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The Massachusetts Disconnect

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By Trudy Lieberman

Much of the national press took a pass last week on another important “study says” story out of Massachusetts. This is the second time in the last month where the national media missed a story with implications for the success of health reform. The latest report, which came from the Harvard School of Public Health and the Blue Cross Blue Shield of Massachusetts Foundation, showed that Massachusetts residents have different views about what’s causing the high prices of medical care than do the state and national policy wonks who are framing the solutions. What a surprise! We have repeatedly reported that the public is disconnected from what the pols are saying. Why should we be astonished they are not in step with the policy community?

The study, says lead researcher Dr. Robert Blendon, found that the public generally believes the cost problem stems from excessive charges by drug companies, insurers, and hospitals. Why not doctors? “Doctors have managed to present a picture in the state that they are not the reason why costs are rising. It speaks to the efficacy of the physicians’ campaign that their fees are not high enough,” Blendon told me. Indeed, doctors around the country have mounted local media campaigns to build their case that Medicare’s fee cuts will result in patients not getting care. Furthermore, the state media have focused mostly on the duel between hospitals and insurers, and that’s the message the public has received.

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The Super Committee: Bracing for More Medicare Cuts

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By MERRILL GOOZNER

I attended a depressing forum on cost-saving ideas for Medicare to present to the Congressional “Super Committee” charged with coming up with $1.2 trillion in budget savings by the end of the year. The tone was ominous, best summed up by Mark Smith, president of the California HealthCare Foundation. “In times of crisis, meat-axes are taken to whole sectors. If you don’t believe me, ask the people who used to work for Lehman Brothers,” he said.

Here’s the backdrop. President Obama in his mid-September budget reduction plan called for coming up with an additional $320 billion in Medicare savings over the next decade, which would be on top of the half trillion dollars in Medicare cost reductions contained in the Affordable Care Act. The president would get there largely by cutting payments to hospitals and other providers, although the president also called for higher premiums on wealthier seniors for physician and drug coverage.

Will the Super Committee look for the same $320 billion in cuts to Medicare? A good case can be made that Medicare’s contribution to the $1.2 trillion recommendation should be less than what the president sought. The Congressional Budget Office’s current baseline projections for federal spending over the next decade has Medicare spending $7.4 trillion out of a total of $44 trillion. That’s 16.8% of ALL federal spending (defense, Social Security, discretionary domestic programs, you name it). Apply that 16.8% to $1.2 trillion and you get about $202 billion as Medicare’s “fair share,” not the $320 billion proposed by the president.

Still, there were precious few ideas at this morning’s forum that would come up with even a fraction of that total. Robert Berenson of the Urban Institute and Steve Phurrough of the Agency for Healthcare Research and Quality, both former top-ranking officials at the Center for Medicare and Medicaid Services, outlined a series of steps CMS could take to get better pricing, stop paying for uncalled for operations, and only pay the price of the “least costly alternative” when medical interventions are comparable. But most of those changes would require Congressional approval (fat chance), and none of the examples given (they spent a lot of time talking about implantable cardio-defibrillators, where an estimated 25% to 30% of the million operations each year are in patients who don’t really need them) raised more than a billion dollars.

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The Massachusetts Numbers

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By Trudy Lieberman

Last week the Census Bureau released new numbers showing that 5.6 percent of the population in Massachusetts remained without health insurance coverage. That’s a 42 percent drop in the number of the state’s uninsured since the law took effect in 2006. A new study by the Cambridge Health Alliance, one of the state’s safety net providers, showed who was left out, putting a human face on those without insurance. The findings are illuminating given that the Bay State’s health law is the model for the national law, which takes full effect in 2014, and the Romney-Perry feud often flares up around the topic of health reform in the state.

The local press, primarily the Boston Globe and WBUR, covered the story; the national media whiffed on its implications for federal reform. If reform in Massachusetts cut the number of uninsured roughly in half, the same is likely to happen nationally, according to government data. The latest Census Bureau numbers show that nearly fifty million people have no health coverage; the Congressional Budget Office estimates about twenty-three million will be still be uninsured later in the decade. It was as if the national media has forgotten that Massachusetts is a harbinger of what will happen nationally. Or perhaps it’s easier for the national media to cover the he said/he said back and forth between Perry and Romney.

Writing on WBUR’s CommonHealth blog, Carey Goldberg started with an intriguing lead that showed she could sniff out a story—and showed why others should, too.

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Health Exchanges — A New Approach

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By BILL KRAMER

Why don’t we think about the Exchanges as a place for people to choose their health care, not just their health insurance?

As the Exchanges are being designed, we have a great opportunity to rethink how to help people choose a physician for their care, but our current mindset may get in the way of developing innovative approaches.

Under the Affordable Care Act, each state is expected to establish “health benefit exchanges” for individuals and small employers in order to “facilitate the purchase of qualified health plans.”  This is consistent with the concept of health insurance exchanges that has been developed over many decades.  In this model – used by many large employers as well as existing exchanges such as CBIA’s Health Connections and the Massachusetts Health Connector – the individual consumer or employee is given a choice among several health insurers.

The consumers are given information about the quality, patient satisfaction, and provider networks of each insurer to help them choose the one that best meets their needs, and healthy competition among the health insurers is expected to drive improved value for consumers.  The consumer makes this choice upon initial enrollment and annually thereafter.  Once the consumer has chosen an insurer, the second step is to choose a provider from the list of providers with which the insurers has contracts.  It is seen as a two-step process: (1) choose an insurer, and (2) choose a provider.Continue reading…

A Field of Dreams?

By VINCE KURAITIS

A study released last week by the Massachusetts Attorney Generalcontains surprising data to challenge two commonly held ACO (accountable care organization) ”Field of Dreams” assumptions. These assumptions relate to patient ”leakage” — out-of-network patient care and referrals.

1) Hospital administrators assume that tighter physician-hospital integration (e.g., through employment of physicians) will result in ”captive referrals” by physicians back to the mother-ship hospital.

2) Medicare administrators are assuming that Medicare Shared Savings ACOs will be able to coordinate patient care even without limitations on patients’ choice to go to providers outside of the ACO provider network.

Here’s the data that challenges the validity of BOTH of these assumptions:

Particularly for provider systems where hospitals and physicians are jointly at risk for the quality and cost of patients’ care, and have worked together to coordinate and improve care, we would expect to see physicians referring to their partner hospital more often. However, for the two physician-hospital provider systems in Massachusetts with the most years of experience managing referrals for HMO/POS patients under a global payment, one health insurer’s 2009 referral data shows that only 35-45% of adult inpatient care, as measured by revenue, goes to the partner hospital. That percentage can be even lower for providers with little to no experience managing where their patients receive specialist/hospital care, or under plan designs that do not require referrals. [emphasis added]

 

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Are We Ready for Global Payments?

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By DAVID HARLOW

Massachusetts Attorney General Martha Coakley released her office’s second annual report, An Examination of Health Care Cost Trends and Drivers (PDF; see also press release), which contains a wealth of critical data analysis — and also highlights how little we know about certain things — providing some important context for the discussion of the proposed Part III of Massachusetts health reform, a bill filed by Governor Patrick which would create all-payor ACOs and a system of global payments.

At this late date, few would argue against a move a way from fee-for-service reimbursement for health care, or adding quality metrics to the mix, and tying financial rewards to providers to their performance measured against these metrics.  (Consider the Massachusetts Blue Cross Blue Shield ACQ (alternative quality contract) experience.)  The AG’s report, however, highlights the wide disparities in payments to providers based on negotiating strength, rather than quality or cost of care (as noted in last year’s AG report; check out the 2009 special commission report, too).

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Twice Told Tale

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By PAUL LEVY

Back in 2008, Charlie Baker, then CEO of Harvard Pilgrim Health Care, and I, then head of a hospital, claimed that the market power displayed by the dominant provider system in the state and supported by the state’s largest insurer resulted in a large disparity in health care payments. We argued that this disparity contributed to unnecessarily high health care costs in the state. We both did this publicly, willing to put our assertions to the test. The quotes in response to this in a Boston Globe story were notable, but they did little to undercut our premises.

About a year later, the Attorney General of the Commonwealth published an investigation of this situation, which had the effect of validating our assertions.

Then, the largest insurer in the state said that the solution to the problem was to move towards a capitated, or global, payment regime. This would control the cost trend.

Again, knowledgeable observers, like the Inspector General, raised concerns. What if the global payment regime also created disparities and locked in higher rates? He noted, “[M]oving to an ACO global payment system, if not done properly, also has the potential to inflate health care costs dramatically.”

I pointed out that, while a global payment plan might have certain theoretical advantages, without a transparent exposition of its effects, how could we know if it had been successful?Continue reading…

Connector Update

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By PAUL LEVY

This report of recent activity in Massachusetts may be of special interest to my out-of-state readers. The insurance exchange set up by the Legislature when the MA health care access bill was passed has gotten very good grades. The folks there have had many things to balance, and they have done it thoughtfully. This report was posted on April 22 by Glen Shor, the current Executive Director. He succeeded Jon Kingsdale last April.

April showered us with reasons to be optimistic about the state of health care reform in Massachusetts.

Faced with projected 11% membership growth in the Commonwealth Care program next year as people lose unemployment benefits – and no additional resources to cover that growth – we encouraged our Medicaid managed care organizations to deliver high-quality, cost-effective coverage for less. They came through for the taxpayers with savings of $80 million, meaning that our members will not have to face the prospect of benefit reductions or unaffordable co-payments.

There was also good news for small business owners looking for an easy way to find affordable health insurance for their employees. Starting in July, we are eliminating all up-front fees for purchasing coverage through the Health Connector and will be launching a wellness program and premium discounts for qualifying small businesses. Within a few months, we will also be expanding the choice of health insurance carriers available to small businesses through our easy-to-use, online shopping experience – and even adding an additional carrier for individual purchasers. Our unsubsidized Commonwealth Choice program has doubled in membership over the past year-and-a-half, and these upgrades should make it an even more appealing tool for comparing options and choosing coverage that best suits one’s needs.

And, of course, the fifth anniversary of Massachusetts health care reform was officially marked by Governor Patrick and others at the Dorchester House this month. While we are proud of the fact that 98.1 percent of our residents and 99.8 percent of our children have coverage, the event poignantly showcased that reform isn’t just about numbers. It’s about helping people. We’re succeeding on both fronts.

On the national scene, the Massachusetts experience continues to be closely examined as other states begin to develop their health insurance Exchanges. Partnering with MassHealth and the University of Massachusetts Medical School, we were successful in obtaining a $35.6 million three-year federal grant that will not only help us share our technological knowledge and practices with other New England states but also improve our web-based shopping experience for Massachusetts consumers and small businesses.

“Trust Us” Just Doesn’t Cut It

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By PAUL LEVY

I apologize in advance if some of you are tired of hearing about Massachusetts and its experience with different payment models for health insurance. I write about this, not only because it is interesting locally, but also because people around the US are watching to see how the experiments here might or might not be applicable to the rest of the country.

I have written before about the pro’s and con’s of capitated, or global, payments as an alternative to fee-for-service payments. There are arguments to be made in support of each. But the problem in this state is that the movement towards global payments has become a matter of religious dogma. The main practitioners of the system have not been willing to divulge the kind of information needed to evaluate it properly. That lack of transparency undermines the policy arguments that might be used to advocate for an expansion of this approach.

But, eventually, more and more of the story comes out, and it is less than pretty. A few weeks ago, I quoted a report by the state’s Inspector General in which he raises concerns about this issue. He noted, “[M]oving to an ACO global payment system, if not done properly, also has the potential to inflate health care costs dramatically.”

Now comes an article by Pippin Ross in Commonwealth Magazine, entitled “Piloting Global Payments.” It has some revelations that give credence to the concerns raised by the IG.

Ross quotes a Blue Cross Blue Shield official as saying:

Blue Cross padded first-year global payment budgets to entice hospitals and doctors to sign on…. [T]he current goal is not to actually reduce costs, but to cut in half the rate of growth in medical costs after five years.

[T]he outcomes after one year under global payment are where Blue Cross expected to be in three or four years. “The amount of money being spent hasn’t changed yet, but the outcomes are serious testimony to the fact that more—in tests and doctors and visits—isn’t always better,” she says. “We’re getting a lot more for our money than we expected.”

But, of course, we don’t really know, do we? We have no way to validate any of this. Sorry, but “trust us” just doesn’t cut it when it comes to this kind of significant change.Continue reading…

The Massachusetts Mistake

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By ROGER COLLIER

A year after the passage of health care reform, fewer than half of Americans support it, a similar percentage believe that it has already been found unconstitutional or soon will be, health care costs are continuing to rise far faster than the CPI, and the Republican Party has seized on the issue as a sure election winner.

The Obama administration and congressional Democrats, now thoroughly on the defensive, are clearly surprised at the public and political reaction. But should they be? This post—on the reliance on Massachusetts as a model—is the first of three that will look at some of the miscalculations—and sheer bad luck—that have helped to undermine reform. When Governor Mitt Romney signed Massachusetts’ reform bill into law in 2006, it was widely regarded as a bipartisan political triumph, and one that was supported by the public and by most of the state’s insurers and providers. Massachusetts would be the first state to require virtually all legal residents to have coverage (with tax penalties imposed on those not complying), while providing subsidies for lower-income individuals not eligible for government programs, as well as to implement a state-administered brokerage function (the Connector) to allow competitive selection of health plans. By the fall of 2008, as congressional efforts to design national health care reform moved into overdrive with the election of Barack Obama, the Massachusetts legislation was widely regarded as a success. Public reactions were generally positive, the numbers of uninsured had fallen, and there had been no dramatic increase in costs. It was scarcely surprising that the Massachusetts model emerged from the field of competing proposals as the favorite of most Democratic lawmakers.

Unfortunately, the elected officials in Washington DC failed to recognize that Massachusetts was an exceptional state in terms of health care. Even before the state’s reform bill was enacted, the percentage of uninsured was very low. It was also a socially very liberal state, far more likely than most to support reform efforts (in fact, Massachusetts had passed, but then revoked, a slightly different version of health care reform a dozen years earlier). And, of course, the economy was still in its boom period when the new law was passed. Massachusetts had other advantages that would not transfer to national reform. As a small state, with only a small percentage of the population likely to be directly affected by reform, implementation could be much faster—less than a year for most provisions of the state’s new law. Continue reading…

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