Commission Releases Recommendations on Health Care Payment Reform

The Special Commission on Payment Reform held their final meeting yesterday to release and unanimously approve recommendations on how to change the health care payment system in Massachusetts. The Commission is recommending Massachusetts transition from a predominately Fee-For-Service (FFS) payment system to a patient-centered global payment system within five years.

(You can see HCFA’s payment reform principles here)

The Commission recommends that government, payers and providers be required to share responsibility for providing infrastructure, legal and technical support to providers in making this transition. The recommendations as well as materials from all previous meetings can be found on the Commission’s website here. Click to read payment reform press coverage from the Globe, the Herald and the New York Times.

The Commission members celebrated reaching consensus on a vision for payment reform but were realistic about the hard decisions, significant issues and many details to be addressed in the implementation of payment reform. According to Administration and Finance Secretary and Payment Reform Commission co-chair Leslie Kirwan the state is taking a bold step towards better quality and more sustainable health care. Secretary Kirwan congratulated Massachusetts for leading the nation in expanding access to coverage through health reform and now addressing health care costs with payment reform. Secretary Kirwan emphasized that the Commission’s recommendations are the first step in a multi-step process. DHCFP Commissioner and Payment Reform Commission co-chair Sarah Iselin reminded the Commission of the problems with the current FFS system which incentivizes more care and more costly services but lacks incentives to coordinate care, achieve good outcomes and deliver preventive services.

Next consultant Michael Bailit outlined the Commission’s recommendations for payment reform. Key components of the recommendations include:

1. Participation by private and public payers
2. Development of Accountable Care Organizations (ACOs)
3. Patient-centered care and adoption of medical homes
4. Patient choice
5. Common core performance measures and cost and quality transparency
6. Appropriately balanced sharing of financial risk between ACOs and carriers
7. Strong and consistent risk-adjustment

In addition the Commission is recommending an “oversight entity” to guide the implementation process. The new entity will define the parameters for global payment methodology but the market will determine the payment amounts. Bailit added that the oversight entity will seek stakeholder input from providers, health plans, government, employers and consumers.

The lack of definition of who or what this entity would be appears to be one of the areas the Commission deferred to later decision makers. We think it’s essential that consumers – the patients that have the most at stake – be at the table in the implementation process.

Acknowledging that there are many issues that need to be addressed, the Commission also listed complementary strategies and issues:

• Health plan design and coverage policy
• Consumer engagement
• Review of existing statutory framework
• Administrative simplification
• Medical malpractice reform
• Primary care workforce development
• End-of-life care
• Payment for provider teaching and standby capacity

Bailit highlighted five important distinctions of global payments from prior payment models such as capitation: a careful transition period with extensive provider supports; robust monitoring of activities to guard against unintended consequences; links to performance measures with emphasis on patient-centered care; improved risk adjustment models; and health information technology infrastructure support.

Then each of the ten members of the Payment Reform Commission had the opportunity to provide comments on the Commission’s process and recommendations, express concerns and offer advice for moving payment reform forward.

Senator Moore stated that many issues must be resolved such as how to fund payment reform. Senator Moore commented that the oversight entity needs to involve consumers and that national health reform could have a significant impact on MA payment reform. Senator Moore also raised concerns about addressing payment reform for long-term care and providing adequate payments for dental care. Senator Moore noted that the Legislature will also look at bills that can complement the recommendations of the Commission’s Report. Rep. Stanley added that she is proud of the Commission’s process. .  Rep. Stanley said that she is eager to make progress on these issues and joked that she is looking forward to the next ‘100 meetings’ on payment reform.

Dr. Alice Coombs, President-Elect of the Mass. Medical Society praised the Commission’s process and expressed her appreciation that the Commission gathered comprehensive feedback from providers and addressed their concerns. She reiterated Bailet’s earlier comments about the complementary strategies and the need for everyone to sacrifice for this transition to work.  Dolores Mitchell, Executive Director of the Group Insurance Commission, contrasted the perception of physicians as gatekeepers in the early days of managed care to the current perception of physicians as care coordinators under the new global payment system. Mitchell stated that the payment reform process needs continued support from all stakeholders to move forward.

Mass. Hospital Association President and CEO Lynn Nicholas reported that MHA supports the Commission’s recommendations. Nicholas stated that transparency, monitoring and modifications will be needed for payment reform’s success; significant issues also need to be addressed. Nicholas raised specific concerns with risk reserves in ACO’s and developing new methods for comprehensive and accurate risk adjustment methods, consumer and employer engagement and education, aligning insurance benefit designs with payment reform goals, the crucial role of the complementary strategies and concerns with funding the upfront cost of implementation. Nicholas urged the Commission to address these concerns in a timely fashion.  Neighborhood Health Plan President and CEO Deborah Enos commended the Commission for a well-organized process but also raised concerns that echoed issues from the hospital community. Enos discussed the need for flexibility within ACO’s, the importance of strengthening primary care, the role of medical homes and the need for investments in system to be shared by all parties.

Nancy Kane of the Harvard School of Public Health declared that she is in awe of the Commission’s report, especially the speed with which it was produced. Kane cautioned that federal subsidies will diminish so the need to control costs will increase. Kane hopes that the political will needed to sustain payment reform continues. Kane reminded the Commission that the United States is decades and even centuries behind many other countries with sustainable models of providing universal care with the sole goal of ensuring the health and productivity of their population. Kane urged the Commission to keep this goal in mind.  Andrew Dreyfus of Blue Cross Blue Shield of Massachusetts remarked that this is the first time that a Commission has made recommendations to fundamentally change the payment system and put physicians and patients at the center. Dreyfus, echoing earlier comments said that we cannot wait to change out payment system and that we need to move as swiftly as we can.

Secretary Kirwan thanked all Commission members and drew parallels from health reform’s framework of laying out goals and delegating details of implementation to an entity to the Commission’s recommended method of achieving payment reform. Secretary Kirwan reiterated that there is hard work ahead which will take commitment from everyone. Finally the Commission unanimously voted to approve the recommendations on the health care payment system.
-Catherine Hammons