payment reform


Moderating Payment Reform: Mark Your Calendars For April 12


Don’t miss this: a conference on payment reform at the Logan Airport Hilton with an ex-gubernatorial candidate and an ex-hospital CEO. It promises to be a rip-roarin’ time!

I’m not kidding. The discussion will be moderated by my fabulous blogging partner, Carey Goldberg, who has an innate gift for transforming wonky content to delicious fun. So it should be a blast. (And there’s free parking.)

Here are details from The Massachusetts Health Data Consortium:

The Massachusetts Health Data Consortium’s Spring Workshop is less than a month away. This year, the theme is Payment Reform: Achieving the Three-Part Aim?.

The movement toward reforming the payment system is accelerating rapidly, and Massachusetts is a national leader in changing from a fee-for-service to a value-based payment model. The Centers for Medicare and Medicaid Services has challenged the healthcare system to achieve the three-part aim: better care for individuals, better health for populations, and reduced expenditures for CMS program beneficiaries. This conference will address why payment reform is needed, and explore how to change the payment system while improving quality, reducing costs, and ensuring adequate access to care.

Our keynote speaker, Dr. Robert Galvin of Blackstone Consulting, will discuss why we should transform the payment system. Following the keynote address, Charlie Baker of General Catalyst Partners and Paul Levy, formerly of Beth Israel Deaconess Medical Center, will discuss if changing the payment system is what is needed. Their conversation will be moderated by Carey Goldberg of WBUR’s CommonHealth. In addition, we will have panel discussions on why cost control is critical and how to maintain quality and access in a new payment system.

You can view the agenda here. The event is on April 12, from 8:30-3:30 at the Hilton Boston Logan Airport.

Guest Post: Why American Medicine Needs A Moneyball Moment

By John Miner and Brad Stulberg
Students in the Masters in Health Services Administration program at the University of Michigan

John Miner

Brad Stulberg

With baseball season over and “Moneyball” exiting the box-office, we cannot help but wonder: When will American medicine have its Moneyball moment? The story of the Oakland A’s and their “do more with less” approach to baseball can serve as a model for American health care: Health care should start measuring and paying for value instead of simply paying for quantity.

Moneyball tells the fascinating story of how the Oakland A’s management team drastically departed from conventional wisdom in building a top baseball team. Rather than continue in the ways of an inefficient baseball marketplace — where value was neither appropriately measured nor paid for — the A’s developed a system that prioritized data-driven insights along with human judgment to construct their lineup.

While teams like the New York Yankees paid tens of millions for star players that “looked great” or had “beautiful swings,” the Oakland A’s fashioned a method to figure out what player attributes really drove outcomes (in this case, winning baseball games) and then paid players based on those attributes: value-based purchasing, if you will.

When compared to other developed countries, America is like the Yankees in terms of payroll — only without the 27 championships.

The A’s philosophy was in stark contrast to prevailing baseball culture. The franchise’s unconventional success rested upon a restricted budget (A’s ownership capped management spending at a hard amount), transformational leadership, and a change in mindsets and behaviors across the A’s clubhouse. The end result? Oakland, with a payroll two to three times smaller than top contenders, was able to compete with traditional powerhouses.

The analogy to health care is striking. Too often, health care dollars are disconnected from value; decisions are made based on precedent, anecdote, and preference rather than evidence; and new statistics and evidence-based measures are confronted with overwhelming disdain. (In fact, Billy Beane of the A’s has himself written about this parallel, in an op-ed piece with Newt Gingrich and John Kerry.) Continue reading

How Payment Reform Can Be Like Dieting In a Locked Room

I love this analogy. Actually, I love any analogy that can add juiciness to the eye-glazing dryness of health policy, but this one in particular, because the image of locking yourself in a room to avoid food temptation (or health-spending temptation) is so vivid.

Here’s the actual quote, from Dr. Timothy Ferris of Massachusetts General Hospital, a big experimenter on alternative models of care and payment. He’s speaking at the Center for Connected Health symposium now under way in Boston. At about one minute in to the above video, as he talks about how shifting health care payment to global budgets and Accountable Care Organizations is doable but hard, he says that “Maybe we should be trying harder.”

“If you go on a diet, there’s a whole different strategy of going on a diet between saying ‘I’m not going to eat more’ and locking yourself in a room with only a limited amount of food. That’s a fundamentally different way to diet, right? I think there’s a role for locking ourselves in rooms that we carefully think about and plan on, and saying, ‘We’re going to live on what’s in this room for the next three years,’ and use that as a mechanism.”

Wonkish readers, please take this analogy and run with it! My own initial thought is that as the rooms start getting locked, it’s a concern that some of them hold far better-stocked cupboards than others. I’d hate to live for three years on Ramen alone.

Watch the video a bit further to see the response from Dr. Jeff Goldsmith, a prominent skeptic of the ACO model.

New Chief At Beth Israel Deaconess: Global Payments No Panacea

New Beth Israel Deaconess chief Dr. Kevin Tabb

Dr. Kevin Tabb, chief medical officer of Stanford Hospital in California, will be the new president of Beth Israel Deaconess Medical Center, the hospital has just announced. WBUR’s Sacha Pfeiffer interviews the new chief on All Things Considered today, and here’s a brief excerpt on one of our favorite topics, the Massachusetts push toward health care payment reform.

[How do you see global payments as an approach for controlling the rise in health care costs?]

I think about Massachusetts as being five years ahead of the rest of the country. I think the things that are already happening here will happen elsewhere, they just haven’t happened yet. Specifically about global payments, that is one way to attack the issue of rising health care costs, although I don’t think it’s the only way. I think all of us are going to need to become more effective and global payments is one way of getting there, but it’s not going to be the panacea, to tell you the truth.

[Would you support it as one of the ways of getting there?]

I would, with the caveat that especially academic medical centers have a unique place in the health care environment, they serve unique populations, and we’re going to need to take that into account as we figure out how we’re going to change.

[How would you take that into account?]

Like all academic medical centers, we take care of very sick, very complex patients — and very sick, very complex patients don’t always lend themselves to simplistic plans. So I think we just need to make sure we take that into account as we look at global payments. That being said, as we look at global payments, all of us in academic medical centers are going to have to make some changes in how we think about health care. Specifically, that means we’ll have to think about taking care of patients across the continuum of care, and that means not just here in the hospital when they’re really sick.

From the Beth Israel Deaconess press release on Kevin Tabb’s appointment:

As the CMO at Stanford, Tabb had broad strategic and operational responsibilities, which included physician network strategy; clinical quality and patient safety initiatives; regulatory and medical staff affairs; and graduate and continuing medical education. He was previously chief quality and medical information officer at Stanford, where he oversaw primary care, outreach clinics and the Stanford Cancer Center. Prior to joining Stanford, Tabb led the Clinical Data Services division of GE Healthcare IT.

Tabb, who is 47, received his MD from Hebrew University-Hadassah Medical School in Jerusalem, Israel, as well as his undergraduate degree from Hebrew University. He completed his residency in internal medicine at Hadassah Hospital. Raised in Berkeley, CA, Tabb emigrated to Israel at the age of 18 and served in the Israel Defense Forces, the country’s military service.

Summing Up The Cost Trend Hearings

Acting Commissioner Seena Perumal Carrington (photo: Division of Health Care Finance and Policy)

We asked Seena Perumal Carrington, acting commissioner of the Division of Health Care Finance and Policy, to sum up this week’s cost trend hearings which concluded yesterday with no clear-cut solution (no one expected that in a week) but some consensus in key areas (like government intervention to deal with price disparities). Here, slightly condensed, is what Carrington sent over:

The state’s annual cost trends hearings are to discuss various perspectives on the drivers behind escalating health care costs, and to determine what can be done to mitigate cost growth through public policy and industry actions.

The 2011 hearings were intended to examine progress made to-date by existing public and private efforts and unearth actionable solutions within the framework of four topical categories:

–Variation of provider prices
–Alternate payment methodologies
–Health resource planning
–Integration and care coordination

Additionally, the 2011 hearings concluded with a discussion of the roles of government and the private market in reducing health care costs.

In the first panel, there was near universal agreement that the extent of price variation reflects an unhealthy imbalance in the health care marketplace that merits immediate government intervention. This conversation (especially around the specific type of intervention needed) will continue in the recently convened Special Commission on Provider Price Reform. Continue reading

Patrick At Health Cost Trend Hearing: 7 Points, New Subtleties

Rachel Zimmerman reports:

Gov. Deval Patrick, speaking today at the 2011 Massachusetts Health Care Cost Trends Public Hearing, pretty much stuck to his theme that the second phase of health reform is coming, like it or not, and without effective solutions for containing medical costs, no economic recovery will stick.

There were a few new subtleties in Patrick’s testimony, however. First, he didn’t mention the term “global payment” in his remarks. (He told reporters later that accountable care organizations and global payments were basically interchangeable concepts, so his not mentioning global payments was not significant.) Still, his non-mention comes less than a week after Attorney General Martha Coakley issued a report saying that so far, global payment agreements have not brought costs down and are not likely to do so any time soon.

Also, Patrick said that he wants to highlight the fact that the insurance commissioner should have “explicit” authority to deny premium increases if they are based on inequitable reimbursement rates to providers. He also reiterated that he wants a bill passed this fall.

Here, edited and condensed, are seven points the governor made:

1.The cost of health care is going up at an unsustainable rate. Fixing it is “an urgent challenge… failing to do so will threaten our economic recovery.”

2. We’ve already made progress: 99.8 percent of children in Massachusetts are insured and 98 percent of adults now have health insurance following the 2006 reform law. Patrick said that more private companies are offering insurance, and insurance can’t be pulled when a person gets sick. “It’s affordable,” he said. And “it stands as a value statement: health is a public good, everyone deserves access.”

3. There’s an emerging consensus on solutions on how to contain costs. “Whole-person care” works, and moving away from fragmented, fee-for-service care is imminent. Continue reading

Massachusetts Attorney General Drops Health Reform Bombshell

By Carey Goldberg and Rachel Zimmerman

“Our examination found that paying providers on a global basis has not resulted in lower total medical expenses.”

It’s just a short, no-frills sentence, but it amounts to a bombshell dropped on a central tenet of the Massachusetts governor’s plan for the next phase of health reform.

That finding anchors a report issued this morning by state Attorney General Martha Coakley. And it appears to contradict Gov. Deval Patrick’s argument that shifting to global payments is a key to “cracking the code” of ever-spiraling medical costs.

The attorney general also found that wide price disparities unrelated to the quality of care still persist from one Massachusetts hospital to another, largely dependent on the providers’ clout in the marketplace. And the report unearthed a counterintuitive trend: residents from the richest zip codes in the state are spending on average far more on health care than people living in poorer neighborhoods. Yet premiums vary little, so in effect, it appears that lower-income people are subsidizing the care of the wealthy.

Global payments are supposed to re-align doctors’ incentives and put a stop to the rise in costs. Under such a global system, instead of being paid for each specific treatment, health care providers are put on an overarching budget for every patient. At the end of a year, if they’re within the budget and meet quality standards, they can win bonuses; if not, they risk penalties. The Patrick administration and private insurers have been pushing doctors toward this model, saying it leads to better, thriftier practices.

But Martha Coakley says: “Our investigation shows that a move to global payments is not the panacea to controlling costs.” The attorney general’s report suggests that in fact, thus far, care has tended to end up costing more under global budgets rather than less. Continue reading

Cambridge Health Alliance Leader To Head RI Hospitals

WBUR’s Martha Bebinger reports:

The CEO of Cambridge Health Alliance, which includes Cambridge Hospital, is leaving.

Dennis Keefe will run a three-hospital network in Rhode Island anchored by Women and Infants Hospital. CHA’s board chair thanks Keefe for steering the Cambridge network through “extremely challenging time.” Keefe says it’s a good time for change for him personally and for Cambridge Health Alliance, one of the state’s largest safety net hospital systems.

From Dennis Keefe’s message to staff:

I did not go looking for this new opportunity and frankly hadn’t given a lot of thought to making any change. But the more the discussions progressed, the more it all began making sense. I will miss all of you but I leave knowing that the institution is in good hands and that it is on a course that I believe will make history as CHA becomes the centerpiece of health care payment reform and the initiatives to establish the patient-centered medical home and Accountable Care Organization.

I’d like to think that I left a stamp on this institution but in reality, CHA left more of an impression on me and I will carry its sense of pride and mission and commitment with me wherever I go.

Rising MA Health Costs: The ‘Market Distortion’ Factor

Following up on new state numbers on the drivers of health costs in Massachusetts, WBUR’s Martha Bebinger reports this morning:

A new state report out this morning is shedding some light on the vexing question: What exactly is driving up health care costs in Massachusetts?

The report says the answer depends, in part, on who is paying the bill. In government health plans — Medicare and Medicaid — rising costs in recent years were largely based on how much care patients received. In commercial health plans, high prices were the driving factor.  Massachusetts Association of Health Plans president Lora Pellegrini says the report proves the need to address prices at high-cost hospitals before the state worries about how to pay for health care.

“We absolutely need to fix these market distortions first, to lay a solid foundation for payment reform or else we’ll just be memorializing high payments in a new system,” she said.

The Incidental Economist also weighs in on a similar theme here; Kevin Outterson writes:

I predict some will claim this proves RomneyCare was mistaken. The report is best understood as additional evidence of provider market power in Massachusetts. We should be talking about how to address this market competition problem.

Why Romneycare Is No ‘Dead Hooker,’ Even With The Latest Doctor Wait Times

I was watching Bill Maher interview Gov. Deval Patrick the other night, and one of his questions made me shout with laughter. Why oh why, he asked, does former Gov. Mitt Romney act as if being linked to the Massachusetts health reform he helped put into place is such a political liability it’s like “being chained to a dead hooker?”

The “dead hooker issue” is particularly germane today for two reasons: Romney is scheduled to give a major speech today in Michigan about health care (See today’s sage report by WBUR’s Fred Thys on how the issue is playing in New Hampshire.) And the Massachusetts Medical Society has just put out its latest survey results on how long patients here must wait to see doctors. Opponents of Romneycare-style health reform are spinning the slight lengthening in wait times as further proof that the reform is bad here, and will be worse nationally.

But in The New Republic, senior editor Jonathan Cohn writes here in a piece titled “Defending Romneycare (because Romney won’t do it)” that he sees quite a different spin.

…The report tells a far more complicated story, one that may not have much (if anything) to do with health care reform. And since Romney himself isn’t making this case–I assume he just wishes the whole topic would go away–let me give it a shot.

While the long waits for physician services in Massachusetts seem real enough, the very same survey reveals that the long waits existed before Romney’s law took effect in January, 2007.

He shares some graphs of gastroenterology and internal medicine wait times, and says:

Reported wait times go up and down, year to year, which is precisely the sort of statistical noise you’d expect from a survey that relies on small samples size and the non-scientific testimony from physicians. Evidence of longer waiting times since the introduction of Romney’s plan seems thin, at best.

Elsewhere, it appears that primary care physicians (although not specialists) are becoming less likely to see new patients. And that’s certainly worrisome. But that decay was also underway before the Massachusetts reforms: It doesn’t appear to have accelerated starting in 2007.

His bottom line: Continue reading