MGB commits to multimillion dollar cost-cutting plan. Here’s what happens next

A decade ago, the state laid out a plan to hold health systems, insurers, and others accountable for ever-increasing health care spending. Now, for the first time, the public will see if the plan works.

On Tuesday, the state’s Health Policy Commission approved Mass General Brigham’s plan to reduce its spending by $127.8 million on an annualized basis, largely through a combination of lowered prices, reduced hospitalization rates, and shifting some hospital care to people’s homes.

The commission will periodically monitor MGB as it implements its plan — known as a “performance improvement plan” or PIP — over an 18-month period. At the conclusion, commissioners will vote whether the PIP was successful, or whether to extend the timeframe or even ask for changes.

“This is the first performance improvement plan that the HPC has ever required in the state. It’s also the first ever required in the country. We took that responsibility and opportunity very seriously,” said Deborah Devaux, the recently appointed chair of the commission.

In a statement, Dr. Anne Klibanski, president and CEO of Mass General Brigham, noted that the approval came at a tenuous time for health systems, with Mass General Brigham caring for a higher number of patients who were sicker than before, amid labor and supply chain shortages.

“Despite the challenges we encounter in our work, we remain committed to transforming how care is delivered and lowering the cost of that care,” Klibanski said.

For the past decade, the state has attempted to rein in health care spending, and agencies have aimed for the past several years to keep the total growth of medical spending in Massachusetts under 3.1 percent annually.

Yet according to a commission analysis in January, MGB’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 filed a proposal in May, with plans to cut its spending by $70 million on an annualized basis. Commission staff worked with MGB over the summer amid what Devaux said was a rigorous analytic review, and last week, MGB submitted a revised plan, nearly doubling its commitment to $127.8 million on an annualized basis.

Commissioners commended MGB for agreeing to spending reductions in the broader context of COVID and ongoing economic challenges facing the sector.

Yet they also recognized that the plan alone wouldn’t solve the state’s health care cost containment problem.

“The achievement of the PIP’s goal of $127 million in annual savings is significant. But this PIP won’t change the price disparities that exist in our state,” said Commissioner Martin Cohen. “But it does recognize that price matters to ensure that health care is accessible and affordable for residents of the Commonwealth.”

Cohen added that the sustainability of the system’s plans mattered just as much as the dollar figure. In its plan, MGB made commitments to continuing the goals outlined in the PIP, including plans for future contract negotiations with local commercial payers to decrease price variation between Mass General Brigham and others in the market.

Commissioner David Cutler also called it a step in the right direction, but said the plan needed to be married with other strategies such as legislation.

“I also recognize the difficulty in getting real big savings to people on a continuous basis,” Cutler said. “We can’t rely on this to the exclusion of other things.”

Jessica Bartlett can be reached at jessica.bartlett@globe.com. Follow her on Twitter @ByJessBartlett.

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