Commonwealth of Massachusetts Department of Public Health Proposed Revision of the Determination of Need Regulation 105 CMR 100.000 2016 August 23, Retooling DoN for Today's Health Care Market Presentation Overview ❑ Historical Overview of Determination of Need ❑ Overview Determination of of Proposed Revision of 105 CMR 100.000, Need ❑ Next Steps ❑ Questions Updated: DoN Revision Presentation PHC 8-23-16 2
Retooling DoN for Today's Health Care Market Historical Overview of Determination of Need ❑ Many laws originally State Certificate of Need (CON) Health Laws, 2013 contemplated DoN comprehensively. However, NII gradual deregulation resulted in A many of these laws being either 161 C1. repealed or scaled back during NJ the 1990s. DU ID ICJ lit 9' 0 ❑ Many health care experts have Amcrinm .e highlighted deregulation as Samoa .grc,, %Q um contributing to escalating health 11.S. Virgin Islands care costs. 1111 CON law; state approval may be required ✓ According to a 2006 Missouri CON law repealed or not M effect. State Senate special Compiled by NCSL November 2013; based on data from AHPA & State Agencies. commission, researchers found that Massachusetts had the least expansive DoN law when compared to neighboring New England states. Updated: DoN Revision Presentation PHC 8-23-16 3 Retooling DoN for Today's Health Care Market Historical Overview of Determination of Need EXAMPLE 1: In 4 -years following deregulation, Ohio saw an increase in 19 new hospitals (of which 15 rehab), 137% increase in outpatient dialysis units, 280% increase in radiation therapy, 548% increase in freestanding MRIs, and a 600% increase in ambulatory surgery centers. Updlited: DoN Revision Presentation PHC 8-23-16 4
Retooling DoN for Today's Health Care Market Historical Overview of Determination of Need EXAMPLE 2: DiamlerChrysler Corporation, GM, and Ford Motor Company completed individual business analyses to compare health care costs for their employees in DoN-regulated states vs. non- DoN-regulated states. Adjusted Health Care Cost Per Person By Location and State CON Status DaimlerChrysler Corporation, 2000 $1,839 51,331 CON states with Delaware I Nfichigan I New York Updated: DoN Revision Presentation PHC 8-23-16 5 Health Care Market Retooling DoN for Today's Historical Overview of Determination of Need EXAMPLE 3: Connecticut placed a moratorium on all mergers and acquisitions, calling for significant enhancements to their DON laws and regulation, citing a need to reduce costs while incentivizing market competition on the basis of value. STATE OF CONNECTICUT GOVERNOR. DANNEL P. MALLOY Thursday, February 25, 2016 Transparency in the Hospital Industry Gov. Malloy Signs Executive Order to Create More Governor Dannel P. Malloy today announced that - In light of the evolving healthcare industry and continuing changes In market conditions - he has signed an executive order that will begin an extensive review of Connecticut's laws and regulations surrounding processes on the establishment, termination, transfer, acquisition, and expansion of hospitals and medical service providers. The review is intended to ensure that consumers In Connecticut continue to receive equitable access to health care that encourages transparency and competition, provides accessible and affordable health care delivery, contributes to economic development, and promotes community benefits. "We've been taking a piecemeal look at the Certificate of Need process for several years. It's time for comprehensive reform," Governor Malloy said. "With continuing changes In the healthcare Industry, It is critical that our state laws ensure that all hospitals continue to thrive, and that the deck is not stacked In favor of fewer than a handful that dominate the marketplace. We need balance. Fewer healthcare systems mean fewer choices for consumers, and that can dramatically affect both the quality of care and costs. It's time we take a holistic look at the acquisition process.'' Updated: DoN Revision Presentation PHC 8-23-16 6
Retooling DoN for Today's Health Care Market Historical Overview of Determination of Need ❑ The mission of the Massachusetts Department of Public Health (DPH) is to ✓ prevent illness, injury, and premature death; ✓ assure access to high quality public health and health care services; and, ✓ promote wellness and health equity for all people within the Commonwealth. ❑ This mission has historically been interpreted to direct DPH to play an active role in ✓ 1) measuring population health and wellness, including identification and understanding of the underlying social determinants of health; and ✓ 2) delivery system policy and design. ❑ Consistent with this interpretation, the Massachusetts General Court established the Determination of Need (DoN) Program within DPH in 1971. ✓ Intended to provide state government with a regulatory mechanism to ensure resources were allocated so "a minimum expectation of health care services" would be available to all residents at the lowest reasonable aggregate cost. Updated: DoN Revision Presentation PHC 8-23-16 7 Retooling DoN for Today's Health Care Market Outdated and Outmoded ❑ Problem Statement: Massachusetts' DoN regulation has been outpaced by a rapidly evolving healthcare market and currently does not align with DPH's core mission. ❑ 1971: DoN established. ✓ Providers: Care largely provided in standalone, not -for-profit hospitals or small group practices. ✓ Payment: Fee -for -service or cost -based reimbursement. Rate setting commission set public rates. ✓ DON: Played a critical role in protecting MA from state overspending on new technologies and duplicative services. Goal was to prevent saturation through non -duplication of services. ❑ 2016: Post -Chapter 224 and ACA health reform. ✓ Providers: Significant provider consolidation. Complex health systems that closely control patient referral patterns. Increased reliance on innovation through technologies and services. ✓ Payment: Systems taking on increased risk and no government rate setting. ✓ DON: Objective has been the non -duplication of services, rather than incentivizing competition on basis of value. Increasingly out of alignment with DPH mission (i.e. population health) and state goals for delivery system transformation. ❑ Result: Despite these substantial changes in health care over the past 45 -years, due to regulatory stagnation, DoN has become outdated and outmoded. ✓ However, DoN represents a significant executive branch tool that can be realigned to advance the state's public health and health care reform goals. Updated: DoN Revision Presentation PHC 8-23-16 8
Retooling DoN for Today's Health Care Market Traditional Health Planning (1970-2012) Behavioral Health Central MA Provider Region Marlborough, MA PCP and Dialysis Defined Distance Unit UMass Medical Ms. Smith Center Represents Population Worcester, MA Needs of Northborough, MA: Behavioral Health and Kidney Disease Management ❑ Map population health needs of defined, limited geographic area ❑ of needed services within area Measure excess/scarcity ❑ Historical role of DoN: ✓ and new technologies To allow government to monitor and control costs of large projects (era of rate setting and cost -based reimbursement) ✓ To empower government to regulate excess/scarcity through geographic distribution of services Updated: DoN Revision Presentation PHC 8-23-16 9 Retooling DoN for Today's Health Care Market Potential ACO View of Future Role of DoN and Health Planning Ms. Smith Central MA Region Represents Needs of UMass ACO Patient Panel 0 W. Menimack/Middlesex Metro West Region Region Central MA Region ❑ ACO "owns" patient risk — question for ACO is how to best manage risk by ensuring access to needed services at lowest cost ❑ ACOs and at risk — to could argue that DoN not needed as ACOs will be best situated — manage and plan for the needs of their patient panel ❑ Question is access to services within the system, not excess/scarcity within a defined geographic area Updated: DoN Revision Presentation PHC 8-23-18 10
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