual social needs leads to better oral health outcomes. Despite having different levels of funding and varying Medicaid adult dental benefits, states across the country are finding ways to invest in SDOH. While not all states have started to include SDOH requirements in their dental contracts, these examples show potential opportunities for dental plans to integrate some of the medical plans’ language and guidance into their own work. To learn more about how state Medicaid programs include SDOH-related language in their dental and medical Medicaid managed care contracts, view this interactive map.
Acknowledgements: This blog and map were made possible by the DentaQuest Partnership LLC. The authors would like to especially thank Trenae Simpson for her guidance and assistance, and Trish Riley and Jill Rosenthal for their helpful feedback. This information, content, and conclusions are those of the authors’ and should not be construed as the official position or policy of the DentaQuest Partnership LLC.
Low-income individuals and communities of color, already besieged by poor access to health care, limited insurance coverage, and other health inequities exposed by COVID-19, also suffer another health disparity – they are among the hardest hit by continually rising prescription drug prices.
Since 2017, states across the nation have taken action to lower rising drug costs, enacting 163 laws that include regulating pharmacy benefit managers, increasing drug cost transparency, importing drugs from Canada, and limiting cost-sharing by consumers. Many of these laws are most likely to combat rising drug costs for individuals covered by public and private insurance plans.
Because high drug prices disproportionately affect low-income, uninsured, and people of color, state laws that work to lower drug costs for these communities are important. Recent examples include a Minnesota law that extends insulin affordability measures to uninsured individuals, and states laws that target a discriminatory practice within insurance benefit design known as adverse tiering. Adverse tiering occurs when insurers place drugs – including those used to treat HIV/AIDS and hepatitis B and C that predominantly affect communities of color – in a drug formulary’s highest cost-sharing tier, forcing patients to pay more even when the drug is a generic.
People of color are disproportionately impacted by chronic illnesses and certain health conditions, such as diabetes, HIV/AIDs, hepatitis B and C, hypertension, cardiovascular diseases, obesity, and asthma. Today’s increased rate of chronic conditions found in communities of color can be traced back to numerous discriminatory policies, including employment, education, and the practice of redlining, which placed loans and insurance out of the reach of residents of certain areas based on race or ethnicity. Systemic discriminatory practices have resulted in poorer households and neighborhoods, higher incidences of adverse childhood experiences, and limited access to quality health care, healthy food, parks, and public transportation. The combination of poor environmental quality, food scarcity, and limited access to health care increases the risk of asthma, obesity, and diabetes.
Not only are people of color more likely to suffer from chronic illness, they are also more likely to be uninsured and are therefore disproportionately hit hardest by ongoing rises in the list prices for prescription drugs. While insured individuals benefit from drug rebates negotiated for plans and drug coverage, the uninsured face higher prices for the same drugs – though they may be eligible for manufacturer coupons to help subsidize high costs. Other programs that help low-income patients obtain lower cost medications, such as MedAccess, require time-consuming applications, income verification, the cooperation of their providers, and computer access. The lack of ability to afford medication can result in under-usage of needed medications and overall poorer health outcomes.
In one study of Medicare beneficiaries without drug coverage, Black and Latinx individuals used 10 to 40 percent fewer medications than their White counterparts did for the same illnesses. Disparities are also seen in the under-use of insulin for the treatment of diabetes, a disease that is 60 percent more likely to impact Black adults than non-Latinx White adults.
Insulin Spending Caps
To make insulin more affordable and accessible, 11 states* have adopted legislation to impose spending caps on insulin for consumers. In most states, insulin spending caps affect only those covered by state-regulated drug plans. However, Minnesota’s recently enacted legislation also extends assistance to uninsured patients who cannot afford treatment for their diabetes.
Signed into law in April 2020, Minnesota’s Alec Smith Insulin Affordability Act caps insulin costs both in the commercial market and for the uninsured or under-insured. The legislation establishes two plans:
- An emergency plan that allows for a once-per-year, 30-day supply of insulin with a payment cap of $35; and
- A long-term plan that provides insulin supplies in 90-day increments for a capped payment of $50.
Both the urgent-need plan and the continuing safety net program are targeted towards uninsured populations, with the latter program requiring a household income less than 400 percent of federal poverty guidelines. Manufacturers who fail to comply with this bill face an administrative penalty of $200,000 per month for noncompliance, with the penalty increasing over time. Since passage of the Minnesota law, the Pharmaceutical Research and Manufacturers of America (PhRMA) has filed suit, claiming the act confiscates private property for public use without proper compensation to manufacturers.**
People of color requiring expensive drugs to treat chronic illness also face a discriminatory practice within insurance markets known as adverse tiering. Adverse tiering occurs when insurance plans structure their drug formularies to require substantial out-of-pocket cost-sharing for drugs in a certain class, particularly for expensive-to-treat conditions such as HIV/AIDS. This discourages patients needing those drugs from selecting an insurance plan with adverse tiering, and forces those who do buy into the plan to pay hefty out-of-pocket co-pays for expensive, life-saving medications. Adverse tiering can cost HIV-positive individuals (of whom 87 percent were Latinx, Black, or of multiple races in 2018) enrolled in such a plan an additional $3,000 each year.
Adverse tiering became more prevalent between 2014 and 2015 for conditions such as HIV/AIDs, hepatitis B and C, and multiple sclerosis. In 2016, the US Department of Health and Human Services (HHS) released a regulation extending consumer protections from discriminatory practices found in the Affordable Care Act (ACA) to:
- All health entities receiving HHS funding;
- HHS-administered health programs; and
- Insurers participating in health insurance marketplaces.
The final rule also affirms the broad definition of “disability,” allowing for the inclusion of persons with chronic conditions that affect major life activities and bodily functions. In the final rule’s preamble, HHS lays out factors that the Office of Civil Rights (OCR) will consider when assessing potential discriminatory practices in plan benefit design on a case-by-case basis. One notable consideration is whether or not the covered entity utilized a nondiscriminatory rule or principle when adopting a certain plan design feature.
Insurers have taken advantage of this language by justifying their placement of all drugs in a given class on specialty tiers as resulting from high drug costs. While this approach avoids the regulation’s definition of discrimination, it none-the-less has the effect of deterring low-income patients needing high-cost drugs for chronic conditions from enrolling in their plans.
Because the chronically ill population is disproportionately made up by people of color, this practice is most likely to impact minority populations. Some states have taken direct action to combat adverse tiering:
- Delaware implemented legislation that prohibits insurers from placing all drugs in a given class on a specialty tier; and
- Both California and Colorado prohibit formulary designs that discourage enrollment by individuals with certain health conditions.
These laws, in addition to Minnesota’s insulin affordability law, provide first steps for policymakers who want to address drug affordability through a lens of racial justice by ensuring that affordability is extended to individuals beyond the commercially-insured market, and that benefit designs within commercial insurance markets do not have discriminatory impacts.
*States with insulin caps include New Hampshire, Colorado, Delaware, Illinois, Maine, Minnesota, New Mexico, Utah, Virginia, Washington, and West Virginia
**Track the status of this case and others on NASHP’s Rx Legal Resources page.
A new, 50-state analysis of Medicaid managed care programs by the National Academy for State Health Policy (NASHP) shows that in the past three years, state Medicaid managed care (MMC) programs have:
- Enrolled more children and youth with special health care needs (CYSHCN);
- Provided more services to them through managed care; and
- Launched more specialized initiatives serving CYSHCN in managed care.
These trends deviate from past approaches as, historically CYSHCN have often been exempt from MMC due to the complexity of their needs. CYSHCN represent nearly 20 percent of children younger than age 19 and have chronic and/or complex care needs that require physical and behavioral health care services beyond what children normally require. As states become more proficient in developing MMC programs, they are increasingly incorporating CYSHCN into their program designs in an effort to improve quality and reduce costs.
NASHP has updated a 50-state chart and map, originally published in 2017, highlighting new developments in states’ MMC programs that serve CYSHCN. The 2017 analysis found that 47 states use some form of MMC (risk-based, primary care case management, and prepaid health plans) to serve CYSHCN, a figure that remains true in 2020, with the same number of states and Washington, DC continuing to use MMC to serve some or all CYSHCN.
NASHP’s new analysis found a downward trend in traditional fee-for-service (FFS) models and a shift toward innovative delivery systems. Given that 47 percent of CYSHCN are covered by Medicaid, this analysis provides important insight into how states are designing services to meet the unique needs of CYSHCN.
The use of managed care delivery systems is widespread, with states contracting with managed care organizations (MCOs), which are paid on a per-member, per-month basis, to provide services for people enrolled in Medicaid. Thirty-eight states use a risk-based model to serve CYSHCN, in which the MCO assumes the financial risk. Ten states use a primary care case management (PCCM) model in which states contract directly with primary care providers and pay them a case management fee for each enrollee’s care coordination, and three states have a prepaid health plan (PHP) through which health plans are paid per-member, per-month for a limited set of services.
In this new analysis, NASHP identified several key trends among the 47 states and Washington, DC that use MMC to serve CYSHCN, such as the use of specialized MMC plans, MMC enrollment policies for CYSHCN, behavioral health service delivery systems, and quality assessment standards for CYSHCN.
MMC Contract Language for CYSHCN
Since 2017, six states have added a specific definition of CYSHCN to their managed care contracts – 29 states now clearly describe this population of children within their MMC program. Including a definition of CYSHCN in a managed care contract can support identification of CYSHCN and can be used to determine eligibility for specific services and supports. Some states align their definitions with the federal Maternal and Child Health Bureau, Health Resources and Services Administration definition, while others are based on specific health conditions or Medicaid enrollment categories (e.g., children enrolled in Medicaid through the aged, blind, and disabled eligibility category).
More states are also evaluating the quality of care that MCOs provide to CYSHCN using measures that account for their unique needs, as compared to 2017. States are required by federal Medicaid regulations to develop a quality assessment and improvement strategy and to contract with an external organization to evaluate the quality of care provided by their MCOs. In addition to meeting these regulations, 39 states now include specific language in their contract regarding measuring quality of care provided to CYSHCN through MMC delivery systems, an increase of seven states since 2017.
MMC Enrollment Policies for CYSHCN
CYSHCN may be eligible for Medicaid coverage through specific pathways to coverage, including those who are eligible for Medicaid’s aged, blind, and disabled (ABD) category, those receiving Social Security Income (SSI), and those who are enrolled in foster care or who are receiving adoption assistance. Additional subcategories of CYSHCN who may be enrolled in Medicaid include American Indian/Alaskan Native (AI/AN) children, those enrolled in Medicaid home- and community-based service 1915(c) waiver programs, and those enrolled in state Title V CYSHCN programs. States are increasingly mandatorily and voluntarily enrolling these subpopulations into MMC. The majority of states continue to enroll children that are eligible for Medicaid through ABD, SSI and youth in foster care or receiving adoption assistance in managed care. Over the past three years, the number of states that enroll AI/AN children and those enrolled in 1915(c) waiver programs has increased by more than 10 for each subgroup. Together, these trends may point to an increased understanding among state Medicaid programs of the diverse needs among CYSHCN subgroups.
Specialized MMC Plans for CYSHCN
Several states have developed specialized managed care plans to meet the unique needs of CYSHCN or subgroups. These plans typically offer tailored benefits that are often not available through their standard MMC plan. The number of states that have specialized MMC plans for CYSHCN has nearly doubled over the last three years.
- Thirteen states (DC, FL, GA, IL, IN, ND, TN, TX, UT, VA, WA, WI, and WV) operate 12 specialized health care plans to serve some or all CYSHCN, an increase of six states since 2017.
- Nine states’ (DC, GA, IL, IN, TN, TX, WA, WI, and WV) specialized plans serve youth in foster care and/or receiving adoption assistance, representing over half of the specialized MMC plans. In 2017, only two such plans existed.
- Six states (DC, IN, ND, TX, UT, and VA) have specialized plans that serve children who are eligible for Medicaid through the ABD category.
- Five states (ND, TN, TX, VA, and WV) enroll children who are enrolled in 1915(c) waiver programs in their specialized plans.
Behavioral Health Service Delivery for CYSHCN
States have historically been more likely to carve behavioral health services out of their MMC plans and deliver these services through distinct behavioral health organizations (BHO) or through FFS arrangements. As more states are shifting to integrate behavioral health and primary care services, they are increasingly providing behavioral health services through their MCOs. As of 2020, 41 states provide behavioral health services through MMC, an increase of eight states since 2017. Six states continue to provide behavioral health services through carve-out FFS and BHO arrangements.
Table 1: States’ MMC Program Design: 2017 – 2020
The table below summarizes key trends across states’ Medicaid managed care programs that serve CYSHCN, such as increases in the number of states that enroll CYSHCN in MMC, offer specialized health care plans that serve CYSHCN, and integrate behavioral health services with primary care for CYSHCN. These and other insights can be found in NASHP’s updated 50-State Chart and Map.
|Feature||Number of States – 2017||Trend||Number of States – 2020|
|Contract provides a clear definition of CYSHCN||23||↑||29|
|Specific quality measures for CYSHCN||32||↑||39|
|Subpopulation enrollment in MMC (mandatory or voluntary for at least one plan)|
|Aged, blind, and disabled||40||↑||42|
|American Indian/Alaskan Native||22||↑||36|
|Foster care youth/adoption assistance||39||↑||46|
|Social Security Income (SSI)||20||↑||33|
|Title V CYSHCN||14||↑||17|
|Specialized plans for CYSHCN*|
|Total states with specialized plans||7||↑||13|
|Includes aged, blind, and disabled||3||↑||6|
|Includes youth in foster care/adoption assistance||2||↑||9|
|Includes Social Security Income||2||↑||3|
|Includes Title V CYSHCN||1||↓||0|
|Behavioral health service delivery system for CYSHCN**|
|MCO provides behavioral health services||33||↑||41|
|Behavioral health services are carved-out into FFS||7||↓||6|
|Behavioral health services are carved-out of managed care and provided by a behavioral health organization||8||↓||6|
*Specialized plans may include more than one subpopulation.
**Some states use more than one approach to provide behavioral health services.
 Children with Special Health Care Needs.” Maternal and Child Health Bureau, December 17, 2019. https://mchb.hrsa.gov/maternal-child-health-topics/children-and-youth-special-health-needs.
 See NASHP’s 2017 chart and map here: https://www.nashp.org/state-medicaid-managed-care-program-design-for-children-and-youth-with-special-health-care-needs/
 MaryBeth Musumeci and Priya Chidambaram, How Do Medicaid/CHIP Children with Special Health Care Needs Differ from Those with Private Insurance? (Menlo Park, CA: Kaiser Family Foundation, June 2019). https://www.kff.org/medicaid/issue-brief/how-do-medicaid-chip-children-with-special-health-care-needs-differ-from-those-with-private-insurance/
 Children with Special Health Care Needs.” Maternal and Child Health Bureau, December 17, 2019. https://mchb.hrsa.gov/maternal-child-health-topics/children-and-youth-special-health-needs
While billions in COVID-19 federal relief funds have been distributed to health care providers, the funding has primarily gone to large hospital systems, leaving many independent providers to suffer reductions in patient visits and revenues, making them vulnerable to acquisition by large hospital systems – known as vertical consolidation in health care. This report explores the increased financial pressure for vertical consolidation, its financial impact on states and consumers, and what policies states can implement to address the coming wave of vertical health care consolidations.
Independent physician practices are struggling to remain financially solvent in the midst of the COVID-19 pandemic. Although $175 billion has been allocated to health care providers in the Coronavirus Aid, Relief, and Economic Security (CARES) Act and other pandemic response legislation, this funding has largely gone to larger hospital systems or to direct costs of COVID-19 testing and services, and many physician practices and independent community providers have suffered significant reductions in their patient visits and revenues during widespread stay-at-home orders. One foreseeable consequence will be a further acceleration of physician practice acquisitions by large hospital systems and private equity firms, also known as vertical consolidation in health care.
This white paper discusses the increased financial pressure for vertical health care consolidation in the wake of the COVID-19 pandemic; the risks such vertical consolidation pose to states and consumers in the form of higher prices, increased spending, and reduced choice; and explores policies states may pursue to address the coming wave of vertical health care consolidation.
Rising Pressure for Vertical Health Care Consolidation and Its Risks
A. Vertical Consolidation in Health Care is Accelerating
Consolidation of independent physician practices — whether acquired by health systems or venture-backed staffing firms — has been increasing for years. Vertical acquisitions of physician groups by hospitals has increased dramatically in recent years. From 2012-2018, hospital ownership of physician practices grew 128 percent. In 2012 about 25 percent of physicians were employed by hospitals, and by 2018 that figure had grown to 44 percent. Over the 18-months from July 2016 to December 2018, hospitals acquired over 8,000 physician practices, employing 14,000 physicians. In 2018, for the first time, more physicians were employees than owners of their medical practice.
Private equity-backed staffing firms are also gobbling up physician practices. Between 2013 and 2016, private equity firms acquired 355 physician practices, targeting an array of specialties including emergency medicine and anesthesiology (who can engage in out-of-network billing strategies because patients do not select these providers), primary care physicians (who may be sources of lucrative referrals), and dermatology and ophthalmology (with significant income from elective procedures).
Layered atop these existing trends, the COVID-19 pandemic is accelerating pressure for vertical consolidation in health care. Remaining independent physician practices are under dire financial strain due to COVID-19, and even those who previously resisted acquisition face new pressure to sell to large health care systems or private equity investors for financial stability and survival.
B. Risks of Vertical Consolidation: Increased Costs, Loss of Choice, No Improvement in Quality
Evidence suggests that vertical health care consolidation leads to higher health care prices—including higher hospital prices, 14 percent higher physician prices, and 10-20 percent higher total expenditures per patient. Despite promised efficiencies, there are several ways vertical consolidation can increase health care costs. First are the addition of facility fees (described further below) that hospitals can charge for outpatient services provided by acquired physicians. Second, the consolidated entity can leverage its market power to engage in all-of-nothing bargaining and insist on anticompetitive contract terms with health insurance plans, allowing a large system to demand higher prices for all its providers. Third, acquisitions allow hospital systems to direct the referrals of captive physician practices to a greater extent than independent physicians, which increases referrals to for higher-cost (lower value) providers and services. Finally, private equity-backed staffing companies have used a strategy of going out-of-network and charging higher prices to health plans and balance bills to patients to maximize their revenues.
Increasing facility fees are an outgrowth of vertical consolidation of hospitals and physicians. The ability of a consolidated system to charge more for identical outpatient services than can be charged by independent physician practices manifests as facility fees and is a significant factor in the price increases driven by hospital-physician consolidation. When hospitals acquire physician practices, they can tack on an additional outpatient facility fee to the professional service fee that physician practice previously charged. Fees for services at physician’s offices usually include both the professional and overhead costs of the service in a single charge. By contrast, hospital outpatient departments are traditionally paid more than physicians’ offices for performing the same type of service because hospital outpatient settings receive a facility fee to compensate them for the expenses of maintaining standby capacity to service acute care needs that may present at any time in addition to the physician’s professional service fee. But there is nothing to justify a facility fee that is simply the result of the hospital’s acquisition of the physician’s practice—nothing has changed in terms of the location, supplies, technology, staffing, duration or intensity of the care, and the patients are no sicker and do not need more services than when their physician practice was characterized as a freestanding community setting. The higher price is merely the result of a change in corporate ownership, which allows the hospital to charge a facility fee for the acquired physician’s services as though it were rendered in an outpatient department of the hospital. The ability to charge facility fees is one of the main financial incentives driving hospital-physician consolidation.
Increased vertical consolidation in health care reduces consumer choice by creating larger, exclusive networks and driving patients and health plans to pay higher prices. These higher costs and reductions in choice among independent providers is not offset by higher quality or efficiency from improved care coordination. Thus, states are increasingly searching for ways to curb the rising costs and loss of choices driven by vertical health care consolidation.
State Policies to Address Vertical Consolidation in Health Care
The pressure for vertical consolidation created by the COVID-19 pandemic for the survival of physician practices means that, in many cases, states will be unable to prevent this consolidation from occurring. Rather, states must explore policies to provide robust oversight over the consolidated entities to mitigate the risks posed by vertical consolidation. Moreover, state oversight is critical because these vertical mergers fly under the radar of federal antitrust agencies because they tend to be too small in size to be reported under the Hart-Scott-Rodino (HSR) Act.
The following table lists a range of policy tools states can deploy to monitor and oversee vertical health care consolidation:
|A. Data gathering||· All-payer claims databases|
|B. Pre-transaction review and approval||· Notice of proposed transactions
· Prior review, approval, and conditions
|C. Oversight of vertically consolidated entities||· Attorney general enforcement against anticompetitive conduct
· Independent health commission
· Certificates of need authority
|D. Controlling outpatient costs||· Restrictions on facility fees
· Counteracting private equity-backed consolidation
· Global budgets
A. Data: the foundation for any policy
Policymakers need information about the drivers of health care costs, utilization patterns, and transactions to guide policies and target enforcement. States with all-payer claims databases (APCDs) have a rich source of data to inform their policies. APCDs are comprehensive databases of health care claims and data from a variety of payers, including private insurers, Medicaid, Medicare, Children’s Health Insurance Program (CHIP), state employee health plans, and others. Currently 19 states have established APCDs, and an additional four states are in the process implementation.
All of the policies described here would be guided by data — whether studying the price, utilization, or referral effects of vertical transactions; detecting targets for enforcement; providing oversight of vertically integrated entities; planning and assessing the need for new or additional services; quantifying the amount of facility fees charged; enforcing compliance with surprise out-of-network billing rules; or implementing global budgets. In states with APCDs, the data underpinning the policies would come from the APCD. In states without an APCD, each policy described here could include a data reporting requirement to facilitate implementation, such as a data submission requirement for pre-transaction review, CON applications, facility fee reporting, or as part of the global budget process. In addition, states can use data from APCDs or work with payers (e.g., the state employee health plan) to establish consumer transparency tools to help consumers choose high-value providers and to drive a range of other health care policies to improve patient care and control costs.
B. Notice, review, and approval for health care transactions
States could take a more active role monitoring or preventing vertical health care consolidation that poses risks to competition. State attorneys general (AGs), the Federal Trade Commission, and the US Department of Justice can use their parallel antitrust enforcement authority to prevent and regulate anticompetitive mergers or conduct by health care entities.
State AGs can challenge anticompetitive mergers and conduct and bring enforcement actions both independently and in conjunction with a federal action. Although historically reluctant to pursue enforcement against vertical mergers, the federal antitrust enforcement agencies have recently issued draft vertical merger guidelines in a signal that they are looking to develop tools to go after such mergers. But most physician acquisitions go unexamined by federal authorities because the dollar value of these deals is too small to be reported to federal antitrust agencies under HSR thresholds. Thus, state AGs can assume a larger role policing these mergers.
1. Notice of proposed transactions
To further antitrust enforcement and state oversight over vertical health care transactions, states may pass legislation requiring hospitals, health systems, physician groups, and private investment firms to notify the state of any significant proposed merger or contractual affiliation. Specifically, states can require reporting of transactions with dollar values less than the federal HSR thresholds. Transactions should be reported to the state AG and to a state health agency, such as an independent health care commission or the state’s certificate of need authority.
Although many states already require hospitals to notify state officials of proposed mergers or acquisitions, states could expand the requirement to transactions involving physicians. Existing state examples include Washington State, which passed a law in 2019 to require notification to the state AG of health care transactions, including those involving “provider organizations,” below the HSR (Hart-Scott-Rodino Antitrust Improvements Act) threshold. Connecticut requires 30-days’ notice to the AG and the head of the Office of Health Strategy (Connecticut’s CON authority) of any proposed transaction involving a physician practice of eight or more physicians. Massachusetts requires all provider organizations to provide the AG, the Health Policy Commission, and the Center for Health Information Analysis with 60 days’ notice of any mergers, acquisitions, or affiliations.
In 2020, lawmakers in California proposed legislation (S.B. 977) that would require health systems, private equity groups, and hedge funds to provide notice to, and obtain the consent of, the AG prior to an acquisition of or affiliation with a health system or health care provider. There is an exception for transactions between health care systems and facilities or providers valued at less than $500,000 (but not those involving private equity groups or hedge funds) or a transaction of any value involving an academic medical center, which only need to provide 30 days’ notice and need not obtain the AG’s consent. The California bill goes beyond the notice requirements in other states by specifically including transactions involving private equity and hedge fund investors, not just other health care entities.
|Recommendations on notice of health care transactions:|
2. Pre-transaction review, approval, and conditions
Although state AGs already possess the authority to challenge anticompetitive mergers under federal and state antitrust laws, state policymakers can augment the AGs’ ability to address the risks of consolidation by requiring transactions to be reviewed and approved by the AG, and allow the AG to condition approval on the parties’ competitive conduct. Although a state AG is typically the primary official tasked with approving health care transactions, states can distribute the responsibility for conducting review to other state entities, such as a health care commission or state certificate of need authority.
Waiting periods, subpoena-power. After notice of proposed health care transactions has been given, state regulators require time and the ability to gather information to review the transaction and assess its market impact. Thus, legislation should also include mandatory waiting periods to enable pre-transaction review and the authority to subpoena and obtain economic, market, and competitive information about the proposed transaction.
Review criteria. To guide review, policymakers may specify statutory review criteria to assess health care transactions, such as the extent the transaction will (1) harm health care markets and competition; (2) increase prices; (3) reduce access to health care services; (4) violate fiduciary duty requirements, especially through self-dealing or conflicts of interest; or (5) harm the public interest. Additional review criteria can be applied to specific types of transactions, such as those involving physicians, nonprofit hospitals, or for-profit entities.
Independent review. For transactions that raise competitive concerns, the state officials (AG or health agency) may seek independent review of the transaction either by a designated state body, such as a health care commission, or independent consultants. Independent review can provide more in-depth analysis to aid state AGs or agencies’ assessment of proposed health care transactions. State policymakers could require the parties to the transaction to pay for independent review to relieve the state of the financial burden of conducting complex market analyses.
Conditions. Legislative authority to review and approve health care transactions should also allow the AG to impose conditions of approval on the parties to the transaction. The range of conditions should respond to the criteria for approval and specific market concerns. For example, conditions could include requirements to keep critical facilities or services open, mandated community health investments, prohibitions on future acquisitions or employment of physicians, divesture of entities or providers to preserve competition, rate controls, refraining from charging facility fees for acquired physician practices, or prohibitions on anti-competitive health plan contracting. Even without statutory authority to impose conditions of approval on transactions, state AGs can negotiate consent decrees to settle their claims challenging anticompetitive transactions. One benefit of a statutory approval authority is that, unlike consent decrees, the AG or other state official need not go to court to enforce the conditions of approval.
Post-transactions monitoring. One of the conditions the AG can impose on approving a transaction is that the parties pay for an independent monitor to provide periodic post-transaction reports to the AG and state agencies. The monitor tracks compliance and market effects of the transaction. If the reports identify areas of noncompliance or potential abuses of market power, the state AG can bring enforcement action and seek penalties.
C. Oversight of consolidated entities
Although pre-transaction review is a critical tool, more than 90 percent of health care provider markets are already highly concentrated, so states require mechanisms to regulate anticompetitive behavior by entities that already possess market power. Different state authorities can play a role in overseeing vertically consolidated health care entities, including the state AG, an independent health policy commission, and the state’s certificate of need (CON) authority.
1. AG enforcement against anticompetitive conduct
State AGs possess broad powers under federal and state antitrust laws to challenge anticompetitive behavior of entities with market power. And unlike federal antitrust authorities, state AGs have authority over nonprofit entities.
Vertically consolidated health care entities may engage in a range of anticompetitive conduct, including using their market power to raise prices and exclude rivals, engaging in all-or-nothing bargaining with health plans to demand higher prices for all affiliated providers, and including anticompetitive terms in their contracts with health plans, such as anti-tiering or anti-steering, gag clauses preventing plans from sharing price information with consumers, or “most favored nation” provisions.
State AGs have successfully challenged anticompetitive conduct in North Carolina, California, and Washington. North Carolina’s AG joined the DOJ in a case against Atrium Health, a dominant health system, to challenge its use of anti-steering clauses in health plan contracts, which prevented private health plans from using financial incentives for patients to choose higher-value and lower cost providers. In its settlement of the case, Atrium agreed to stop using anti-steering clauses and preventing health plans from sharing costs with patients.
California AG, Xavier Becerra, brought a case against health care giant Sutter Health, alleging Sutter used its market power to raise prices in the region through its use of anticompetitive contract terms, including all-or-nothing and anti-steering clauses, the use of gag-clauses to prevent disclosure of price and quality information. In late 2019, Sutter tentatively agreed to pay $575 million to settle the case, to stop using all-or-nothing contracting, and to cap out-of-network rates. In June, however, Sutter asked the court to delay approving the settlement, citing losses from the COVID-19 pandemic, despite having received some $200 million in federal relief funding. Final court approval of the settlement is still pending.
On the heels of the AG’s action against Sutter, the California legislature sought to expand the AG’s authority to police anticompetitive conduct by health care entities in S.B. 977. The bill would make it unlawful for a health systems with substantial market power in any market for hospital or non-hospital services to take any action that would have a substantial tendency to cause anticompetitive effects, such as raising prices, diminishing quality, reducing choice or access with respect to hospital or nonhospital (e.g., physician services). Specifically, conduct involving tying or exclusive dealing by a health system with market power would be presumptively illegal.
In a case focusing on vertical consolidation, Washington’s Attorney General Bob Ferguson sued to unwind two hospital-physician transactions by CHI Franciscan health system that drove up prices on the Kitsap peninsula. The complaint alleged Franciscan violated Section 1 of the Sherman Act, Section 7 of the Clayton Act, and the State’s Consumer Protection Act. The parties agreed to settle the case in a consent decree in which Franciscan agreed to pay $2.5 million, divest of a surgery center, notify the state AG of future transactions, and agree to contractual changes, including a bar on using all-or-nothing bargaining with health plans.
In each case, the state AG was able to use enforcement authority to stop anticompetitive conduct by health care providers and enter settlement agreements that prevented the consolidated entities from continuing to abuse their market power. Though settlements included conduct remedies and even monetary relief, they meant the cases did not go to trial and establish legal precedent for future enforcement actions. These cases are resource-intensive and politically charged, but they can challenge abuses of market power by consolidated entities and send a message of deterrence against other powerful providers. State legislatures can aid enforcement by outlawing anticompetitive contracting practices, such as all-or-nothing bargaining, anti-tiering or anti-steering clauses, most-favored nation provisions, and gag clauses. In addition, statutes can augment State AGs’ enforcement authority by declaring unlawful certain anticompetitive practices by health care entities with market power, such as tying and exclusive dealing.
2. Oversight by independent commission
Several states have established independent health care cost or policy commissions, insulated from political influence, to provide analysis, recommendations, and oversight of health care market consolidation. The following states have statutorily established a health care commission or board to address health care costs: Colorado, Delaware, Maryland, Massachusetts, Oregon, Pennsylvania, Vermont, and Washington. Connecticut established the Office of Health Strategy to coordinate the state’s health care cost containment strategy. In addition, Rhode Island’s Governor and heads of their health and health insurance agencies convened the Health Care Cost Trends Steering Committee through executive action with funding from a private grant.
Market and transaction analysis. States health care commissions provide in-depth data analysis, often using data from the state’s APCD, and policy recommendations to the Governor, legislature, and executive branch agencies. In addition, health care commissions can have a role in reviewing health care transactions, making recommendations to the State AG and providing post-transaction monitoring. Beyond transaction-specific oversight, health care cost commissions can track health care cost and market trends more broadly across the state.
Health care cost growth benchmarks. Several states have given their health care commissions authority to set and monitor health care cost growth targets. Massachusetts pioneered the approach, which has been replicated in Delaware, Oregon, Rhode Island, Connecticut, and Washington. Common features include: establishing a statewide cost growth benchmark, analyzing data and calculating spending against the benchmark, reporting on cost drivers, and using hearings, transparency, performance improvement plans to encourage providers to comply with targets. While some have questioned whether these health care cost commissions possess sufficient authority to enforce compliance with health care cost growth benchmarks, the Massachusetts experience has proven fairly successful at reigning in health spending growth even with limited enforcement tools. As the model evolves, states may want to enhance the enforcement authority if soft regulatory tools prove inadequate to secure compliance with health care cost growth targets.
3. Oversight by certificate of need (CON) authority
The COVID-19 pandemic has highlighted the importance of health care planning to assure the state’s capacity to address public health crises as well as ongoing demand for health services, particularly in rural areas where a sole provider is responsible for the provision of health care services. Although debate continues over the impact of existing CON laws on competition, price, and quality in the health care market, states with CON authorities have the administrative infrastructure to expand CON from a health facility planning function to an overseer of vertically consolidated health care entities. Over a dozen states already require a CON or require notice to CON authorities for the sale or transfer of health care facilities, including nonprofits health care entities. Moreover, existing facilities often seek CON approval to add or remove services or seek affiliations. These CON requirements could be extended to vertical transactions involving physician groups and play a larger role in ongoing oversight of vertically consolidated providers.
Connecticut’s CON authority, the Health Systems Planning (HSP) office, reviews and requires a CON for all transactions involving a broad range of health care providers, including hospitals and provider groups. HSP conducts an in-depth cost and market impact review for transactions involving the sale or transfer of a hospitals in transactions of a certain size or involving a for-profit buyer and may place conditions on the approval of a CON for a hospital transaction.
To oversee vertical transactions, a state could extend the authority of the CON officials to require a CON for provider group transactions of a certain size, require some form of market impact analysis, and authorize the imposition of conditions of approval for the CON. Such conditions could include refraining from charging facility fees, limiting price increases, maintaining key services, avoiding anti-competitive contracting with health plans, limiting physician employment and exclusive contracting, and satisfying quality metrics, and investing in community and population health services. Oversight over compliance with conditions must be robust, long-term, and backed by enforcement authority, including action by the state AG for violations of conditions or anticompetitive conduct.
In many states, however, CON is highly susceptible to political influence by dominant health systems and other powerful stakeholders. Thus, if CON Authorities are given a larger role in overseeing consolidated health care entities, they need to be insulated from capture by incumbent industry leaders and publicly accountable. To engage in robust oversight of health care transactions and entities’ ongoing activities, CON authorities require financial, claims, and market data, whether submitted as part of the CON application process or from the state APCD, and have capacity for data analysis.
D. Controlling rising costs driven by vertical consolidation
Another set of tools to curb rising costs when vertical consolidation has already occurred include regulations on the outpatient fees themselves. These policies target rising outpatient costs driven by additional facility fees, out-of-network billing by investor-backed physician staffing companies, and changes in referral and utilization patterns.
1. Restrictions on facility fees
The main policy tools available to states to address unwarranted facility fees are transparency and facility fee regulation.
Facility fee transparency. Like all cost-control efforts, transparency is a first step to shine a light on the practice and put patients on notice that they may receive bills for facility fees due to corporate acquisition. However, transparency alone does not ameliorate the problem of facility fees nor does it shield a patient from incurring a facility fee. Even if they are notified of added facility fees, patients may not know what to do with the information and may be unable (or unwilling) to switch providers based on the notification about facility fees.
Examples of state laws requiring facility fee transparency come from Washington, Connecticut, Minnesota, and Texas. Washington and Minnesota’s laws require that, prior to non-emergency care, provider-based clinics that charge a facility fee must notify patients that the clinic is licensed as part of the hospital and the patient may receive a separate charge or billing for the facility component, which may result in a higher out-of-pocket expense; the health care facilities must also prominently post a statement that it is part of a hospital. Connecticut requires a similar notice and requires providers itemize facility fee charges on bills, disclose Medicare’s applicable facility fee rate for comparison, and provide information about the patient’s right to request reduction of the facility fee. Texas law requires that facilities must notify patients that the site charges a facility fee, and the disclosure must include the median facility fee at the facility, the range of possible fees, and the facility fee for each level of care. To enhance transparency, states may require annual reporting of facility fees charged or billed by health care providers, identified by location (e.g., the physician’s office) to be published on a publicly accessible website.
Facility fee regulation. Prohibiting or limiting allowable facility fee charges by providers can eliminate price differences for the same outpatient services based on the location or “site” of service. Medicare has instituted site-neutral payment, based on the view that “if the same service can be safely provided in different settings, a prudent purchaser should not pay more for that service in one setting than another.”
States could adopt policies that would limit or prohibit hospitals and health systems from charging facility fees. For the broadest impact, the state could (a) eliminate all facility fees at locations more than 250 yards away from a hospital’s main campus (a site-specific limit), and (b) eliminate facility fees for outpatient services that do not require additional standby capacity, including evaluation and management (E&M) services, regardless of whether the service is provided on- or off-campus (a service-specific limit).
Connecticut prohibits hospitals from charging a facility fee for outpatient office visits at an off-campus, hospital-based facility. But this prohibition only applies to E&M codes used for office visits, not the full range of outpatient services. In addition, Connecticut does not limit facility fees for on-campus outpatient visits. However, states could implement broader site-specific and service-specific facility fee restriction policies that cover the full range of non-emergency outpatient services and apply both on- and off-campus. For uninsured patients, Connecticut requires providers to charge no more than the applicable Medicare rate for outpatient services received at an off-campus, hospital-based facility, thereby incorporating any Medicare site-neutral payment changes into the amounts charged to uninsured patients.
Eliminating facility fees for the broad range of outpatient services (including those currently enjoying higher site payments under previously consummated acquisitions) is highly contentious and politically difficult. Connecticut legislators originally planned broader facility fee regulation, but they narrowed the requirement after facing strong opposition from powerful hospital facilities and physician groups in the state.
Connecticut’s law on facility fees also set forth a model for enforcement by making a provider’s violations of the facility fee prohibitions an unfair trade practice under the state’s Unfair and Deceptive Acts and Practices (UDAP) law. It is also an unfair trade practice for a provider in Connecticut to report a patient’s nonpayment of a prohibited facility fee to a credit reporting agency. This provides individual patients who have been charged unlawful facility fees or who have not received mandated notices about such fees a private right of action against providers. By contrast, Medicare patients do not have a private right of action if they are improperly charged cost-sharing payments for facility fees. Similarly, states can create an administrative enforcement mechanism for the relevant state agency, such as the Department of Health, to impose administrative penalties for violations of the facility fee policy. Ideally, administrative enforcement would be in addition to private remedies.
2. Counteracting private equity-backed consolidation
Although vertical consolidation between hospitals and physicians tends to reduce the opportunities for out-of-network billing (because employed physicians are more likely to participate with all the plans of their parent health system), the opposite is true for consolidation driven by private equity firms. Surprise medical billing is a key revenue strategy for private equity firms that invest in physician practices where patients are unable to choose their provider, such as emergency physicians or anesthesiologists. These companies strategically go out-of-network so they can seek higher out-of-network charges from health plans and balance bills from patients, driving up premiums and out-of-pocket bills.
Thus, states can counteract the higher costs driven by private equity investment in health care by enacting comprehensive protections against surprise medical bills. As NASHP and others have tracked, a growing number of states have enacted laws against surprise out-of-network billing, which protect many of the state’s consumers and payers from the excess costs from out-of-network bills.
Many of the tools described above — gathering data on pricing and referral trends from an APCD, pre-transaction review, and post-transaction oversight — can include particularized scrutiny for transactions involving private equity or venture-backed investors or staffing companies. An additional policy idea worth exploring is to shore up states’ prohibitions on the corporate practice of medicine to target private investment and control of physician practices by unlicensed corporations.
3. Global budgets
Three states, Maryland, Vermont, and Pennsylvania, have secured arrangements with the Centers for Medicare & Medicaid Services (CMS) and the Center for Medicare & Medicaid Innovation (CMMI) to establish global budgets for health systems within the state. Although global budgets generally target hospitals, vertical consolidation increases spending for hospitals and physicians and for inpatient and outpatient services. Thus, the global payment model could be a tool to contain rising costs posed by vertical consolidation.
Maryland’s global budget model builds on its long-standing all-payer rate setting system, administered by the Health Services Cost Review Commission under a federal waiver allowing higher Medicare payments as part of the system. In 2014, the state moved to an all-payer global budget system for all the acute care hospitals in the state. The state limits per-person hospital spending to a predetermined target growth rate, with a goal on reducing total spending growth and shifting care toward lower-cost settings and primary care. Although early results of the program were mixed, the effects may be limited in part because the program did not initially include physician payments in the global budgets. Subsequent refinements are shifting to a total cost of care model that would extend financial incentives beyond hospitals to physicians and other care settings.
Vermont’s all-payer ACO model involves most of the state’s hospitals and payers to collaborate in a statewide accountable care organization. Vermont’s Green Mountain Care Board is responsible for overseeing the ACO, setting benchmarks and budgets, and evaluating performance and cost-trends among the participating providers. The Green Mountain Care Board also oversees a hospital budget review process that establishes, publicizes, and enforces hospital budgets as a means of controlling health spending.
Pennsylvania has also launched a global budget demonstration for rural hospitals with the federal CMMI that will transition rural hospitals from fee-for-service to a global budget payment. While Pennsylvania does not rely on its Health Care Cost Containment Council to administer the global budget program, the cooperating federal and state agencies established an independent body to administer the program, the Rural Health Redesign Center Authority, though legislation in 2019.
Global budgets work best if they unify all the payers to participate in and contribute to the budget for a region’s health systems. Thus, these global budget models all involve CMS to include Medicare and Medicaid and the state’s biggest payers. In addition, with spending increasingly shifting to outpatient services and driven by physician referral patterns, to effectively control costs, the global budget model must go beyond hospitals to include physicians and outpatient facilities, whether in an ACO or a total-cost-of-care approach. Despite the significant amount of coordination and administrative infrastructure required to implement global budgets, these states have shown that health system budgets may be a way forward in rural and other areas where competition is inadequate and health systems are vulnerable to financial instability.
It is well-established that horizontal hospital consolidation and the concentration of provider market power is leading to uncontrolled increases in health care prices and spending. Yet, vertical health care consolidation between hospitals and physician groups and private equity investment in physician practices has largely gone unchecked, due to the relatively small dollar values of these transactions and pressure for health care integration. Policymakers are now starting to realize the threat posed by vertical health care consolidation, years into a wave of vertical mergers that is accelerating with the strain on independent practices from the COVID-19 pandemic.
States have a critical role in developing policy tools to address vertical health care consolidation, because these transactions escape review by federal authorities. States must consider a range of policy tools with a focus on oversight of vertically consolidated entities and broad regulatory authority over rising costs, because much consolidation has already occurred. States are at the vanguard of this policy effort to address this perennial health policy challenge: soaring health care costs driven by consolidation.
 Dep’t of Health & Human Svcs. CARES Act Provider Relief Fund, https://www.hhs.gov/coronavirus/cares-act-provider-relief-fund/index.html#:~:text=CARES percent20Act percent20Provider percent20Relief percent20Fund,lines percent20of percent20the percent20coronavirus percent20response.
 Reed Abelson, Doctors Without Patients: ‘Our Waiting Rooms Are Like Ghost Towns,’ N.Y. Times (May 5, 2020), https://www.nytimes.com/2020/05/05/health/coronavirus-primary-care-doctor.html; Daniel Horn, Wayne Altman, Zirui Song, Primary Care Is Being Devastated by COVID-19. It Must Be Saved. Stat News, April 29, 2020, https://www.statnews.com/2020/04/29/save-primary-care-devastation-COVID-19/; Rachel Weiner, Small medical practices struggle to survive amid coronavirus pandemic, Wash. Post, May 14, 2020, https://www.washingtonpost.com/health/small-doctor-practices-struggle-to-survive-amid-coronavirus-pandemic/2020/05/14/328984e6-9390-11ea-91d7-cf4423d47683_story.html; Marc Zarefsky, 97 percent of Physician Practices Feel COVID-19 Financial Sting: Where to Get Help, Am. Med. Ass’n , May 8, 2020, https://www.ama-assn.org/practice-management/sustainability/97-practices-feel-COVID-19-financial-sting-where-get-help;
 Allison Inserro, Newsroom: Hospital Acquisitions of Physician Practices Continue, Am. J. Managed Care, Feb. 26, 2019, https://www.ajmc.com/newsroom/hospital-acquisitions-of-physician-practices-continue.
 Joanne Finnegan, Report: 8,000 medical practices acquired by hospitals in 18 months, Fierce Healthcare (Feb. 21, 2019), https://www.fiercehealthcare.com/practices/consolidation-trend-continues-8-000-more-hospital-owned-practices-14-000-more-hospital.
 Carole Kane, Updated Data on Physician Practice Arrangements: For the First Time, Fewer Physicians are Owners Than Employees, AMA Policy Research Perspectives (May 2019), https://www.ama-assn.org/system/files/2019-07/prp-fewer-owners-benchmark-survey-2018.pdf.
 Jane Zhu, Lynn Hua, Daniel Polsky. Private equity acquisitions of physician medical groups across specialties, 2013-2016. 323 JAMA 663-665 (Feb. 18, 2020), doi:10.1001/jama.2019.21844; Lawrence Casalino et al, Private Equity Acquisitions of Physician Practices, 170 Ann. Internal Med. 114-116 (Jan. 15, 2019); Stephanie Cameron, Dan Zabinksi, Jeff Stendsland, Congressional Request on Healthcare Provider Consolidation, MedPAC (Nov. 7, 2019), http://medpac.gov/docs/default-source/default-document-library/consolidation-draft-3.pdf?sfvrsn=0.
 Rita Rubin, COVID-19’s Crushing Effects on Medical Practices, Some of Which Might Not Survive JAMA. Published online June 18, 2020. doi:10.1001/jama.2020.11254; Bob Herman, The Coronavirus could force more doctors to sell—or shutter, Axios (Apr. 20, 2020), https://www.axios.com/coronavirus-doctors-practices-sell-close-d59aa9f0-1e01-4a90-82f7-d4ebab26e355.html.
 Laurence C. Baker, M. Kate Bundorf & Daniel P. Kessler, Vertical Integration: Hospital Ownership of Physician Practices Is Associated with Higher Prices and Spending, 33 Health Aff. 756, 760 (2014); Cory Capps, David Dranove, Christopher Ody, The Effect of Hospital Acquisitions of Physician Practices on Prices and Spending, 59 J. Health Econ. 139 (2018); James C. Robinson & Kelly Miller, Total Expenditures per Patient in Hospital-Owned and Physician-Owned Physician Organizations in California, 312 JAMA 1663 (2014); Hannah T. Neprash et al., Association of Financial Integration Between Physicians and Hospitals With Commercial Health Care Prices, 175 JAMA Internal Med. 1932, 1937 (2015).
 See Capps, Dranove, & Ody, supra note 9 (estimating that a quarter of the 14 percent price increase associated with physician-hospital integration resulted from the addition of facility fees); Neprash et al., supra note 9, at 1937; James D. Reschovsky & Chapin White, Location, Location, Location: Hospital Outpatient Prices Much Higher than Community Settings for Identical Services, Res. Brief No. 16, Nat’l Inst. Health Care Reform, 1 (2014), http://www.nihcr.org/Hospital-Outpatient-Price.
 Amanda Cassidy, Health Policy Brief: Site Neutral Payments, Health Aff. 3 (July 24, 2014), http://healthaffairs.org/healthpolicybriefs/brief_pdfs/healthpolicybrief_121.pdf; Donna Rosato, The Surprise Hospital Fee You May Get Just for Seeing a Doctor, Consumer Reports (June 13, 2019), https://www.consumerreports.org/fees-billing/surprise-hospital-fee-just-for-seeing-a-doctor-facility-fee/;
Reschovsky & White, supra note 10, at 4.
 In 2020, the dollar value threshold for reportable transactions under the Hart-Scott-Rodino Act is $94 million. U.S Federal Trade Comm’n, Premerger Notification Office Staff, HSR threshold adjustments and reportability for 2020 (Jan. 31, 2020), https://www.ftc.gov/news-events/blogs/competition-matters/2020/01/hsr-threshold-adjustments-reportability-2020.
 Although the Employee Retirement Income Security Act (ERISA) prevents states from mandating that self-insured employer-based plans participate in the APCD, states have secured voluntary participation by these plans. NASHP, Next Steps for APCDs: U.S. Department of Labor (DOL) Rulemaking, Oct. 4, 2016, http://www.nashp.org/next-steps-for-apcds-us-department-of-labor-dol-rulemaking/.
 APCD Council, Interactive State Report Map (as of July 14, 2020), https://www.apcdcouncil.org/state/map.
 Robert Berenson, Jaime S. King, Katherine L. Gudiksen, Roslyn Murray, Adele Shartzer, Urban Institute Research Report: Addressing Health Care Market Consolidation and High Prices 11-14 (Jan. 2020), https://www.urban.org/research/publication/addressing-health-care-market-consolidation-and-high-prices; Erin Taylor & Michael Bailit, State Health & Value Strategies, Issue Brief: Leveraging Multi-Payer Claims Databases for Value (Mar. 25, 2019), https://www.shvs.org/leveraging-multi-payer-claims-databases-for-value-2/.
 Saint Alphonsus Med. Ctr.-Nampa Inc. v. St. Luke’s Health Sys., Ltd., 778 F.3d 775, 791 (9th Cir. 2015).
 Federal Trade Comm’n, Press Release: FTC and DOJ Announce Draft Vertical Merger Guidelines for Public Comment, Jan. 10, 2020, https://www.ftc.gov/news-events/press-releases/2020/01/ftc-doj-announce-draft-vertical-merger-guidelines-public-comment.
 15 U.S.C. § 18a (in 2019 the HSR threshold for notification was $90 million).
 The analyses, state examples, and recommendations in this section are drawn from an in-depth report by legal and economic researchers at the Source for Healthcare Price & Competition at UC Hastings College of the Law. Jaime S. King, Samuel M. Chang, Alexandra D. Montague, Katherine L. Gudiksen, Amy Y. Gu, Daniel Arnold, and Thomas L. Greaney, Preventing Anticompetitive Healthcare Consolidation: Lessons from Five States, The Source on Healthcare Price and Competition 11 (June 15, 2020), https://sourceonhealthcare.org/profile/preventing-anticompetitive-healthcare-consolidation-lessons-from-five-states/.
 Id. at 11.
 Act effective as of July 28, 2019, ch. 267, 2019 Wash. Laws, http://lawfilesext.leg.wa.gov/biennium/2019-20/Pdf/Bills/Session percent20Laws/House/1607-S.SL.pdf?q=20200124073816.
 Conn. Gen. Stat. § 19a-486i, http://media.sourceonhealthcare.org/Conn_Gen_Stat_19a-486i.pdf.
 Mass. Gen. Laws ch. 6D, § 13, https://malegislature.gov/Laws/GeneralLaws/PartI/TitleII/Chapter6D/Section13.
 S.B. 977, 2019-2020 Reg. Sess., § 1190.10(a) (Cal. 2020) (as amended June 19, 2020), https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201920200SB977.
 Cal. S.B. 977, § 1190.10(f).
 King et al., supra note 21, at 14-26.
 King et al., supra note 21, at 20. (“Substantive transaction reviews, such as a CMIR or HCIS, may require access to trade secrets or other propriety information. To ensure the state has access to all information necessary to conduct a thorough review, state legislatures should grant the AG and other state entities the authority to compel information during the review process and for subsequent investigations following the review.”). The report by King et al. details state examples from California, Connecticut, Rhode Island, and Massachusetts, authorizing state officials to compel the parties to produce information to assist in review. Id. at Appendix F.
 King, et al., supra note 21, at 16. As an alternative to legislative review criteria, at least one state (Pennsylvania) has created a sub-regulatory process and criteria for the AG to review health care transactions involving nonprofit entities. See Review Protocol for Fundamental Change Transactions Affecting Health Care Nonprofits, Office of the Attorney Genereal, Commonwealth of Pennsylvania, https://www.attorneygeneral.gov/protect-yourself/charitable-giving/review-protocol-for-fundamental-change-transactions-affecting-health-care-nonprofits/.
 See, e.g., MASS. GEN. LAWS ch. 6D § 13, https://malegislature.gov/Laws/GeneralLaws/PartI/TitleII/Chapter6D/Section13 (requiring the Health Policy Commission to conduct a cost and market impact review of proposed transactions that will have a significant impact on the state’s ability to meet its cost-growth benchmark or on the competitive market); CONN. GEN. STAT. § 19a-639f, https://www.cga.ct.gov/current/pub/chap_368z.htm#sec_19a-639f (requiring the Health Systems Planning Unit of the Office of Health Strategy—the state’s CON authority—to conduct a cost and market impact review of proposed transactions requiring a CON including the retainer of independent consultants to conduct the economic analysis).
 King et al., supra note 21, at 18-20.
 King et al., supra note 21, at 23-26.
 King et al., supra note 20, at 26-28.
 Brent D. Fulton, Health Care Market Concentration Trends in the United States: Evidence and Policy Responses, 36 Health Aff. 1530–38 (2017).
 Berenson et al., supra note 16, at 33-34.
 Id. At 34-35 (describing these anticompetitive contract terms in more detail and providing examples).
 United States v. Charlotte-Mecklenburg Hosp. Auth., 248 F. Supp. 3d 720 (W.D.N.C. 2017).
 Final Judgement, United States of America and the state of North Carolina v. the Charlotte-Mecklenburg Hospital Authority d/b/a Carolinas Healthcare System, No. 3:16-cv-00311-RJC-DCK (W.D. NC Apr. 24, 2019). https://www.justice.gov/atr/case-document/file/1157461/download.
 Becerra Complaint, People of the State of California ex rel Xavier Becerra v. Sutter Health., CGC 18-565398 (Cal. Super. Ct. S.F. City and Cnty. 2019).
 Jenny Gold, Citing COVID, Sutter pushes to revisit $575M antitrust settlement, Modern Healthcare (June 17, 2020), https://www.modernhealthcare.com/providers/citing-COVID-sutter-pushes-revisit-575m-antitrust-settlement.
 Cal. S.B. 977, § 1191(a).
 Washington State Office of Attorney General, Press Release: CHI Franciscan Will Pay Up to $2.5 Million Over Anti-Competitive Kitsap Deals, https://www.atg.wa.gov/news/news-releases/attorney-general-ferguson-chi-franciscan-will-pay-25-million-over-anti.
 Complaint, State of Washington v. Franciscan Health System, No. 3:17-cv-05690 (W.D. WA Aug. 31, 2017).
 Consent Decree, Complaint, State of Washington v. Franciscan Health System, No. 3:17-cv-05690 (W.D. WA May 13, 2019), https://agportal-s3bucket.s3.amazonaws.com/uploadedfiles/Another/News/Press_Releases/ConsentDecree_1.pdf.
 Berenson et al., supra note 16, at 37-39 (discussing the tradeoffs between litigation and legislative approaches to combat anticompetitive practices by health care entities).
 Berenson et al., supra note 16, at 49-53. In 2020, Washington passed H.B. 2457, creating the Health Care Transparency Board and authorizing it to establish a health care cost growth benchmark, http://lawfilesext.leg.wa.gov/biennium/2019-20/Pdf/Bills/Session percent20Laws/House/2457-S2.SL.pdf#page=1.
 Conn. Gen. Stat. § 19a-754a.
 Office of the Rhode Island Health Insurance Commissioner, RI Health Care Cost Trends Project, http://www.ohic.ri.gov/ohic-reformandpolicy-costtrends.php.
 See, e.g., “What Is the Delaware Health Care Commission?” Delaware.gov, https://dhss.delaware.gov/dhcc/about.html; “What is the Pennsylvania Health Care Cost Containment Council?” http://www.phc4.org/council/mission.htm.
 For example, the Massachusetts Health Policy Commission performs analysis of the market impact of proposed health care transactions and makes findings and recommendations to the Attorney General. Act of 2012, ch. 224, 2012 Mass. Laws, https://malegislature.gov/Laws/SessionLaws/Acts/2012/Chapter224; Massachusetts Health Policy Commission, “Market Oversight,” https://www.mass.gov/market-oversight.
 Milbank Memorial Fund, Health Care Cost Growth Benchmarks By State, Accessed July 21, 2020, https://www.milbank.org/focus-areas/total-cost-of-care/health-care-cost-growth-benchmarks-by-state/ (noting that Massachusetts, Oregon, and Washington’s cost growth benchmarks were established legislatively, while Connecticut, Delaware, and Rhode Island’s were established by Executive Order); Elsa Pearson & Austin Frakt, Health Care Cost Growth Benchmarks in 5 States, JAMA Forum (June 4, 2020), https://jamanetwork.com/channels/health-forum/fullarticle/2767017.
 Lisa Waugh & Douglas McCarthy, How the Massachusetts Health Policy Commission Is Fostering a Statewide Commitment to Contain Health Care Spending Growth, Commonwealth Fund (Mar. 5, 2020), https://www.commonwealthfund.org/publications/case-study/2020/mar/massachusetts-health-policy-commission-spending-growth; Joel Ario, Kevin McAvey, Kyla Ellis, Implementing a Statewide Healthcare Cost Benchmark: How Oregon and Other States Can Build on the Massachusetts Model, Manatt Health (December 2019), https://www.manatt.com/Manatt/media/Documents/Articles/RWJ-Phase-5-Report-Cost-Benchmarking-Paper-December-2019_FOR-WEB.PDF.
 Berenson et al., supra note 16, at 53; Waugh & McCarthy, supra note 51.
 NASHP staff internal analysis suggests that the following states require CON review of certain health care transactions: Arkansas (only for specified facilities), Connecticut (CON required for transfer of a facility of a large practice group), Delaware (CON for acquisition of a non-profit healthcare facility), Hawaii (administrative review only), Illinois (exemption required), Kentucky, Maine, Massachusetts, Michigan (CON required for acquisition of an existing facility), Mississippi (CON required for change in ownership of existing health care facilities, major medical equipment, or a health service), Missouri (CON required for change of owner, operator to an existing CON approved project not yet complete), New Jersey (for general hospitals only), New York (CON required for change in ownership, consolidations, or creation of parent entities), Oklahoma (only long-term care, psychiatric, and chemical dependency treatment facilities),Washington (sale, lease, or purchase of an existing hospital).
 Conn. Gen. Stat. § 19a-638 (“A certificate of need issued by the unit shall be required for [. . .] [a] transfer of ownership of a health care facility [or] [. . .] [a] transfer of ownership of a large group practice to any entity” except as specified”).
 Conn. Gen. Stat. § 19a-639.
 Wash. Rev. Code § 70.01.040, http://media.sourceonhealthcare.org/WA_70.01.040.pdf. Minn. Stat Ann. §62J.824 (2018) https://www.revisor.mn.gov/statutes/cite/62J.824
 Conn. Gen. Stat. §19a-508c, http://media.sourceonhealthcare.org/Conn_Gen_Stat_19a-508c.pdf.
 Acts 2019, 86th Leg., R.S., Ch. 1062 (H.B. 1112) (2019),https://statutes.capitol.texas.gov/Docs/HS/htm/HS.254.htm.
 Medicare Payment Advisory Commission, Report To the Congress: Medicare Payment Policy 75 (2014), http://www.medpac.gov/docs/default-source/reports/mar14_entirereport.pdf. In 2015, Congress passed the Bipartisan Budget Act requiring Medicare to implement site-neutral payment for outpatient services (other than emergency department services) furnished at any new, off-campus hospital outpatient departments, meaning these services will be reimbursed at the same, lower rates as freestanding physicians’ offices. This Medicare site-neutral payment policy went into effect in 2017 for outpatient locations acquired or built after 2015. In 2018, CMS has expanded the policy to cover E&M office visits at sites previously exempted under the 2015 law. CMS’s expansion of site-neutral payment was challenged in court and upheld on appeal before the D.C. Circuit in 2020. Litigation is ongoing. Am. Hosp. Assn. v. Azar , D.C. Cir. App., No. 19-5352.
 In 2019, Massachusetts Governor Charlie Baker proposed a comprehensive health care cost containment package that included both site-specific and service-specific limits on facility fees. H. 4134, 191st Gen. Ct., 2019-2020 Sess. (Mass. 2019), https://malegislature.gov/Bills/191/H4134.
 Conn. Gen. Stat. § 19a-508c(k).
 Arielle Levin Becker, House nearing deal on massive health care bill, CT Mirror, May 29, 2015, http://ctmirror.org/2015/05/29/house-nearing-deal-on-massive-health-care-bill/.
 Conn. Gen. Stat. §19a-508c(k).
 Conn. Gen. Stat. § 20-7f.
 Zack Cooper, Fiona Scott Morton, Nathan Shekita, Surprise! Out-of-Network Billing for Emergency Care in the United States, (Feb. 2020 preprint) https://www.journals.uchicago.edu/doi/pdfplus/10.1086/708819; Zack Cooper, Hao Nguyen, Nathan Shekita, and Fiona Scott Morton, Out-Of-Network Billing And Negotiated Payments For Hospital-Based Physicians, 29 Health Aff. 24 (2020), https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2019.00507.
 NASHP, Comprehensive State Laws Enacted to Address Surprise Balance Billing (updated March 14, 2019), https://www.nashp.org/wp-content/uploads/2019/03/Surprise-Billing-Laws-Chart-final-for-pdf-3.14.19.pdf; Manaasa Kona, State Balance-Billing Protections, Commonwealth Fund (updated July 20, 2020), https://www.commonwealthfund.org/publications/maps-and-interactives/2020/jul/state-balance-billing-protections.
 See, e.g., Cal. S.B. 977 (2020), which would specifically apply AG approval and oversight to health care transactions involving private equity or hedge funds.
 Centers for Medicare and Medicaid Services, Maryland All-Payer Model, Accessed July 23, 2020, https://innovation.cms.gov/innovation-models/maryland-all-payer-model.
 One study found that Maryland’s all-payer global budget system reduced total spending compared to out-of-state controls. Susan Haber et al., Evaluation of the Maryland All-Payer Model: Second Annual Report, Prepared by RTI International for CMS (Aug. 2017), https://innovation.cms.gov/files/reports/md-all-payer-secondannrpt.pdf. However, another study found no changes in utilization, so the savings were likely attributed to lower hospital prices. Eric T. Roberts, et al., Changes in Health Care Use Associated with the Introduction of Hospital Global Budgets in Maryland, 178 JAMA Internal Med. 260-268 (2018), available at: https://www.commonwealthfund.org/publications/journal-article/2018/jan/changes-health-care-use-associated-introduction-hospital.
 Centers for Medicare and Medicaid Services, Innovation Center, Maryland Total Cost of Care Model, Accessed July 22, 2020, https://innovation.cms.gov/innovation-models/md-tccm.
 Centers for Medicare and Medicaid Services, Innovation Center, Vermont All-Payer ACO Model, Accessed July 22, 2020, https://innovation.cms.gov/innovation-models/vermont-all-payer-aco-model.
 State of Vermont, Green Mountain Care Board, “ACO Oversight,” Accessed July 22, 2020, https://gmcboard.vermont.gov/aco-certification-and-budget-review.
 State of Vermont, Green Mountain Care Board, “Hospital Budget Review,” Accessed July 22, 2020, https://gmcboard.vermont.gov/hospital-budget.
 Pennsylvania Rural Health Model, Accessed July 22, 2020, https://www.health.pa.gov/topics/Health-Innovation/Pages/Rural-Health.aspx.
 Pennsylvania Rural Health Redesign Center Authority Act, Pub. L. 742, No. 108 (2019 Pa. Acts), https://www.legis.state.pa.us/cfdocs/legis/li/uconsCheck.cfm?yr=2019&sessInd=0&act=108.
*Erin C. Fuse Brown, JD, MPH, is associate professor of law and director of the Center for Law, Health and Society at Georgia State University College of Law. This work was performed in her capacity as a consultant to National Academy for State Health Policy.
Acknowledgements: The National Academy for State Health Policy (NASHP) wishes to thank Arnold Ventures for its generous support of NASHP’s Center for Health System Costs, for which this paper was commissioned.
Massachusetts Gov. Charlie Baker will kick off the National Academy for State Health Policy’s 33rd annual conference with a keynote address at 4:30 p.m. (ET) Monday, Aug. 14, 2020. The conference, originally scheduled for Boston, will be delivered on-line.
Massachusetts has long been a national health reform leader and Gov. Baker has played a key role in many advances since his election in 2015. Previously, he served 10 years as CEO of the non-profit Harvard Pilgrim Health Care, which the National Committee for Quality Assurance repeatedly ranked as the nation’s top-ranked health plan during his tenure. Earlier, Gov. Baker held key positions in Massachusetts state government as Secretary of Health and Human Services and Secretary of Administration and Finance.
Gov. Baker is leading Massachusetts through the COVID-19 pandemic and has prioritized testing and contact tracing programs. His administration implemented reforms at the state’s health exchange, the Massachusetts Health Connector. Massachusetts currently leads the nation in health insurance coverage with only 3 percent of its population uninsured.
Last year, Gov. Baker introduced An Act to Improve Health Care by Investing in VALUE, designed to deliver more cost effective, nimble, and patient-centric health care for the 21st century. A cornerstone of the comprehensive plan is a significant investment in primary care and behavioral health, while maintaining the state’s cost growth targets administered by the state’s Health Policy Commission. That first-in-the-nation, cost-growth benchmarking system has reported success in bending the health care cost trajectory and other states are now replicating it.
Baker’s newest proposal for the plan would add enforcement provisions that require health care providers who exceed the target to pay fines. The proposal, which the state Legislature is currently deliberating, also includes provisions to lower pharmaceutical costs, including subjecting manufacturers who raise drug prices excessively to fines and redirecting those revenues to support community hospitals and safety net providers.
Register for NASHP’s annual conference, State Health Policy: Flexibility and Resiliency through COVID-19 and Beyond, on Aug. 17-19, 2020.
To improve the quality of services for children and youth with special health care needs (CYSHCN) and reduce health care costs, states are implementing strategies to improve access to home health services. Of particular importance as states confront COVID-19-related budget challenges, home health services can help to avoid costly emergency department use, hospitalizations, and institutional care.