CommunityMy FDL

Health Cost Control – Mass trying to drop fee for service for global budget/outcome incentives

Seems that few want to admit that the health cost controls in every other nation – state control of fees in fee for service – a design partially put into the Vermont design by the consulting actuary – are the only real way to control costs. So instead of doing state control of fees we are now going to jump into the the latest health insurance “its not our fault” idea – voluntary Global payments – or some other budget control idea, but we will do it by law because the experiment last year found few heath care providers jumping at the idea of killing fee for service.. The Mass State Senate is taking the law up the week of May 14th.

We are now being sold the change as “more coordinated care while reducing costs as we align payments with ‘value’ “. We have had a BC/BS’s “Alternative Quality Contract (AQC) for the last 3 years that clearly links financial incentives for providers with their quality improvement and ability to manage costs (a global budget is set to cover all health-care services for a set of patients – Groups can also earn a bonus, up to 10 percent, if they do well on 64 quality measures, including controlling blood pressure and delivering high-quality patient experiences – with 615,000 state residents covered) and Atrius Health and others, including Tufts Health Plan and Harvard Pilgrim Health Care, have are or about to move a percentage of their customers to “quality and cost” plans with about 1.2 million people covered by plans that “reward value over volume.” Mandatory change from fee for service to a budget approach is a good thing, but Mass will not fight the health care businesses and will instead have many new incentives for hospitals to accept “global payments,” or a flat fee for all the care delivered for a specific person or group of people.

Mass needs cost control so as to reduce health care to less than half the state budget, but this is not the way.. Under the new law instead of paying hospitals for each patient visit, if the voluntarily join the program, the program will give them a lump sum that “encourages doctors to keep patients well and prevent them from being sick”, as it rewards wellness programs, cuts down on administrative paperwork, expands patient access to information, addresses medical malpractice reform, and elevates the role of primary care doctors. In the proposed law We get more aggressive standards for evaluating system effectiveness, the creation of a division of health planning and health planning council, and greater transparency – but with few standards because we “need to allow for customization by users” despite the greater administrative cost and complexity/implementation issues such customization results in when trying to sync all programs (a chore of the new Coordinating Council) and we kill the old Health Care Quality and Cost Council because it did nothing that optimized system performance (are the folks at Obamacare noting this fact?). Again, Mass will make voluntary the ACOs and alternative provider payment rules, because the state is dominated by health care providers that don’t like these ideas – We don’t require global payments but include incentives that would encourage providers to use alternatives to fee-for-service.

For those accepting the change from fee for service a spending cap for health-care spending will be set that will be linked to the gross state product, minus some percentage – of course the “cap” is pretend given that the whole system is voluntary in many ways. Again the involuntary form of this type of action works around the world for health care budgets and has worked in MA for workers’ compensation where we froze rates in 1992, and over the past 20 years they have dropped 67 percent cumulatively. A tip of the hat to tight regulation.

But the “voluntary” with participation incentive approach was tried 20 years ago when we called the process a conversion to HMOs and capitation. It didn’t work then to control costs after the first two years of initial good results. Here we are the confusing reduced costs over the last 18 months from folks in a recession saving by not going to a doctor, with “more coordinated care while reducing costs” under the test system. The market does not work in health care, so we must regulate costs either directly or through the insurance system, keeping it “single payer simple” so doctors do not go nuts administering their offices. Simple IT solutions like making medical records available across the whole system, while a good idea, will not control costs. Rather than this voluntary system we need an involuntary system that addresses physician and hospital price disparities that are not related to the quality or complexity of the services being provided – say as in the Maryland Review Board that sets the amount paid by third part payers – but MA is not about to copy MD – we do our own thing. Does anyone really believe that a new payment systems and consumer transparency can restrain cost increases naturally?

So, it appears Massachusetts will get a form of voluntary budgeting/global payments for some providers, plus some medical liability reform via adoption of Michigan’s rule for a 182-day waiting period upon filing a claim notice, “which allows time to do a root-cause analysis on why an error occurred.”

In February, the AMA issued a manual to help physicians navigate emerging payment models that are being promoted as alternatives to fee-for-service, such as capitation, shared savings and bundled payments. The manual is available online ( Maybe cost control – real involuntary cost control – is coming to health care. I really hope so, but it will have to be a mandatory change, not like the law being discussed in Mass..

Previous post

Late Night FDL: A Tribute to Activist Mothers

Next post

Late, Late Night FDL: She's a Lady