payment reform


In A New Era Of Payment Reform, Early Lessons From Mass.

In an extensive, thoughtful new analysis in the journal Health Affairs, a troika of policy experts — Robert E. Mechanic, Stuart H. Altman and John E. McDonough — review Massachusetts’ new cost-containment law, including how we got there and the challenges that remain. For wonks, much of the material will be familiar, but it’s great to see it all laid out in one place, with sweeping, for-the-record breadth.

(Ken Lund/flickr)

(For the truly hardcore, the entire September issue of Health Affairs is devoted to payment reform. One highlight: Martha Bebinger’s excellent account entitled, “Personal Responsibility: How Mitt Romney Embraced The Individual Mandate In Massachusetts Health Reform.”)

The lasting sense you get from this historical picture of health reform in the state is that while Mass. remains a national model when it comes to providing access to care and big thinking on policy, the delicate balance of upholding quality while scaling back cost is still being figured out. The authors conclude:

There are many uncertainties about Massachusetts’ efforts to slow health spending growth and the consequences if these efforts succeed or fail. For example, the potential impact on the state’s teaching and research institutions, which are more expensive than their community counterparts, is unclear. These institutions attract substantial federal and private medical research funding, provide high-quality care, and contribute to local economies through direct employment and related activity in the life sciences. Compelling them to direct their innovation and creativity toward the production of more efficient delivery models, and the elimination of waste should yield positive benefits. However, starving them into decline would be a severe loss for the state. Continue reading

And The Winner Of The CommonHealth Cost Bill Pool Is…

Brian Rosman, of Health Care For All, declared himself the winner of our pool — Will Mass. Reform Bill Go Down To The Wire? — in a comment this morning. (Rosman predicted the bill would be enacted at 9:30 last night, and he was indeed closest to the mark.) He writes:

Based on the State House News Service transcript of the Senate session last night, the cost bill was enacted sometime between 8:27 pm and 8:47 pm. It seems all of us were more pessimistic about how late it would go. The Senate adjourned last night at 12:12 am.

I look forward to proudly displaying the “nice piece of WBUR paraphernalia.”

Brian Rosman
Health Care For All

Brian, our people will contact your people, and get you that paraphernalia soon.

In the meantime, let’s keep watch over whether the bill truly fulfills it’s very big promises…

Landmark Health Care Cost-Cutting Plan Sent To Governor, Set To Become Law

This just in: a joint House-Senate press release on the passage of a sweeping, first-in-the-nation health care payment reform plan, now on it’s way to the governor’s desk:

BOSTON – The Legislature today completed work on a framework of nation-leading health care reforms, sending to the Governor a comprehensive, landmark cost-control bill estimated to save the Commonwealth $200 billion over the next 15 years while improving the quality of care, increasing patient access, and strengthening the transparency and accountability of the state’s entire health care system.

The bill comes at a crucial time as health spending is projected to double from 2009 to 2020, outpacing both inflation and growth in the overall economy, while Massachusetts residents and businesses continue to struggle with increasing premiums and other health care costs. Continue reading

Ambitious Health Cost Control Bill Expected To Win Approval Today


Massachusetts would be the first state in the country to set health care spending goals if a bill released last night becomes law. The legislature is expected to approve health care control legislation today, the final day for formal business in this legislative session.

WBUR’s Martha Bebinger reports:

For years, we’ve complained about health care rising much faster than most other things we spend money on. That complaint may become a thing of the past in Massachusetts. The bill before the House and Senate today aims to link health care costs increases to the potential growth of the state’s economy for five years. Then for the next five years health care spending would have to increase even more slowly than other spending. House Majority Leader Ron Mariano calls this a bold step.

“And one that is going to be a challenge for everyone in the system,” he says. “But it’s one that I think we’re moving towards anyway and I think this bill will help us get there.”

To get there, according to the bill, hospitals and doctors will have to cut their rate of growth about in half. Massachusetts Association of Health Plans president Lora Pellegrini agrees this would be an gutsy, ambitious step.

“No other state has tried to tie health care costs to the state’s economy. This is going to be really revolutionary and important and I’m sure the nation’s watching,” Pellegrini said. Continue reading

Reaction To Payment Reform Bill: ‘Important Step’ For Some, ‘Misses Mark’ For Others


The first wave of reaction to the state’s new, 350-page cost-cutting bill came swiftly, despite the late hour, and runs the gamut from congratulatory to harshly critical. Here’s a taste (with updates Tuesday morning):

From Lora Pellegrini, President and CEO, of the Massachusetts Association of Health Plans:

“We commend Governor Patrick, Senate President Murray, House Speaker DeLeo, Chairmen Moore and Walsh, and the other Conference Committee members for the high priority they have placed on payment reform this session and their leadership on this landmark legislation.

“The bill is an important step toward improving the cost and quality of health care in Massachusetts as it builds off of current efforts to transition away from the current fee for service system, which emphasizes volume over value, to a system that rewards high-quality and cost-effective health care.

“We are pleased that the bill includes measures to address the market power of certain providers and the prices they charge as highlighted by multiple reports and studies issued by the Attorney General and various state agencies over the last several years. Dealing with those issues is critical to the bill’s success by ensuring that price differences among providers are correlated to the quality, acuity and complexity of patient care and are not due to an institution’s or system’s size, brand recognition or geographic isolation.

“We look forward to continuing to work with the Governor and members of his Administration, the Attorney General, and the Legislature throughout the regulatory process to ensure that payment reform provides meaningful cost savings for Massachusetts employers and working families.”

And from Joshua Archambault, of the Pioneer Institute:

After years of debate over how to contain health care costs, the Massachusetts Legislature is poised to approve a bill that burdens the entire health care system with more bureaucracy and hundreds of millions in increased expenses. Continue reading

Conference Committee Named For Mass. Health Care Cost Bill

Images of Money/flickr

Breaking news for the hardcore only…

State House News Service reports that legislative teams from the House and Senate are heading to the negotiating table to devise a single plan aimed at cutting health care costs through a variety of payment and delivery reforms:

Uxbridge Democrat Sen. Richard Moore and Lynn Democrat Rep. Steven Walsh will lead the Senate and House negotiating teams on omnibus legislation aimed at controlling health care costs and improving the quality of patient care by deploying new payment methods and other transparency and innovation measures.

Moore and Walsh will be joined on the six-member conference committee by Sen. Anthony Petruccelli (D-East Boston), co-chair of the Financial Services Committee, House Majority Leader Ronald Mariano (D-Quincy), Senate Minority Leader Bruce Tarr (R-Gloucester) and Rep. Jay Barrows (R-Mansfield). The negotiators were named Thursday as House and Senate members each voted to stand by their own proposals.

Moore and Walsh co-chair the Legislature’s Health Care Financing Committee, a panel that failed to forge an agreement on health care cost containment legislation after reviewing a bill file by Gov. Deval Patrick for more than a year. The committee ultimately decided to send Patrick’s bill to the Senate. Both branches subsequently developed their own heavily amended proposals (H 4155 and S 2270).

Breaking: Mass. Senate Passes Historic Health Care Cost-Cutting Bill

5/18 Update: WBUR’s Martha Bebinger has a feature report on the bill’s passage.

Original post: Here’s the full, unedited press release:

Senate Approves First-In-Nation Payment Reform Bill

BOSTON – Crunching through 265 amendments during two full days of public debate, the Senate on Thursday capped a framework of nation-leading health care reforms with landmark cost-control legislation that will save the Commonwealth $150 billion in the next 15 years while improving the quality of care and increasing the transparency and accountability of the state’s entire health care system. The bill passed 35-2.

Health spending is projected to double from 2009 to 2020, outpacing both inflation and growth in the overall economy. Massachusetts residents, businesses, and state and local government continue to struggle with increasing premiums and other health care cost sharing.

“The most important goal of this legislation is to reduce the cost of health care while providing access and quality outcomes,” Senate President Therese Murray (D-Plymouth) said. “Massachusetts spends 15 percent more per person on health care than the rest of the nation and 40 percent of our state budget is spent on health care. This bill will reel in health care costs, without harming our number one industry or patient care, and remove a major roadblock to long-term job growth and essential investments in education and transportation.”

“The Senate today took bold action to address one of the most serious threats to our economic recovery and strength, and did so in a thoughtful and deliberate manner,” said Sen. Richard T. Moore (D-Uxbridge), lead sponsor of the bill. “This proposal will result in billions of dollars in savings for consumers and small businesses across the Commonwealth, and it will ensure that patients receive the highest quality of care which they expect and deserve. The Senate recognizes the importance of our innovation economy, and sought to pursue reforms in a collaborative manner with those stakeholders responsible for implementation. This legislation completely alters the landscape of our deliver system, and does so with a desire to seek the greatest value at the most reasonable cost for the residents of the Commonwealth.” Continue reading

Nation Eyes Bay State As Cost-Cutting Health Reform Plan Emerges


Here’s more evidence that as Massachusetts goes, so goes the nation. The Washington Post reports on details of the soon-to-be-released, highly anticipated Health Reform 2.0 bill, aka, the cost-control plan. Put succinctly by Brian Rosman, of Health Care For All:

“There’s a bit of Bay State pride tied up in this,” said Brian Rosman, research director for the Boston-based advocacy group Health Care for All. “We were the first to figure out universal coverage. Now we want to be the first to crack health-care costs.”

The Post report touches on various aspect of the wide-ranging cost-cutting plan, expected to be out later this month:

The payment-reform law that Massachusetts will soon debate could create new incentives for doctors, hospitals and providers to participate in a payment system that looks a lot like the Alternative Quality Contract.

In February 2011, Gov. Deval L. Patrick (D) introduced legislation that would have moved all Massachusetts health-care providers to value-based payments (arrangements like the Alternative Quality Contract) by June 2015. A new government entity, created by the bill, would facilitate that change, setting various benchmarks and timelines… Continue reading

Health Payment Reform Can Bring Big Savings For Employers, Report Finds

Projected impact of growth scenarios on total employer savings on employer-sponsored health insurance. From "Benefits of Slower Health Care Cost Growth for Massachusetts Employees and Employers" by Jonathan Gruber and Ian Perry. (Courtesy)

Projected impact of growth scenarios on total employer savings on employer-sponsored health insurance. From "Benefits of Slower Health Care Cost Growth for Massachusetts Employees and Employers" by Jonathan Gruber and Ian Perry. (Courtesy)

WBUR’s Martha Bebinger reports that under new health payment reform (read cost-containment) plans currently underway in the state legislature, employers could save between $8 and $35 billion over nine years, according to a new analysis by MIT economist Jonathan Gruber.

That translates into direct financial benefits for workers, writes Bebinger:

Gruber says there’s a direct trade off between health care costs and wages. When premiums go up, wages don’t rise as quickly.

“What we’re saying here, by that same logic, is if we can control health care costs workers get more,” Gruber said.

In what Gruber calls a modest proposal, health care costs would increase 5 percent per year, just one point less than the expected 6 percent increase. The savings for employers would be $8 billion over nine years.

Under a more aggressive approach, health care costs would still rise, but only 2 percent per year. Employers would save almost $35 billion or about $1,000 per worker, per year. Continue reading

10 Ways That Mass. Payment Reform Could Go Wrong

I had my introduction all ready. As the moderator of a panel held by the Massachusetts Health Data Consortium last week, I was going to introduce Paul Levy (“Not Running A Hospital“) and Charlie Baker (not running for governor, at least not at the moment) as bringing in with them a “fresh gust of skepticism” about the direction of Massachusetts payment reform.

I figured the Charlie and Paul Show would offer a sharp contrast to the first speaker, Dr. Robert Galvin, the CEO of Equity Healthcare and a nationally known thinker on how to improve health care. The conference’s program said he would “explain why the time is now for payment reform,” so I assumed he was enthusiastic about the palpable Massachusetts political momentum toward global payments.

Nope. Or at least, it’s not so simple. His nuanced presentation struck me as by no means a blanket endorsement of global payments for everyone, everywhere. In fact, there was a decidedly Cassandra-like tone to it. He warned about the dangers of a “one size fits all” mentality, and of letting health care institutions get “too big to fail.”

And in a mental exercise that perhaps all decision-makers should adopt, he imagined a “future history” in which we pretend we’re in 2022, analyzing the failure of Massachusetts payment reform. (This is known as an FMEA for Failure Modes and Effects Analysis.) So, looking back ten years hence, what might have gone wrong? His list, but re-ordered to put first the items I found most interesting:

1. We under-anticipated the resources needed to effect the changes (He spoke from bitter experience with the number of meetings needed to make organizational changes in health care. And watch out, he said: “To bring doctors and hospitals together, pay them globally and expect a miracle to happen, I think is magical thinking.”)

2. We created organizations with too much pricing power.

3. We didn’t find a solution to the “who loses” challenge. “One person’s costs are another person’s revenues; you have to solve that.”

4. The changes cost more than they saved.

Continue reading