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Baker urges big shift in health care payment models

Speaking at the Health Policy Commission's latest annual cost trends hearing on Wednesday, Gov. Charlie Baker said industry staffing shortages loom as a major challenge his successor and lawmakers will need to tackle. (Chris Lisinski/SHNS)
Speaking at the Health Policy Commission's latest annual cost trends hearing on Wednesday, Gov. Charlie Baker said industry staffing shortages loom as a major challenge his successor and lawmakers will need to tackle. (Chris Lisinski/SHNS)

The Massachusetts health care system withstood the upheaval of the COVID-19 pandemic, but widespread staffing shortages and an outdated, reactionary payment model that fails to prevent illnesses linger as major challenges that need to be addressed, Gov. Charlie Baker said Wednesday.

Kicking off a policy discussion and analysis at the Health Policy Commission's annual cost trends hearing, Baker praised the state's providers for their performance during the pandemic and reflected on some of the most significant health care accomplishments of the past year, including his signature on a mental health care access law and an agreement with the Biden administration on a $67 billion Medicaid waiver.

His remarks at the event — the first one held in-person since COVID-19 hit — also took a look ahead at what remains unfinished for the next governor to tackle when Baker hands the reins over in January.

Job vacancies loom as one of the most significant challenges, Baker said. He warned that a depleted workforce could spill over into slowing the "throughput" of patients from one provider to another. That creates both "real cost consequences" for patients as well as "pretty severe" financial challenges for providers, who as a result need to carry patients longer than expected while still getting paid a fixed amount, the governor said.

"You shouldn't just think about the staffing issue as a challenge for each particular part of our system," Baker told the HPC. "That's real, but you should also think about what it means (for) the system's ability to behave as a system when they end up in a situation like this."

Workforce impacts are apparent across different kinds of health care employers. A recent report from the Mass. Health and Hospital Association estimated Bay State hospitals are about 19,000 full-time workers short, a figure Baker said could swell by as much as 5,000 additional jobs when accounting for Steward Health Care. The Mass. Senior Care Association on Wednesday said its latest survey observed "historic highs" in unfilled nursing home jobs, vacancies that are causing facilities to limit admissions.

State data show similar trends. From 2019 to 2022, the total number of employees in home health care services dropped about 13 percent, while workers employed in nursing care and skilled nursing facilities declined nearly 24 percent, according to figures HPC Senior Director of Research and Cost Trends David Auerbach presented Wednesday.

"That really, as we have shown, leads to bottlenecks and disruptions throughout the whole system," Auerbach said.

Polling a range of provider organizations' pre-filed hearing testimony, HPC Executive Director David Seltz reported during a witness panel Wednesday that 84 percent listed workforce and staffing challenges as a top concern. Of the providers asked, 58 percent responded that they are increasing recruitment efforts by developing certification programs and workforce pipelines in schools, and 58 percent said they are attempting to address clinician burnout with administrative simplification, professional development and higher pay.

One example of a worker shortage Baker cited collides with another crisis policymakers have been trying to bring under control: when people with significant mental health needs wait in emergency departments for hours, days or months until space opens up in a relevant program.

Close to one in every four emergency department beds on a typical day are occupied by patients awaiting behavioral health care services, Baker said, attributing that figure to the MHA's recent study.

"We have, by the way, a lot of behavioral health care beds in Massachusetts that are licensed and ready to go and not staffed. That continues to be an enormous challenge in that space as well," Baker said. "I think it might be as many as 400 inpatient psychiatric beds are currently offline, not because they aren't licensed, not because they aren't available, but because they aren't staffed."

The governor said he hopes the mental health care access law he signed in August will help address that problem, as will additional investments in community-based programming and the upcoming January launch of a 24/7 behavioral health helpline.

In his final cost trends hearing as governor, Baker also renewed his long-unsuccessful push for reimagining investment in health care.

Baker filed a bill in 2019 and again in March that would have required providers and insurers to increase their spending on primary and behavioral health care by 30 percent, seeking a concrete incentive to steer more dollars toward preventative care. Lawmakers did not approve those measures on either occasion.

The current system, Baker said Wednesday, "doesn't necessarily reward" work to achieve better patient outcomes.

"In terms of getting people to just walk away from the underlying financial transactional heartbeat the system runs on at the federal level, it's been really hard," he told the HPC.

"Our legislation basically turned that whole thing upside down, which freaked everybody out, which is part of the reason why I think it didn't happen, but I continue to believe that until somebody figures out how to make the front end and time-based care matter more than the technology and the back end and can sell it, it's going to be really hard to get to where you want to go."

Speaking to reporters after his testimony, Baker added that Massachusetts has to "get out from under a payment model that was designed in 1968 and get to one that has a little more relevance to the 21st century.

"That one in my mind means paying more upfront so that you pay less on the back, because the way the system still works now despite a lot of people's best efforts is most of the money we spend is after people get sick," he said. "We aren't doing, in my view, anywhere near enough to keep them healthy in the first place."

The HPC's latest annual health care cost trends report, published in September, found that statewide total health care spending per capita fell in 2020 for the first time in seven years, but analysts described that as a likely outlier due to the pandemic and said it does not reverse a steady trend of rising costs.

Auerbach said higher prices, rather than a reduction in utilization of health services, is the bigger driver of the overall spending trends.

Consolidation also continues to play a role. In fiscal year 2010, the five largest hospital systems provided about 45 percent of hospital care in Massachusetts; by fiscal year 2020, that rate had increased to 61 percent, according to data Auerbach presented.

HPC members want lawmakers to increase the commission's regulatory muscle by overhauling the performance improvement plan (PIP) process, which the panel can use to order health care providers to make changes designed to reduce cost growth, and to subject major industry figures to additional scrutiny.

"The HPC has advanced bold recommendations in its recent cost trends report, like setting new metrics and mechanisms for accountability and equity," Attorney General Maura Healey, who could become the next governor if she wins Tuesday's election, said in pre-recorded remarks to the HPC. "Let's give those serious consideration as we embark on the next decade."

Lora Pellegrini, president and CEO of the Massachusetts Association of Health Plans, on Wednesday took aim at pharmaceutical manufacturers and providers, urging lawmakers to hold those segments of the industry "accountable for continued price increases that threaten our collective ability to meet the state's cost growth benchmark."

Pellegrini also criticized a new law Baker signed Tuesday that limits the practice of step therapy, or when an insurer can require a patient to try and fail on a cheaper treatment before covering a more expensive option prescribed by a doctor.

"This law will challenge a health plan's ability to drive members to safe, effective, and lower cost pharmaceutical alternatives in favor of new, high-cost name brand drugs," Pellegrini said. "It will lead to higher costs for employers and consumers, increasing pharmaceutical spending on top of existing annual spending growth ... If health plan tools continue to be eroded, health care costs will continue to rise and we will not meet the challenges of health care cost containment."

State House News Service's Sam Drysdale contributed reporting.

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