Cost control the next step for Massachusetts health reform

All eyes will monitor the effort as national reform unfolds, but experts expect payment revisions to vary depending on the state.

By Tanya Albert Henry — Posted March 28, 2011

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Already a pioneer of health coverage expansion, Massachusetts is beginning to tackle the critical next phase of its health system reforms: containing costs. There may be debate about the best way to accomplish that, but observers agree it is the necessary next step if universal coverage is to be successful.

As physicians in Massachusetts work to help shape payment changes and other cost-containing efforts, the nation's eyes are on the commonwealth to see how the process plays out and what lessons can be adapted to national health system reform implementation.

"If you can't get costs under control, you can't get the health care coverage expansions," said Robert Berenson, MD, a senior fellow at the Urban Institute who was an internist for 20 years. "And in the end, you need to get the population covered to reduce inefficient [health] spending."

In February, Massachusetts Gov. Deval Patrick unveiled his cost-containment plan to follow up on the landmark 2006 coverage expansions. If approved by legislators, it would define and encourage accountable care organizations within the state; give the state insurance commissioner the ability to scrutinize insurers' rates, including underlying physician pay, and disapprove rates that are excessive; and revamp the medical liability system to try to resolve disputes more quickly and curb defensive medicine.

"We're optimistic that this bill highlights the fact that whatever pay reform we do, it needs to introduce flexibility, and the transition to health payment reform needs to be voluntary," said Alice A. Tolbert Coombs, MD, president of the Massachusetts Medical Society.

Dr. Coombs, a critical care specialist and anesthesiologist, said the liability piece is an important part of payment reform, allowing doctors to give patients more information about what might have gone wrong and offer compensation. "It creates a culture of transparency."

One concern the society's leaders have, however, is ensuring that practicing physicians have sufficient authority within ACOs, which are networks of physician practices and hospitals that will share in any cost savings they generate by better coordinating and integrating care. "Doctors are in the trenches, and when the door closes we take care of the patients," Dr. Coombs said.

Hugh Taylor, MD, the Massachusetts Academy of Family Physicians' delegate to the American Academy of Family Physicians, also stressed physician involvement in the ACO process.

Dr. Taylor, a family physician in Hamilton, Mass., said doctors who remember past capitation attempts are approaching the concept with some trepidation. But he added that physicians are on board with finding ways to cut costs and that ACOs can be a reasonable way to do that -- if done properly.

"The reason we are interested in ACOs is because we believe coordination of care results in good quality of care," he said. "The challenge is to get in on the ground floor and have enough influence in it being done right."

For example, he said, the system should be organized so that a high percentage of people obtain preventive care rather than go to the emergency department. It also must ensure that physicians can afford to take care of patients who are already sick.

Dr. Taylor said the bill's authors are right in making ACO participation voluntary for physicians. But he added that a plan to make ACOs financially responsible for the bulk of the care by 2015 is aggressive.

A unique state approach?

Many experts look toward Massachusetts to see where national health system reform might go. But when it comes to cost containment, its approach might not be a good model for the nation.

"Other parts of the country need to do it their way, because different states don't look alike or have the same needs. Even different parts of the same state don't have the same needs," said Stuart Guterman, vice president for payment and system reform at the Commonwealth Fund and executive director of its Commission on a High Performance Health System.

Some regions differ based on age, income, health status and physician supply. "One size does not fit all in this area," Dr. Berenson agreed.

The Massachusetts Medical Society held a conference on state reform efforts with the Commonwealth Fund in the fall of 2010. A white paper from the event highlights some of the varied models being explored.

Geisinger Health System in Pennsylvania is using its networks to try out a model similar to patient-centered medical homes and high-risk care management programs. Sutter Health in Northern California has focused on engaging its physicians on quality and efficiency improvement. And in Massachusetts, Blue Cross Blue Shield established alternative contracts with physicians that include quality incentives.

Whatever systems states ultimately set up, reform should control prices and volume, Dr. Berenson said. ACOs and medical homes are two strategies being discussed to control volume, he said, and insurance regulation is a means to control price.

"We need to focus on payment systems that pay for good care and appropriate care and ensure that patients get the care they need," Guterman said. "Any payment system done wrong has the potential for harm."

Physicians agree that cost containment should happen but stress that it should be accomplished properly. "We need to do it slowly and allow early adopters to be studied," Dr. Coombs said. "We need to address systems that don't work well and adopt systems that do work well."

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Reform's next steps

Massachusetts Gov. Deval Patrick has unveiled legislation to contain health costs and preserve the commonwealth's landmark 2006 coverage expansions:

Accountable care organizations

  • Mandates that ACOs provide patient-centered primary care coordination and referral services.
  • Requires ACOs to share financial risk, distribute savings and meet quality measures.
  • Expects ACOs to be competent in population health management, financial and contract management, quality measurements, and communication.
  • Charges ACOs with providing behavioral health services, either internally or by contract.
  • Makes physician participation voluntary.
  • Allows primary care physicians to belong to only one ACO but places no limits on specialists.
  • Requires MassHealth, the Group Insurance Commission, the Commonwealth Connector and all other state-funded insurance programs to implement ACOs and alternative payments by January 2014.

Medical liability reform

  • Calls for a 180-day cooling-off period after an injured patient signals an intention to sue.
  • Requires certain physician-patient communication during the cooling-off period.
  • Makes expressions of apology, regret and sympathy inadmissible in court.

Insurance regulation

  • Gives the Division of Insurance the right to reject insurance contracts for excessive premiums if it finds the plans' payments to physicians and others were the cause of the high premiums.

Sources: Gov. Deval Patrick's "An Act Improving the Quality of Health Care and Controlling Costs by Reforming Health Systems and Payments," Massachusetts Medical Society

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