Massachusetts Legislature starts moving on payment reforms

Some bills under consideration would establish global payments, ACO-type shared savings, and early-offer and apology provisions for medical liability cases.

By — Posted May 11, 2012

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Massachusetts lawmakers in the coming months will be seeking to reconcile several comprehensive health system reform bills aimed at controlling rising health care costs, a follow-up to the enactment of a near-universal coverage expansion in 2006.

At this article’s deadline, several bills were in the state Legislature’s pipeline, including one introduced by the House on May 4 to cut $160 billion in health care spending over the next 15 years. The Senate, which released its own proposal on May 9, also was weighing legislation introduced in 2011 by Gov. Deval Patrick. His plan seeks to move all state-sponsored health coverage to a global fee payment system, while encouraging the growth of accountable care-type organizations, in which physicians and other health professionals would work together to improve health outcomes for patients and lower costs.

“I do think it’s going to happen,” Lynda Young, MD, the Massachusetts Medical Society’s president, said of the prospect that the governor would sign a cost-containment bill by July 31, the end of the state’s formal 2012 legislative session.

In a statement, Dr. Young applauded the inclusion of medical liability relief provisions in the House bill, which were based on language drafted by MMS and other major health advocacy organizations in the state. The measure includes a provision that would make physician apologies for an error inadmissible as evidence in a medical liability lawsuit.

Patrick’s bill contains a similar provision, although Dr. Young said the language in the House bill provides more definition of the concept of “disclosure, apology and offer” than the Patrick bill does. In particular, the House bill would adopt Michigan’s model to resolve medical liability claims, establishing a 182-day waiting period upon filing a claim notice, “which allows time to do a root-cause analysis on why an error occurred,” Dr. Young said.

The bill also would set firm spending targets to encourage health professionals to help limit spending increases. Dr. Young said some of these cost-control mechanisms are too aggressive. One example is the bill’s proposed formula to control the rise in costs by linking them to the state’s gross domestic product minus 0.5% over a three-year time frame. “We were advocating that it be 1% above GDP over three to five years,” she said, a change that would not restrict cost growth as sharply.

The House bill contains language similar to the governor’s bill regarding provisions to establish accountable care organizations and alternative payment methodologies, such as global and bundled payments, allowing for voluntary participation on the part of physicians and patients. Under such models, doctors would receive set payments per a specific time period or patients’ episodes of care rather than just on the volume of services they provide.

A switch to a global payment system would eliminate some of the administrative burdens associated with fee-for-service billing, said Bill TenHoor, president of TenHoor & Associates, a health care consulting firm in Duxbury, Mass. “Physicians spend several hours a day with paperwork, and they’d prefer not to,” he said. Though procedure-based coding isn’t going to go away completely, global payments would give physicians more time to interact with their patients — particularly the sicker ones — if they are implemented effectively, TenHoor said.

But while the global payment concept has proven to control costs and is well accepted by a number of doctors, especially those in larger health systems, it “isn’t going to work in every practice system in every part of the state,” Dr. Young said.

In February, the AMA issued a manual to help physicians navigate emerging payment models that are being promoted as alternatives to fee-for-service, such as capitation, shared savings and bundled payments. The manual is available online (link).

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