State legislature passes new health care reform bills

State legislators passed two bills at the end of the legislative session that, if signed by Gov. Maura Healey, would add new health care reform in Massachusetts.

Of those two bills, one would create new regulations on the pharmaceutical industry, aimed at reducing drug prices for patients. The other would add increased oversight to the health care market, in response to the Steward Health Care crisis.

Both were passed by the Senate and House of Representatives Dec. 30 and sent to the governor’s desk.

Oversight bill tackles fallout from Steward bankruptcy

The bill aiming to increase oversight of the health care market, H.5159, comes in response to the Steward Health Care crisis, which shook up access to care in Massachusetts, especially in Dorchester and Ayer, which saw the closures of Carney Hospital and Nashoba Valley Medical Center.

“As we stare down a health care system plagued by high costs and the fallout from private equity mismanagement, we are doubling down on our responsibility to our residents by safeguarding patients, expanding access to care, and holding private equity accountable,” said Senate President Karen Spilka in a statement.

Legislators said they expect the bill, if signed, to help mitigate future impacts to the health care system in the state.

“The crisis and long-term impacts to the health care system that Steward Health Care caused through financial greed and negligence has led to the important reforms in this legislation that will strengthen oversight of the Commonwealth’s health care system, helping to prevent future crises and ensure Massachusetts residents have access to high-quality care,” said Shrewsbury Representative Hannah Kane, who sat on the conference committee.

Under the legislation, the state’s Health Policy Commission, an independent state agency focused on the affordability of health care, would have expanded review over “material changes” proposed by care providers, including major changes in capacity, major mergers or acquisitions or plans to switch a provider organization from a nonprofit to for profit status.

The Commission wouldn’t be able to prevent the change, but the process would create greater reporting requirements, and the change would not be able to go through until the state were to complete an impact report on the proposed change.

The legislation would also create a state Office of Health Resource Planning, tasked with putting together a statewide plan to identify and anticipate needs in the state’s health care system as well as identify the resources necessary to meet those needs.

And it would prevent the state from issuing a license to a hospital if its main campus is leased from a health care real estate trust.

Throughout the Steward Health Care crisis, a prominent concern was the company’s deal in 2016 to sell its hospitals’ physical properties to Medical Properties Trust, and then lease the space back. Those lease payments proved unwieldy and contributed to the financial difficulties the hospitals faced.

In a statement, David Seltz, executive director of the Health Policy Commission, called the two bills and their efforts to increase transparency and accountability in the state’s health care system the “most meaningful advancement of Massachusetts’ health care oversight and cost containment laws” in over a decade.

Prescription drugs

Under the proposed pharmacy legislation, S.3102, the state would aim at decreasing prices for patients in the state, especially targeting diabetes, asthma and the two most prevalent heart conditions.

For those conditions, the bill would require that patients pay no more than $25 for selected brand-name medications to treat chronic illnesses. A selected generic alternative would be available at no cost.

Legislators estimated that change would impact about 180,000 people statewide.

It also focuses on transparency around cost and operations within the pharmaceutical industry, a step that will help reduce drug costs moving forward, said Deirdre Cummings, legislative director of the Massachusetts Public Interest Research Group.

“You can’t fix what you can’t see, so this greater clarity will be an important step toward lowering drug prices and overall health care costs,” Cummings said in a statement.

The bill also creates a licensure process for pharmacy benefit managers, companies that act as a middleman, brokering transactions between drug companies, insurers and pharmacies. The PBMs are paid to dispense medications from the manufacturer and, in turn, reimburse pharmacies for the drugs.

If signed, the bill would require the PBMs to seek a three-year license to operate from the state Division of Insurance. Under the legislation, all PBMs would be required to be licensed by the start of 2026.

And the Center for Health Information and Analysis, an independent state agency that tracks and analyzes the quality, affordability, utilization and access to the state’s health care system, would be authorized to collect data on the PBMs to help the state better identify and understand what is driving the cost of prescription drugs.

The bill would also establish an Office for Pharmaceutical Policy and Analysis within the Health Policy Commission to report on trends related to access and affordability in the state, tasked with producing an annual report with recommendations to promote affordability.

Both pieces of legislation barely made it through the State House, passing both chambers days before the start of the new legislative session.

Their passage came after months of delay when both chambers passed differing versions of the two bills in July. Those distinct versions each went to a conference committee — a closed-door group of three senators and three representatives tasked with ironing out differences between the versions.

Compromise versions of both pieces of legislation were reported from the committees Dec. 27.