The Massachusetts Health Policy Commission gave Mass General Brigham an extension on its performance improvement plan.
The HPC ordered the state's largest health system to come up with a plan to reduce its costs, which exceeded the commission's spending growth benchmark by $293 million from 2014 to 2019. Boston-based Mass General Brigham asked for a 60-day extension when the plan was due in mid-March.
The health system now must produce a plan by May 16, including a savings target and methodology, proposed interventions and a timeline. The HPC will review the plan during its June 8 board meeting.
Mass General Brigham is taking the issue seriously and the HPC expects the health system to submit a constructive set of recommendations, commissioners said during their board meeting Wednesday.
"We wanted to avoid the infinite loop of going around and around on things and not reach an agreement. This is not that," commissioner David Cutler said. "This is not a situation where they come to us and say, 'No, no, no,' and it goes around infinitely and we haven't been reaching an agreement. But rather, this is a situation of genuine discussion and trying to help craft something that would be in the best interest of the Commonwealth."
This is the first performance improvement plan issued by the commission, although the process has limited enforcement authority. The performance improvement process carries a maximum penalty of $500,000.
Meanwhile, Mass General Brigham has proposed inpatient expansions that are expected to increase the state's healthcare costs.
The health system plans to spend more than $2 billion to expand Mass General Hospital and Brigham and Women's Faulkner Hospital. The projects are expected to increase Massachusetts' healthcare costs by $36.7 million to $62.3 million per year, according to the HPC.
Under the determination of need application, Mass General Hospital would add a new 482-bed tower, oncology infusion bays, operating rooms and imaging equipment. The $1.9 billion expansion would increase annual costs by up to $54.4 million, the commission estimated.
The five-story addition to Brigham and Women's Faulkner hospital would add 78 inpatient beds, an eight-bed observation unit, imaging equipment and shell space for future expansion. The $150 million project would increase costs by up to $7.9 million a year, HPC's analysis shows.
Mass General Brigham recently pulled its plans to add three new suburban ambulatory sites after the state health department didn't endorse the project. The $223.7 million project would have increased annual healthcare costs by up to $27.9 million a year, the HPC said.
The state health department approved both of the inpatient expansions. The Massachusetts Public Health Council is expected to review the Mass General Hospital and Brigham and Women's Faulkner Hospital expansion applications early next month.
Massachusetts health systems have boosted their prices as they grew their market shares, according to the HPC. As for Mass General Brigham, rising prices and its predominantly commercially insured patient base have been the main drivers of the system's spending growth, not utilization, the commission found.
Patients tend to use the relatively higher-priced academic medical systems in the state, bypassing community hospitals for low-acuity care. That trend, coupled with hospital price increases, is why healthcare cost growth exceeded the state's 3.1% benchmark in 2018 and 2019.
Formal price caps, adjusting the performance improvement plan penalties and other regulatory tools would need to be approved by the state legislature.
"The business models of hospitals really are broken," commissioner Chris Kryder said. "We deal with it every day—costs are too high, patient satisfaction is too low, quality isn't good enough. We're talking about a high-quality place in (Mass General Brigham), but I believe it is a contracting problem and we should be engaged with MGB on how they are going to be delivering care differently going forward."
