Massachusetts, the first state to adopt near-universal healthcare coverage is out in front of healthcare reform once again. This time, the idea is to revamp the reimbursement system for physicians and hospitals, from the current fee-for service model to a global payments model (aka bundled payments). This is a key step toward adoption of the accountable care organization model, which is getting a lot of attention from both providers and payers, even though it is still loosely defined and largely untested.
State attorney general Martha Coakley's office released a report in January concluding that "the current system of health care payment is not always value-based and health care providers throughout the state are compensated at widely different rates for providing similar quality and complexity of services." The report urged "adopting payment reform measures that account for and do not exacerbate existing market dynamics and distortions."
Fast forward to the present, where Dr. Judy Ann Bigby, secretary of health and human services for Massachusetts heads a working group of state officials and healthcare executives tasked with doing just that. They met this month to begin drafting a payment reform plan.
Some private insurers in the Bay State are already trying out global payments for the care of chronic conditions such as diabetes and high blood pressure. Blue Cross Blue Shield of Massachusetts, which covers three million Mass. residents, has moved 32% of its HMO business to global payments. Tufts Health Plan says that 20% of its business, mostly through its Medicare Advantage program, is contracted on a global payments basis, according to the Boston Business Journal.
How much further these experiments go depends as much on politics as on economics.
The current push for payment reform is being driven by Governor Deval Patrick (D), who is up for re-election in November. His chief opponent, Republican Charlie Baker is no stranger to healthcare. Baker, former CEO of Harvard Pilgrim Health Care, names lack of transparency as the prime suspect in the high cost of medical care. He is viewed as favoring less government oversight than Patrick as a means toward controlling healthcare costs.
Regardless of who wins in November, controlling healthcare costs hinges on three things that must happen more or less simultaneously:
- Implementing some form of payment reform
- Defining guidelines for ACOs
- Negotiating the balance of power among government, providers, & payers
No doubt someone from the governor's office—and someone from the Baker campaign—will be dialed in to the OIG listening session next week on legal issues associated with ACOs.