House health care bill aims to contain costs, set rules to prevent another Steward crisis

Mariano already declared his support for the measure, and a version of it will likely reach the House floor for a vote in the coming months, adding yet another weighty, complicated topic to an already-packed agenda as the Legislature races toward a July 31 deadline to complete major business for the year.

However, it’s not clear what kind of a response the bill will elicit in the Senate, whose top Democrats for years have had their focus more trained on reining in prescription drug prices.

“This legislation focuses on restoring stability to the health care system, and on bolstering accountability within the industry, with the ultimate goal of ensuring that everyone in Massachusetts has access to quality, affordable health care,” Mariano said in a statement to the News Service. “To achieve those goals, this bill makes important updates to how we regulate and monitor the health care market, informed by the Steward Health Care crisis, but also by the bigger problems in a sector that has never fully recovered from the pandemic.”

Officials in Mariano’s office pitched the wide-ranging bill as the biggest effort to contain health care costs since the 2012 law that established the Health Policy Commission, the Center for Health Information and Analysis and an annual benchmark representing a goal for spending growth.

The legislation also serves as a de facto acknowledgement that the existing regulatory and analytical structure has not been sufficiently equipped to keep cost and spending increases within reasonable limits, putting patients across the state under financial pressure as many providers face strain of their own.

Those conditions existed before upheaval at the for-profit, private equity-backed Steward Health Care exploded into public view this year, and the expanded committee bill takes into account the crisis that has taken center stage.

The Steward-inspired changes are mostly forward-looking, aiming to prevent similar problems from emerging in the future, and would not immediately change the arc of the current upheaval, Mariano’s office said.

Acute care hospitals would be required to own the land on which their facilities stand to acquire state licensure, according to a committee-produced summary of the bill.

That’s a contrast from the situation at Steward, which in 2016 sold its real estate to Medical Properties Trust, a real estate investment trust, and now leases back the hospital properties. The maneuver appears to have saddled hospitals with a burden they are struggling to manage: in January, Medical Properties Trust said Steward owed it about $50 million in unpaid rent.

“It isn’t Cerberus Capital that created the problem at Steward. It was the management of Steward selling the land to a holding company of which they have a majority interest, which smacks of a Ponzi scheme of the highest order,” Mariano said in an interview on WCVB’s “On the Record” earlier this month.

Hospitals licensed on or before April 1, 2024 — including Steward’s hospitals — would be exempt from the new requirement.

The bill would also effectively require creditors and vendors to notify the Department of Public Health 60 days before repossessing medical or surgical equipment, and would void any contracts with providers that allow for any repossession more quickly.

That provision, too, is a direct response to Steward. In January, The Boston Globe reported about the case of Sungida Rashid, a 39-year-old new mother who died after doctors at St. Elizabeth’s Medical Center — a Steward hospital — could not use an embolism coil to treat her internal bleeding because it had been repossessed over unpaid bills weeks earlier.

Another section would significantly strengthen data-reporting requirements and consequences, an area where Steward for years has allegedly been failing to comply with — and fighting in court against — existing law.

Hospitals would need to disclose audited financial statements about out-of-state operations for their parent organizations, certain private equity investors, real estate investment trusts, and management services organizations.

They would also face much higher fines for falling short of those requirements, boosted from $1,000 per violation to $25,000 per violation with no maximum cap. The bill additionally empowers DPH to block certain licensure or expansion approval against a system that has failed to submit appropriate financial data to the state.

But Steward-related changes are just one category of reforms among several in the mix.

The redrafted legislation would also overhaul health care cost containment and management at the state level, including by changing the existing one-year benchmark to a three-year cycle. Mariano’s office said a longer time period would better account for dips and spikes in spending by individual entities.

In recent years, the rate of total health care expenditure growth has exceeded the target rate set by regulators, who have been pressing lawmakers to give them new tools to better contain the trend.