reform 2011


Key Mass. Player Reveals Health Reform Thinking

Read a related news report by WBUR’s Martha Bebinger here.

• “Everybody needs to have a primary care provider or ‘medical home.'”
• “It should be possible to cut the growth rate of our medical spending in half within about three years.”
• “Without good information on costs and quality, patients can’t make good choices.”

If I were drawing a diagram of what’s inside the “health reform” area of Rep. Steve Walsh’s brain, it would depict a welter of circles with phrases like those inside them. That’s the impression I came away with after a public forum earlier this week.

Steve, a Lynn Democrat, is the House chair of the Joint Committee on Health Care Financing in the Massachusetts legislature. As such, he took the health reform hand-off from Gov. Deval Patrick this spring — that is to say, when the governor filed his bill aimed at containing health care costs. Steve was charged by Speaker Bob DeLeo to travel around the state on a listening tour about how the health care system should change. He’s since held 400-plus meetings (Not a typo: 400) with all interested parties, and he’s now working to pull together what he heard into a set of principles to guide reform.

‘When you move around one-third of $70 billion, there are winners and there are losers.’

Earlier this week, he presented his current thinking, distilled down into seven main points, to a small audience at Harvard’s Rappaport Institute for Greater Boston, where he is a fellow. Appearing with him was Harvard economist David Cutler, who gave him high marks. Steve stressed that he was reporting back about what he heard, not outlining legislation, but it strikes me as an important first glimpse into where a key legislative player’s head is at — at this point, at least. (Read WBUR’s Martha Bebinger on it here.)

Readers, reactions welcome. And if you read to the end, you’ll get to similar smoke signals coming from the Senate. I think I see the shape of something beginning to emerge from all that smoke — and it should actually coalesce into a bill late this fall or, perhaps more likely, in February.

Herewith, Steve Walsh’s seven points:

Payment reform: Continue reading

Prediction: MA Legislature Won’t Pass Health Reform Before Next Summer

Harvard professor and author John E. McDonough

I promise, this will be the last post from my recent conversation with John McDonough, Harvard School of Public Health professor and author of the new book, “Inside National Health Reform.” (With the 3-minute video and the top 10 ObamaCare list, you might think we’re aiming to do All McDonough All The Time.)

But his prediction about the coming course of Health Reform 2.0 in Massachusetts struck me as so savvy and grounded in historical experience that I just wanted to share it. Gov. Deval Patrick has been pushing for the legislature to move as soon as possible on his proposal to change how health care is paid for. Predictions from legislative leaders on when that might actually happen have included this fall and this spring. John, who was involved in the landmark 2006 reform expanding health insurance coverage statewide, notes:

“I’ve observed — and this goes back to 1995, since the legislature made the profound procedural change of going to two-year sessions — that just about every major health care bill, every piece of legislation on health care reform — has reached the governor’s desk in June or July of the even-numbered year.” [The one exception, he noted, was the major 2006 reform, which passed in April, but that was because of pressure from a federal deadline.]

“It has to reach the point in time where the legislature has the sense of, ‘Uh oh, if we don’t do something, we will be judged as a general court to have failed to meet one of our responsibilities.’ But it really does take the deadline for the forces to come together and make something happen. We had reform in 2010, 2008, 2006, and when I was in the legislature, it was 1996.”

Tufts Medical Center CEO: Give Us A Uniform Rulebook, No More ‘Bags Of Cash’

Outgoing Tufts Medical Center CEO Ellen Zane

Last week at the state cost-trend hearings, outgoing Tufts Medical Center CEO Ellen Zane proposed a radical idea: a “common fee schedule across all health plans.” We asked her to expand on it, and she does so below, clearly and with some deliciously frank turns of phrase, such as: “There should be no more special deals outside of the base fee schedule, which I have always described as ‘bags of cash’ funneled through to hand-picked providers through various schemes.”

The hearings on providers, payers and costs last week were enlightening for what they showed about the attitudes of different participants in the market. Overall, I think providers showed they are willing to lead major changes in how they provide care and how they are paid for it.

I would like to see a similar willingness to change on the part of insurers, and in my testimony at the hearing I briefly touched on what I think some of those changes should be. I believe these changes could eliminate millions of dollars in administrative costs. If all insurers could agree to – or were required to – apply one set of rules to the way they pay providers, we would have millions more available for patient care or reducing premiums.

Let’s start by examining the premise that insurance companies always put forward: that only 10 percent of the health care dollar goes to administrative costs. That only looks at insurers’ administrative costs – it ignores the millions upon millions that providers pay to interpret the myriad insurance rules that determine how much we are paid for each service.

Imagine a sport in which players were expected to adapt to a totally different rulebook every time they played in a different stadium – and that over the course of a season they played in tens, if not hundreds, of different stadiums. On top of that, imagine the referees are entitled to change the rules in the middle of a game. That’s what it’s like for providers trying to interpret how to bill insurers. To keep up with all this takes football fields of billing folks (just to extend the sports analogy) at my hospital, and at every other hospital in the state.

So how do we create a more level playing field? First of all, I proposed the establishment of a base fee schedule for all of the many services provided by doctors and hospitals. Continue reading

Tufts Chief Ellen Zane: Start From A ‘Common Fee Schedule’ For Health Care

Outgoing Tufts Medical Center chief Ellen Zane proposed this intriguing idea yesterday for a potential fix to the huge variation in prices between hospitals, one of the drivers of ever-rising health costs:

“I fundamentally beieve a real fix in this market is to have a common fee schedule across all health plans. Not that we’re all rate- setting. We’re not talking about intense rate-setting. But that fee schedule should be moderated with inflators in private negotiations, not state-run negotiations, private negotiations.

So perhaps the hand of the state could come in and develop a foundation that’s transparent, that we all know the basis of, that isn’t different from health plan to health plan. And then in our private negotiations [we talk about reasons to raise prices from baseline] — whether it’s the fact hat we have a high Medicaid population or a high case mix or a teaching mission — all of which are legitimate variations in price.

So rather than talking about what’s fair and not fair, we ought to do it more scientifically, and we ought to do it more transparently, so that we have a common understanding that’s irrefutable and then we inflate it based on who we are, what our quality is, what our mission is and so forth. And there’s been a resistance to even thinking about that and I frankly don’t know why.”

Readers, why do you think? And how do you like this idea?

Cornucopia Of Reactions To AG’s Report On Health Care Costs

Attorney General Martha Coakley

Attorney General Martha Coakley’s new report on Massachusetts health care costs is not exactly water-cooler fodder, but we all do our best. The Boston Herald tweeted today, “Do you support Coakley’s efforts to drive down the cost of health care?”

It’s hard to imagine anybody saying, “No! I want health care costs to keep going up!” But the Herald story did reap the usual bounty of choleric comments like this one:

Sure, put me on a budget for health care….hmmmm install a stent? nope not this year, guess I’ll have to save up and not get sick for a couple of years… or DIE first!

Asked about the report today, Gov. Deval Patrick emphasized the common ground it occupies with his own plans for health care reform. He too, he said, has been concerned that the next phase of reform not set into stone the price differences among different health care providers.

Blue Cross Blue Shield of Massachusetts issued a statement both commending the attorney general and defending its global payment plan, which the report found had failed to save money.

In its findings, the report states that a “shift of payment methodology by itself is not the panacea to controlling costs.” We agree. Also important are the adoption of new value-based benefit plans noted above along with a greater focus on wellness and the chronically ill.

However, we are enthusiastic about our new payment model, the Alternative Quality Contract (AQC) which now includes more than a third of our provider network and slightly less than half of our in-state HMO membership. The early results show the AQC is achieving our twin goals to both improve the quality of patient care and reduce the historical rate of increase in health care costs. 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

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.

Big California Fight Over Health Insurance Hike Approval

The state house in Sacramento

They sure do sound familiar, the arguments flaring these days 3,000 miles away in the California legislature. A Los Angeles Times column reports here:

Here’s how badly the state’s health insurance companies want to kill a bill in the Legislature giving state officials the power to put the kibosh on excessive premium increases.

Not content to fight the measure on the merits, they’ve mustered bogus facts and figures against it and tried to convince the public that a measure allowing regulators to limit premium increases will actually cost people money.

The column links to the health insurers’ arguments against the bill and then challenges them.

Massachusetts already requires prior state approval for individual and small-group rates — one among 34 states to do so — but as the state debates the next phase of health care reform, the desirable extent of government regulation remains a hot issue.

As the L.A. Times column sees it, regulation is good for the public, but lawmakers may not pass it because so many are so beholden to campaign contributions from the health insurance industry. Readers, thoughts?

Appropriations committee members, who gave thumbs up to the bill last week,

seemed worried that an elected insurance commissioner might use his powers under prior approval to benefit the public interest, as opposed to placing what’s best for the health insurance industry front and center.

It’s small wonder. From 2007 through this year, for example, Anthem Blue Cross has made campaign contributions totaling nearly $5 million to candidates, parties and political action committees, according to state records. Blue Shield has contributed more than $2.3 million in the same period, and Johnston’s organization has forked over more than $500,000.”

NY Times Calls Mass. Health Reform Success; A Sampling Of Readers’ Responses

Some staffers of The New York Times have been known to comfort themselves, when they’re late on a story, by saying something like, “Well, something hasn’t really happened until it’s been in The Times.”

So though the landmark Massachusetts health reform of 2006 has been garnering positive reviews from many (though not all) quarters for years, it does seem worth noting that the Times has officially proclaimed it a success, in this May 20 masthead editorial. It wrote:

Mitt Romney’s defense of the Massachusetts health care reforms was politically self-serving. It was also true.

Despite all of the bashing by conservative commentators and politicians — and the predictions of doom for national health care reform — the program he signed into law as governor has been a success. The real lesson from Massachusetts is that health care reform can work, and the national law should work as well or even better.

The editorial points out that 98 percent of residents are insured; the cost of the reform is about 1 percent of the state budget; more employers are offering insurance; local public opinion is generally positive. On the less positive side, business premiums continue to rise; ER use and waits for primary care remain high; and costs are still rising.

The editorial concludes:

The national reform law has provisions designed to reduce spending in Medicare and Medicaid and, through force of example, the rest of the health care system. Those efforts will barely get started by the time Massachusetts hopes to have transformed its entire system. Washington and other states will need to keep a close watch

We can start by watching the comments after this article. There were some of the usual polemics, but also some interesting experiences shared by readers, on both sides. For example: Continue reading

First Hearing On MA Health Reform, 2011: Where Does Everybody Stand?

Okay. I’ve posted Attorney General Martha Coakley here. I’ve posted Gov. Deval Patrick here. Now for everybody else. Today’s State House hearing was the season opener, time for the players in Massachusetts health reform — from huge hospital systems to individual consumers — to stake out their opening positions. How do they see Gov. Patrick’s proposal for the next, cost-cutting phase of health care reform? What are their concerns?

Here’s my overarching impression: General support for the idea of shifting the system toward payment for “global” budgets for “whole-patient” care, away from fragmented payments for each service. And broad concern that if done wrong, it could hurt.

Full testimony is available from several major organizations. The Massachusetts Medical Society is here. The Pioneer Institute is here. Health Care For All is here. I’ll post more as I get them, and you’re deeply welcome to share links or thoughts in the Comments section below.

Meanwhile, here are some noteworthy moments from the first three hours or so of today’s hearing:

Dr. JudyAnn Bigby, secretary of health and human services, and the governor’s point person on the bill:

What’s wrong with our current health care system is that it “doesn’t consistently pay for the right thing.” That is, “The problem with the way we pay for care is that it’s based on insurance billing codes and not based on what patients need and what physicians are trained to do.”

Many payers and providers are already moving away from fee-for-service and forming more integrated care organizations, but it is a change that we must all approach with great care. It is because this transition requires thoughtful planning and should not take place in a haphazard manner that the governor’s bill is so necessary.

‘Our only beef, quite frankly, is that this is a very government-centric, Cabinet-centric approach’ — Lynn Nicholas, Massachusetts Hospital Association

Secretary of housing and economic development Gregory Bialecki:
“The health care cost crisis in Massachusetts is the primary roadblock to our continuing recovery.”

The governor’s bill “sends the message to businesses that their health care costs, which they see right now as being out of control, are going to become more consistent and more predictable and frankly more rational

Bialecki said he sees no evidence that the governor’s bill would hurt employment in the health care industry.

Not a return to the bad old days of HMOs

Rep. Steven Walsh, house chair of the committee, expressed concerns that the reform would be a throwback to the bad old days of HMOs, and people might find themselves unable to get care at top specialty hospitals such as Children’s Hospital and Dana Farber Cancer Institute. JudyAnn Bigby’s response: Continue reading