House Democrats will no longer push to require hospitals to own the property on which they operate, instead pivoting to a narrower reform that would crack down on the specific kind of lease agreement that has fueled problems at Steward Health Care.
The House Ways and Means Committee on Tuesday teed up a 96-page hospital oversight and health care cost control bill, which was drawn up to incorporate policy reforms to the still-unfolding Steward crisis and other pressure points straining the industry.
Ahead of a vote in the House scheduled for Thursday, top representatives made only a few noteworthy changes from an earlier version of the legislation recommended by the Health Care Financing Committee last month.
The measure would create reporting requirements and stricter penalties for failing to comply, a direct response to the upheaval inflicted by for-profit Steward’s fight to keep some financial information out of regulators’ hands. It also seeks to overhaul the state framework for containing health care spending growth, a tacit acknowledgement that the system created in a landmark 2012 law has not done enough to keep costs controlled.
One change the Ways and Means Committee made reins in proposed reforms to hospital property ownership.The original bill would have required all hospitals to own their facilities’ land as a licensing requirement. Under the redraft, hospitals would instead be barred specifically from leasing the property of their main campuses from real estate investment trusts, like Steward did with Medical Properties Trust, which now serves as the system’s de facto landlord.
Other leases with entities that are not real estate investment trusts would be allowed. The bill also exempts facilities with existing real estate investment trust lease agreements, so the new requirements would not apply to the Steward hospitals.
The redraft also tweaks the approach to boosting what commercial insurers must pay to hospitals that have historically received disproportionately low reimbursement rates, many of which serve large low-income and people of color populations.
Like the Health Care Financing Committee version, the updated bill requires commercial insurers to pay those facilities at least 85% of the average in-network rate from 2026 through 2029 — an attempt to close a gap between payments to bigger academic medical centers and those received by facilities like Lawrence General Hospital.
Instead of gradually increasing that percentage until rates are equal across providers as the original bill did, the redraft instead calls on insurers to increase reimbursement rates to certain vulnerable hospitals at a higher rate than the state benchmark for anticipated health care cost growth. That new requirement would last for two consecutive three-year cycles, after which insurers would need the increase in what they pay to vulnerable hospitals to mirror the state benchmark.
Another Ways and Means Committee change creates a separate registration requirement for physician practices with more than 10 physicians, who would be required to inform the Department of Public Health and patients several months before closing.
Ahead of deliberations on the wide-ranging measure, House lawmakers filed 48 amendments covering topics such as delaying the closure of essential health care services, boosting aid to community hospitals, and seeking more financial disclosure in Steward Health Care’s bankruptcy case.
Rep. Natalie Higgins of Leominster offered one amendment that would allow the Department of Public Health to keep open for three years any essential health service it deems “necessary for preserving access and health status in the hospital’s service.”
Even before the Steward crisis burst into public view this year, both Democrats and Republicans began pushing for major legislative reform to impose greater scrutiny and tighter guardrails on hospital expansions and closures, prompted in part by the UMass Memorial Health’s controversial decision to shutter a maternity ward in Higgins’ hometown of Leominster.
The weighty legislation focuses on policy reforms and does not seek appropriations, according to Mariano’s office. The Quincy Democrat has been vocal about his disinterest in using state fund to help the recently bankrupt Steward through its struggles.
One provision of the bill set for a vote Thursday would require lessors to give the state 60 days notice before repossessing any medical equipment or supplies. The Boston Globe reported in January that a woman died after Steward doctors could not use an embolism coil to treat her internal bleeding because it had been repossessed due to unpaid bills.
Other sections of the bill would increase the fines for failing to submit audited financial documents to the state, subject payers such as health insurers to the “performance improvement plan” process regulators use to order cost-cutting, and expand state review of proposed essential service closures.
Many of the bill’s reform ideas had been on Mariano’s radar before the crisis at Steward burst into public view, such as overhauling the review process when larger academic medical centers seek to expand into territory covered by smaller, more vulnerable community hospitals or bulking up the regulatory response to health care service closures.
Aides to the speaker have pitched the legislation as the most significant health care cost control measure since 2012, when the state created the Health Policy Commission, the Center for Health Information and Analysis and an annual benchmark representing a goal for spending growth.
In recent years, total per capita health care expenditure growth has exceeded that annual benchmark, prompting finger-pointing and warnings about the strain that patients, families and businesses face as a result.
The bill shifts the one-year benchmark to a three-year cycle, which Mariano’s office said can better account for fluctuations.
It’s still not clear what kind of reception the proposal will receive in the Senate, with just a bit more than two and a half months for the Legislature to complete the term’s major business.
Senate President Karen Spilka has said she is also interested in legislative safeguards to prevent another Steward-like crisis and overhauling the HPC. The Senate last year approved a prescription drug pricing reform bill, prior versions of which died without a vote in the House. Parts of that measure could wind up incorporated into a larger health care package, or greenlit in exchange for some other action should top Democrats turn to legislative horse-trading.