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Massachusetts Healthcare Reform—2008 in Review and the Outlook for 2009

 

Email Alert

By Colin J. Zick*

January 27, 2009

Nearly three years after the initial passage of Massachusetts' landmark Health Care Reform law, nearly 440,000 previously uninsured individuals are now insured. Nearly half of these individuals are enrolled in private plans with no government subsidies. A recent report by the U.S. Census Bureau shows that gains made in enrollment in Massachusetts since the law was enacted have moved Massachusetts from seventh place in the percentage of insured citizens to first place for 2006 and 2007.

Chapter 58 Health Reform Implementation Continues

The law that enacted the Massachusetts health insurance mandate, Chapter 58 of the Acts of 2006, was signed into law in April of 2006. The unique feature of Chapter 58 is its statutory mandate, requiring adult residents who can afford insurance to maintain a minimum standard of coverage or face state-imposed penalties.

The first steps toward implementation of Chapter 58 were the expansion of MassHealth (Medicaid) eligibility and the promulgation of emergency regulations from the Massachusetts Health Insurance Connector Authority (Connector). The Connector now offers subsidized coverage for low-income, uninsured adults. The three-year phase-in of Health Care Reform in Massachusetts continues with 2008's increase in tax penalties for the uninsured and implementation of expanded minimum coverage standards (Minimum Creditable Coverage) in 2009. Also planned for early 2009 is the extension of the Commonwealth Choice program to small employers. Spending on Commonwealth Care already has exceeded the original state budget projections for FY 2008 by over $150 million.

Employers also have new responsibilities intended to facilitate and expand access to health insurance for their employees under Chapter 58. Employers with eleven or more full-time equivalent (FTE) employees are required to establish Section 125 plans, enabling employees to purchase health insurance on a pre-tax basis. Employers who are required to set up a Section 125 plan and fail to do so risk being hit with a "free rider" surcharge. In addition, a Fair Share Contribution (FSC) requirement included in Chapter 58 also applies to employers with eleven or more FTEs, and requires them to make a "fair and reasonable contribution" to their employees' health insurance costs or pay an assessment to the state. If an employer does not meet the FSC requirement, it may be required to make an FSC payment of $295 (or more) per employee per year. These FSCs are used to help offset the cost of the subsidized health insurance programs provided by the Commonwealth, although they probably will lag behind the actual cost of such insurance.

Other important elements of Chapter 58 include the merger of the small and non-group health insurance markets, and restructuring of the Uncompensated Care Pool, now called the Health Safety Net.

Massachusetts Gives Businesses Until May 1, 2009, to Adopt Comprehensive Information Security Programs

In September 2008 the Massachusetts Office of Consumer Affairs and Business Regulation (OCABR) issued broad identity theft regulations that require virtually every business doing business with Massachusetts residents (including healthcare providers) to develop comprehensive policies and procedures to address the risk of identity theft by May 1, 2009. In conjunction with the recently enacted Massachusetts identity theft statute, Mass. Gen. Laws ch. 93H, the Massachusetts identity theft regulations published as 201 CMR 17.00 set specific standards for businesses that own, license, store, or maintain personal information about any Massachusetts residents.

There are several key provisions in these new regulations:

  • Businesses subject to the regulations include any company—whether or not it's based in Massachusetts—that owns, licenses, stores, or maintains "personal information" about Massachusetts residents.
  • "Personal information" is defined to include items likely obtained and maintained by healthcare providers, including a resident's name in combination with a Social Security number, driver's license number, credit card, or bank account information.
  • Affected businesses are required to develop, implement, maintain, and monitor a comprehensive information security program that would identify and mitigate the risks of potential identity theft.
  • Businesses are required to set limits on when employees may access, keep, and transport records containing personal information outside of company offices, and impose disciplinary measures on employees that violate the information security policies.
  • The regulations also specifically require that computer systems containing personal information are protected by secure user authentication protocols, firewall systems, malware protection, and reasonably up-to-date system software.

The Massachusetts Attorney General is authorized to enforce these regulations, but at this stage, as with any new regulatory framework, the form and level of government enforcement is still unclear and will develop over time.

Chapter 305 of the Acts of 2008—An Act to Promote Cost Containment, Transparency, and Efficiency in the Delivery of Quality Healthcare

As a follow-up to the massive reforms begun in 2006, on the last day of the 2008 legislative session the Massachusetts Legislature passed sweeping cost containment legislation, Chapter 305 of the Acts of 2008.

Restrictions on Pharmaceutical & Medical Device Marketing

This legislation added Chapter 111N to the Massachusetts General Law, and its provisions regulating gifts by pharmaceutical and medical device manufacturers to physicians. The Massachusetts Department of Public Health (DPH) is in the process of drafting regulations to enact this law, which promises to be the strictest in the country. These regulations are expected to be issued before Spring 2009. The new law will apply to any pharmaceutical and medical device manufacturer who "participates in a commonwealth health care program" or "is engaged in the packaging, repackaging, labeling, relabeling or distribution of prescription drugs, biologics, or medical devices." The statute also requires DPH to promulgate a marketing code of conduct that is "no less restrictive" than the PhRMA and AdvaMed codes. Covered manufacturers must adopt the DPH code, train their employees in compliance with the code, and submit an annual compliance audit to DPH. Additionally, the law will require annual disclosure of all items of value of $50 or more that a manufacturer provides to a physician or other healthcare practitioner, and requires DPH to post this disclosure on its website. The law will also provide for civil penalties of up to $5,000 per violation.

Chapter 305 contains a variety of other health reform provisions, the most notable of which are the creation of a "health care quality and cost council" charged to "promote public transparency of the quality and cost of health care in the commonwealth"; creation of an institute for healthcare innovation, technology and competitiveness, to be known as the Massachusetts e-Health Institute; and charging DPH to develop, implement, and promotion of an evidence-based outreach and education program about the therapeutic and cost-effective utilization of prescription drugs for physicians, pharmacists, and other healthcare professionals authorized to prescribe and dispense prescription drugs.

*We would like to thank Colin J. Zick, Esquire (Foley Hoag LLP, Boston, MA) for writing this email alert.

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