Last summer, CVS and Mass General Brigham announced a deal they promised would expand access to primary care. Now, a state regulator is warning that not only is that outcome far from guaranteed, but the transaction would also increase residents’ healthcare spending by tens of millions of dollars each year.
The deal seeks to embed Mass General’s clinicians and care pathways into 37 CVS MinuteClinics across Massachusetts, with patients being referred into the health system’s broader network for follow-up care. The business partners filed paperwork in June of last year to initiate the integration, and the Massachusetts Health Policy Commission began conducting its review of the proposed deal in the fall.
The state agency’s report, published this month, estimates the deal would increase costs by about $40 million annually. This spending growth would come primarily from new primary care patients being treated in Mass General’s higher-priced system, as well as from the repricing of routine convenience care at higher rates.
Health economists are unsure whether the deal will actually do a good job of expanding access to care or simply shift utilization into a higher-cost system — which would increase overall spending and costs borne by patients and employers.
Breaking down the $40M figure
In its report, the Massachusetts Health Policy Commission outlined that its $40 million estimate reflects three primary dynamics, the first being spending for new primary care patients.
Essentially, people who were not previously Mass General patients are expected to receive primary care at MinuteClinics and then be billed at the health system’s higher prices — and after the visit, they might also be referred to Mass General’s higher-priced specialists and hospitals. Based on its analysis of spending trends of generally low-complexity primary care patients who are new to Mass General’s network, the Health Policy Commission projected that spending stemming from these new primary care patients would rise by $27.7 million annually.
The report noted that Mass General’s prices are, on average, 129% higher than its competitors. This also ties into the second dynamic to watch: the repricing of simple services. The convenience care — like treating minor infections or providing routine vaccinations — that MinuteClinics provide would be repriced at Mass General rates, which would increase commercial spending by an additional $6.6 million each year, according to the Massachusetts Health Policy Commission.
The agency also projected an additional $5.9 million in spending due to the diversion of some convenience care patients to other providers. As MinuteClinics focus more on building out primary care capabilities, they will likely decrease their convenience care capacity — and some patients who would have otherwise sought convenience care with CVS will be diverted to other providers, which are typically higher-priced, the report pointed out.
It also noted that the collective $40 million figure is not a ceiling — it’s a conservative prediction. The calculation assumes the new clinics will see only about 35% capacity utilization by the third year, but cost increases could be much higher if adoption grows.
If the MinuteClinics fully scale into complete primary care practices, the report estimates that total spending would rise to $76.2 million annually from standard billed visits and referrals — with an additional $16 million coming from other payments insurers make outside of individual doctor visits, such as care for coordination or for certain programs.
Even if the MinuteClinics completely fail to build out their primary care services and only continue offering convenience care, the Massachusetts Health Policy Commission still expects commercial spending to grow by about $12 million a year simply because those services would be billed at Mass General’s pricier rates.
Mass General has the highest prices in the state for not just primary care, but across all healthcare services, the report stated.
What Mass General & CVS have to say
The health system said it has questions about the methodology used by the Massachusetts Health Policy Commission, stating that the report didn’t account for the longer-term reduction in total cost of care that typically follows after preventive and coordinated care efforts take effect.
“This affiliation is designed to expand access to high-quality, convenient care for patients, including in regions facing provider shortages and high rates of avoidable ED use. Our approach aims to ensure that more residents, especially those who have struggled to access care, can benefit from primary care’s proven value in improving health outcomes and lowering avoidable costs,” Mass General wrote in an emailed statement.
In a separate statement, CVS said the report appears to overstate the potential effect on healthcare spending, as well as neglect that expanding access to primary care can reduce overall healthcare costs over time.
“This context is particularly important in Massachusetts, where multiple state reports have highlighted that lengthy wait times for primary care appointments and overutilization of emergency departments suggest that improved access could help redirect care to more appropriate, lower‑cost settings,” CVS’ statement read.
Both organizations said they plan to continue working with regulators until the state issues its final determination of whether the deal can proceed.
Would access really improve?
There are many factors that affect healthcare costs, including the appropriateness of care and the use of preventive services. So there is some truth to that claim that expanding access to care through a high-priced health system could still lower costs — that’s if patients receive better treatment for chronic conditions and avoid hospital visits, noted Miriam Straus, associate director at Georgetown University’s Center for Health Law and Policy at the O’Neill Institute.
However, she thinks any cost savings from the partnership’s primary care expansion would be modest.
“This is because health savings from expanded primary care are the largest with high-risk patients, such as those with chronic conditions. In contrast, the new MinuteClinic Primary Care patients are expected to be healthier on average,” Straus remarked.
Another health policy expert — Cheryl Damberg, director of the RAND Center of Excellence on Health System Performance — also said she was uncertain the deal could actually improve health outcomes in a meaningful way or generate net cost savings.
In theory, boosted primary care access can reduce delayed care and lead to better chronic disease management, but evidence is still mixed, and it’s unclear if that benefit would materialize under this partnership, she stated.
She pointed out that MinuteClinics have historically served a broad walk-in population, but this partnership shifts them toward a more commercially insured group — including many people with high-deductible plans, who often still face access barriers due to high prices.
This shift doesn’t expand access for the populations most likely to face gaps in care, such as Medicaid or uninsured patients, Damberg noted. Instead, it reorganizes care for already-insured patients within a more expensive delivery system — which makes it difficult to view the partnership as a win for broad access expansion, even if it does boost convenience for some commercially insured patients.
“There’s a pivot over to serving the commercial population. They have health insurance now, but they could be in high-deductible plans, so they could still face barriers to accessing primary care and specialty care. It’s not like you’re taking Medicaid patients and throwing more money at providers who will now decide to accept them,” Damberg remarked.
The net effect would likely be improved convenience for some patients, not widespread access for all patients.
The market power play
One policy researcher doubts that the deal could truly increase primary care capacity. John Romley, senior scholar at USC’s Schaeffer Center for Health Policy and Economics, said that unless Mass General significantly increases its number of primary care clinicians, care is mostly reallocated — not expanded.
“Could it be the case that CVS, as part of this relationship, decides to roll out more MinuteClinics across the MGB service area? That is possible, and that would change the story,” he stated. “But there is a possibility you’re just kind of moving around who gets what care, and that the total amount of primary care supplied — across everyone — may not increase much.”
But to Romley, the bigger concern is about market power.
The Massachusetts Health Policy Commission’s report noted that the addition of MinuteClinics into Mass General’s network would probably increase the health system’s bargaining power — enough to help it further increase prices for services. However, such a change in bargaining leverage is difficult to quantify at this point.
Mass General already has strong market power in Massachusetts, serving as the state’s largest health system and employer, so regulators are worried the partnership could further beef up its negotiation leverage with payers in a way that would drive prices up statewide.
Romley also pointed out the deal could have some indirect effects on market competition that are difficult to measure but potentially influential. For instance, because CVS also owns payer Aetna and pharmacy benefit manager Caremark, there would likely be competitive spillovers that weaken price competition.
In other words, CVS’ interwoven ecosystem — spanning insurance, care delivery and pharmacy — could reduce the competitive pressure on prices and strengthen its own negotiating position in ways that raise costs. Even though CVS won’t directly set the clinic prices, the company can shape how care is steered and reimbursed, which then impacts how Mass General’s higher-cost services are used and paid for.
Basically, CVS would help feed patients into the Mass General system, and its integrated payer/pharmacy benefit manager role would likely decrease competitive friction in negotiations — therefore making it easier for higher prices to hold or spread, Romley said.
He noted that it’s impossible to quantify how much this increased negotiation power could raise prices, given contract negotiation data is notoriously hard to obtain. But nonetheless, he thinks the deal raises real concerns about upward pressure on prices.
Since the deal will mainly affect people with employer-sponsored commercial insurance, he thinks rising costs would largely be passed on indirectly to Massachusetts workers.
“Whatever is not paid out of pocket, the remainder of the cost, gets passed through in the form of lower wages to workers. It’s not obvious, it’s quite indirect, but ultimately, someone has to pay for it. In this context, it will probably ultimately, to a large degree, be the workers covered by the employers,” Romley explained.
A potentially huge case study
The history of retail health clinics in the U.S. hasn’t exactly been a rosy one. Large retailers like CVS, Walgreens and Walmart were investing heavily in expanding these care models a few years ago, but they have since had to pull back amid struggles to scale them into full primary care systems.
There’s no real evidence of what happens when these sites are repurposed beyond low-acuity care. There is very little real-world data on how retail clinics perform when they are integrated into a major medical center and used as an entry point into a broader health system, Romley noted.
There’s still a chance the deal won’t be allowed to proceed. The Massachusetts Health Policy Commission, or potentially the state attorney general, could block the transaction if they conclude that it will raise costs or harm competition. But if the deal proceeds, Romley thinks it will likely become a closely watched case study in whether vertical integration between retailers and dominant health systems expands access or just reshapes where and at what price care is delivered.
If it goes through, the deal could offer one of the clearest tests to date of how retail clinics function when fully embedded into a health system’s greater network.
Photo: wildpixel, Getty Images
