Mass General Brigham has said it will reduce its total medical spending by $127.8 million annually, nearly doubling its commitment to reduce its spending after months of discussions with a state watchdog agency.
The filing is part of the hospital’s “performance improvement plan,” which was required by the state’s Health Policy Commission after what it said were years of spending above acceptable levels.
MGB is the first health system to be required to file such a plan, which will still need to be approved by commissioners, likely at a meeting on Sept. 27. Approval will put to the test the state’s main mechanism to hold providers accountable for ever-increasing health care costs.
“Despite unprecedented financial challenges facing Mass General Brigham and health systems everywhere, we are resolute in doing our part to lower the cost of health care in Massachusetts, without impacting our ability to provide patient care or our responsibilities to medical research, education, and the communities we serve,” Dr. Gregg S. Meyer, executive vice president of value-based care at Mass General Brigham.
The plan, unveiled Thursday, is similar to the one filed by the system in May, which suggested Mass General Brigham would reduce spending through a combination of lowered prices, reduced hospitalization rates, and by shifting some hospital care to people’s homes. At a meeting in July, HPC Executive Director David Seltz said the commission had reviewed the proposal, and was engaged in ongoing conversations “of mutual benefit to both sides.”
The updated plan suggests the same mechanisms to reduce spending, but with bigger planned-for savings. Mass General Brigham said it will save $90 million annually, in part by committing to bringing outpatient rates — delivered at outpatient facilities tied to its academic medical centers — closer to those of others in the marketplace. To help achieve the higher savings, which increased from $53.8 million in the first proposal, the system expanded the number of commercial insurers it will work with to reduce outpatient rates from what they otherwise would have been.
The system will also reduce the prices at its outpatient facility in Waltham to be in line with rates it charges at its community hospitals, and will change its rates across more payers, saving more money.
The health system will save an additional $32.4 million annually — up from $10.8 million — by reducing avoidable hospitalizations, emergency room visits, post-acute care, and the use of high-cost outpatient imaging. As part of these plans, the system says it will increase enrollment in its care management program, which uses algorithms and teams of people to better manage the care of complex patients and keep them healthier. Savings grew because the program is increasingly targeting the commercial and Medicaid populations, which often have higher costs associated with them.
As before, the plans outlined $5.3 million in annual savings from delivering care remotely or in lower-cost hospitals and clinics. The health system said it had already negotiated commercial rates for hospital-at-home services that cost less than in-hospital care and would expand that program to save money. The system also says it will sustain its use of virtual care, which it scaled up during the pandemic, and was supportive of charging lower rates for remote care than for in-person visits.
Policy makers and regulatory agencies have tried for years to keep the total growth of medical spending in Massachusetts under 3.1 percent annually, as affordability concerns have continued to mount. In 2020, health care spending totaled $62.6 billion.
But in January, according to a commission analysis, Mass General Brigham’s total commercial spending on primary care patients was $293 million above benchmark limits from 2014 to 2019 — more than double that of the second-highest health system in Massachusetts. The system was required to file a plan to outline how it would keep its spending in check. It was the strongest such action for the Health Policy Commission in the six years it has reviewed health care market transactions, and made MGB the first system to be required to file a spending reduction plan.
In April, the commission gave MGB more time to file the plan, and has been in ongoing communication with MGB since a plan was filed in May.
Initially, Mass General Brigham said it divided that total over the five-year period cited, and made a goal to reduce its spending by $70 million annually — even more than the $60 million in annual excess costs.
Some health care experts were skeptical of the initial plans, calling them “wholly inadequate,” and pointing out that the system could cut spending in some areas while raising them in others. Other experts pointed out that the measures would only bring the system to the limit of spending increases allowed by the state, rather than meaningfully reduce spending.
Paul Hattis, a former member of the commission and senior fellow at the Lown Institute, a Needham-based health care think tank, was heartened that the savings goal had increased but remained skeptical whether it would be enough. .
“Not sure if the $127.8 million figure is a guaranteeor just a target,” Hattis said. “Even at that level, if delivered on, it seems to me that it is still not enough to truly address the problem.”
John Freedman, chief executive of health care consulting firm Freedman HealthCare LLC, added that the relative size of the savings was still less than 1 percent of the system’s operating revenue, and the state will have a hard time tracking and verifying that savings occurred.
“Success here might mean that MGB gets held to the maximum allowable price increases -- or higher if the savings turn out to be overstated,” Freedman said. “If that happens, MGB will not only remain the highest-paid network, it will also continue to widen the financial gap between it and the others in the state.”