Massachusetts considers capitated insurance payments

The Blues plan has already brought back capitation; now a state commission is moving to recommend that "global payments" replace fee-for-service charges.

By Emily Berry — Posted June 1, 2009

Print  |   Email  |   Respond  |   Reprints  |   Like Facebook  |   Share Twitter  |   Tweet Linkedin

Fee-for-service pay could be a thing of the past for Massachusetts physicians by the time 2015 rolls around, if an influential group of health care leaders in the state get their way.

A commission is set to propose that the entire state leave behind fee-for-service payments over the next five years in favor of capitated payments, this time designed to avoid the problems that pushed capitation out of favor over the last decade.

"Global payment" is the preferred name for this per-member payment, split between doctors and hospitals, with the amount determined in part by the quality of care delivered.

Advocates say that as with its move toward universal coverage, Massachusetts' payment system changes could be a national model. The state intends the change in payment systems to shift from rewarding a high volume of services toward improving overall patient health.

"Payment reform is one of the most powerful levers we have to drive and support health system change," said Sarah Iselin, the Massachusetts Division of Health Care Finance and Policy's commissioner and co-chair of the state's Special Commission on the Health Care Payment System.

The state's Blues plan introduced a limited wave of capitation last year with its "alternative quality contract," which several large physician-hospital organizations signed onto this year. But the special commission is set to push for per-member payments to replace fee for service for all payers -- including Medicare and Medicaid -- within five years.

The panel is expected to vote on recommendations at its final meeting, scheduled for late June, Iselin said. But even before the commission finalized its draft recommendations, the idea of across-the-board capitated payments sparked fierce debate.

Many physicians across the country who were part of the boom of capitation agreements during the 1990s found they had taken on financial risk they weren't equipped to deal with. Patients in some cases distrusted doctors because of a perceived incentive under capitation to delay or skip care.

So the commission's recommendations may not be an easy sell.

"It's going to be threatening to many physicians," said Massachusetts Medical Society President Mario Motta, MD, a cardiologist.

Though proponents say the problems with the old model could be resolved, Jess Orrick, a practice management consultant based in Newton Centre, Mass., was skeptical. He found fault with the makeup of the special commission, which includes health plan executives, state finance officials and the head of the Group Insurance Commission, which purchases health insurance for state and municipal employees.

"The people trying to solve the problem are the cause of the problem," Orrick said.

But commission members also include the MMS president-elect, along with the president and CEO of the state's hospital association.

Dr. Motta said there is still time for the group's recommendations to change. A 100% global-payment system may not be ideal, he said, and there's no reason not to adopt a hybrid system, using fee-for-service where it makes sense.

Once the recommendations are finalized, state lawmakers would need to pass legislation establishing an independent board to implement the recommendations. Among the first steps for that board would be securing a waiver from the Centers for Medicare & Medicaid Services allowing Medicare to start global payments in Massachusetts, Iselin said.

Making global payments the rule statewide would require participation by self-insured employers as well, she said. Self-insured plans are, for the most part, exempt from state insurance regulations and instead are regulated by the federal Employee Retirement Income Security Act.

Iselin said the special commission's ideas are the same kind of changes needed across the country.

"I think we in Massachusetts have a unique opportunity because of what we've been able to achieve in coverage," she said. "But we'd be having this conversation about cost even if we hadn't done the reform."

Back to top


Capitation 2.0

The Massachusetts Special Commission on the Health Care Payment System is expected to adopt a transition away from fee-for-service payments and toward a type of capitation called "global payments" over the next five years. The draft recommendations include:

  • Massachusetts will transition to a payment system where global payments to provider networks are the predominant form of reimbursement.
  • Global payments should be adjusted for risk and other factors and incorporate common performance measures.
  • Provider networks are "Accountable Care Organizations," which include doctors, other community-based health professionals and hospitals collectively capable of providing a range of services. Relationships among them can vary (ownership, virtual/contractual).
  • A careful transition toward "global payments" must occur and offer adequate infrastructure support for professionals. The transition will occur over a period not to exceed five years, though some health professionals may transition sooner.
  • A new, independent board will be charged with guiding implementation of the new payment system.
  • The board will develop parameters for a standard global payment methodology.
  • The board will set targets for the market to promote greater payment equity.

Source: Massachusetts Special Commission on the Health Care Payment System (link)

Back to top



Read story

Confronting bias against obese patients

Medical educators are starting to raise awareness about how weight-related stigma can impair patient-physician communication and the treatment of obesity. Read story

Read story


American Medical News is ceasing publication after 55 years of serving physicians by keeping them informed of their rapidly changing profession. Read story

Read story

Policing medical practice employees after work

Doctors can try to regulate staff actions outside the office, but they must watch what they try to stamp out and how they do it. Read story

Read story

Diabetes prevention: Set on a course for lifestyle change

The YMCA's evidence-based program is helping prediabetic patients eat right, get active and lose weight. Read story

Read story

Medicaid's muddled preventive care picture

The health system reform law promises no-cost coverage of a lengthy list of screenings and other prevention services, but some beneficiaries still might miss out. Read story

Read story

How to get tax breaks for your medical practice

Federal, state and local governments offer doctors incentives because practices are recognized as economic engines. But physicians must know how and where to find them. Read story

Read story

Advance pay ACOs: A down payment on Medicare's future

Accountable care organizations that pay doctors up-front bring practice improvements, but it's unclear yet if program actuaries will see a return on investment. Read story

Read story

Physician liability: Your team, your legal risk

When health care team members drop the ball, it's often doctors who end up in court. How can physicians improve such care and avoid risks? Read story

  • Stay informed
  • Twitter
  • Facebook
  • RSS
  • LinkedIn