By Rachel Zimmerman
WBUR, May 4, 2012
When Massachusetts passed sweeping health insurance reform in 2006, a crucial piece was missing from the landmark legislation: how to control rising medical costs.
Today, state lawmakers unveiled an ambitious new proposal to do just that.
Here are some details of the House bill, officially the Health Care Quality Improvement and Cost Reduction Act of 2012, presented today by lawmakers. The state Senate is expected to introduce its own version of the plan next week.
1. Oversight: A new, quasi-governmental agency called the Division of Health Care Cost and Quality would oversee the transition to the new payment and delivery system with a board including consumer, government and industry representatives.
2. Cost-Cutting: To curb the increase in medical spending, the plan establishes a cap for health-care spending linked to the local economy, the Gross State Product, minus one-half a percent (years 2016 through 2026, then plus 1 percent).
3. Leveling The Field: The state could impose a 10 percent “luxury tax” on pricey hospitals that charge more than 20 percent of the state median price for a given service without being able to justify that higher price. (Two earlier reports by Attorney General Martha Coakley found that certain hospitals exploited their market clout and charged higher prices without offering better quality care.) Hospitals would pay this penalty into a “distressed hospital” fund for institutions that serve a high proportion of poor and vulnerable patients.
4. Accountable Care Organizations would take on greater prominence, though the bill stresses that joining an ACO would be voluntary for patients and providers. The bill defines the size of an ACO as bigger than 15,000 people and no larger than 400,000. Patients would have the right to appeal decisions made by their ACO doctors, and have the right to a second opinion.
5. Shifting Payments: The state’s medical establishment would continue its shift toward global payments and away from fee-for-service systems. The measure would “transition the industry to adopt alternative payment methodologies such as global payments and bundled payments for acute and chronic conditions.”
6. Technology: Electronic health records would be required for all providers by 2017.
7. Greater transparency would be attained through detailed pricing available to consumers on the Web, as well as greater disclosure of out-of-pocket costs to patients up front.
8. Streamlining Care: The measure stresses greater coordination of care through primary care, and the establishment of “patient-centered medical homes” so that patients could have a single point of coordination for all types of care.
9. MedMal: New rules on medical malpractice would create a 180-day cooling off period while both side try to negotiate a settlement. Also, the measure would allow providers to freely offer an apology to a patient.
10. Tiering: Under a provision called “smart tiering” patients might pay more for more expensive services.
11. Upping The Rates: The bill would make several changes to Medicaid, including increasing MassHealth rates paid to providers.
12. Training: Funding for workforce training and development are included in the measure, and a provision would forgive loans to primary care doctors who practice in rural or underserved areas.
MIT economics professor Jonathan Gruber, an architect of the state’s 2006 health law and an advisor to President Barack Obama on the national Affordable Care Act calls the new House proposal “aggressive, broad and visionary.”
“This is an incredibly hard problem,” said Gruber, speaking on WBUR’s Radio Boston today. “What I like about this…is that it’s really taking the spaghetti approach to cost control; let’s throw a bunch of things against the wall and see what sticks. They’re doing a bunch of different things all of which might work.”
Health Care Quality Improvement and Cost Reduction Act of 2012:
By Don McCanne, MD
When the Massachusetts reform act was about to be enacted in 2006, MIT economist and Romney consultant Jonathan Gruber acknowledged that the issue of rising costs was not adequately addressed in the legislation, saying that the bill should be passed to get people covered and then the cost problem could be fixed later. So now, the cost fix, he says, is to throw spaghetti against the wall and see what sticks.
If you look at the spaghetti in the new bill being introduced, you will see that there is not much there to stick, as far as costs are concerned. The measures summarized above, and described in detail in the bill available at the link, really do very little to control costs. Several of them are simply reiterations of some of the measures in the Affordable Care Act.
Massachusetts desperately needs reinforcement of its primary care infrastructure (as does the entire nation), and this legislation takes strides in that direction. But most of the rest of the bill is a diversion from what Massachusetts really needs to do – replace their antiquated, fragmented financing system with an efficient and equitable single payer program. Once in place, it would be much easier and less costly to make the necessary improvements in the infrastructure of their health care delivery system.