Payment Reform Hearing Report

At its hearing last Thursday, the legislature’s Committee on Health Care Financing began its public look at payment reform, soliciting public input on the proposal to move to global payments (background here, and HCFA’s take here). The muggy, packed hearing brought out all the players (aka “stakeholders”) in the Massachusetts health policy arena, and their carefully couched positions revealed widely varying points of view.

As the State House News Service headline put it, “Tangled Web Of Interests Dot Long Road To Health Payment Reform.” Everyone agreed that figuring out how to do payment reform right is the most critical task facing Massachusetts. Controlling the growth in health care spending has enormous implications not only for health care, but the entire public and private economy of Massachusetts.

HCFA submitted a statement on behalf of a broad range of consumer organization (see it here) and executive director Amy Whitcomb Slemmer testified along with a consumer panel. Our full report is below the fold.

Leslie Kirwan, Secretary of Administration and Finance and the chair of the payment reform commission, began the testimony on her penultimate day in office by firmly supporting the recommendations of the commission: ending fee-for-service, gradual transition to global payments within five years, and proper design to support the key elements of change. Dr. JudyAnn Bigby, Secretary of Health and Human Services, further fleshed out the key elements of the reform: incorporation of primary and preventive care in the transition, expert oversight, support for providers, sharing of risk among providers and insurers, reliance on health information technologies, the alignment of health outcomes and incentives, engagement of all stakeholders in the process, emphasis on integrated systems of care, support for providers with disproportional share of low-income patients, transparency, and evidence-based medicine. These two cabinet officials decisively established the Patrick administration’s aggressive support for comprehensive payment reform. (read Secretary Kirwan’s testimony and Secretary Bigby’s testimony)

Next was Inspector General Greg Sullivan, who presented findings on the continued rise in insurance premiums over the past few years. After praising the commission on a bold approach, Sullivan raised questions on the structure of ACOs and the potential anti-competitive nature of the system. Sullivan pointed to the lack of mechanisms to hold down costs and prevent anti-competitive practices in the recommendations submitted by the commission. He expressed concern about the monopoly power of some hospitals which exert market dominance in their region. Sullivan proposed short-term cost control measures, including subjecting health insurance premiums to the approval of the Division of Insurance and attorney general.

Dolores Mitchell, executive director of the Group Insurance Commission, then spoke forcefully in favor of reform, as “our last best hope.” While advising caution in implementation, Mitchell emphasized the urgency of dealing with escalating health care costs, which cannot wait for a five-year transition period.

A number of physicians testified with concerns over how global payments would impact doctors. Mario Motta and Alice Coombs of the Massachusetts Medical Society both worried about the effect of the policy on providers who are already “on thin ice,” and urged a slower pace for implementation. Their testimony maintained that physicians have limited control over most health spending, and urged a focus on medical liability reform and primary care.

Specialists also raised their concerns. An emergency physician asked that his specialty be exempt from global payments. A radiologist and anesthesiologist each pointed out that the generalizations regarding payment do not apply to them as they do not have control over their volume of care. All urged adoption of electronic medical records as a prerequisite to payment reform.

Hospital representatives brought varying concerns to the hearing. Speaking for the Massachusetts Hospital Association, Executive Director Lynn Nicholas recommended that pilot and demonstration projects precede systemic changes. Given the precarious financial condition of some hospitals, Nicholas worries that it would be inappropriate to imposed significant risk on providers without thoughtful definition. MHA released a 21-page position paper at the hearing that summarizes their view of the payment reform issues.

Representatives from DSH (Disproportionate Share Hospital) hospitals worried about loss of needed revenue if their needs were not considered, including costs such as translation services. However, Dennis Keefe of Cambridge Health Alliance, a leading DSH institution, volunteered to be an early adopter of global payments. They also admonished the panel to not leave out adequate behavioral health payments. This was also echoed later by David Matteodo of the Massachusetts Association of Behavioral Health System.

Dr. Marylou Buyse represented the Massachusetts Association of Health Plans, alongside a panel of small business groups, including Lisa Carroll of the Small Business Service Bureau. Dr. Buyse said that costs were going up due to the rising costs of medical care. Insurers devote roughly 90% of their premiums to medical costs of their members. She and the panel also pushed for action now on their proposed legislation to place a provider rate cap on small business plans, while global payments were being phased in.

Groups already using global payments were generally supportive. Atrius Health, a large medical group, pushed for rapid implementation of global payments. Tufts Health Plan commented that they already had positive experience with global payments. This was echoed later by Blue Cross Blue Shield’s testimony, which offered examples under their current global payments of care management innovations that would not be possible under traditional fee-for-service payments. Support also came from Associated Industries of Massachusetts, the largest business group in the Commonwealth.

Health Care For All led the testimony of a consumer-oriented panel, in support of global payments but with a number of concerns of our own. HCFA ED Amy Whitcomb Slemmer emphasized the need to accompany payment reform with a renewed investment in public health, and the need to extend patient protections in place for managed care plans. Also testifying was Dr. Bob Master of Commonwealth Care Alliance, who said his plan’s success in providing high quality care with minimal price increases shows the value of care coordination which global payments promote. Members of HCFA’s Consumer Health Quality Council represented a distinct voice of patients. Alec Ziss testified on the need to focus on primary care and Myra Fournier spoke of the need to include patient engagement as part of payment reforms. Jessica Costantino of AARP rounded out our panel, emphasizing the need to include consumers in the decision-making process.

Other groups testifying included the Community Hospitals, Health Underwriters, 1199SEIU, Homecare Alliance, the Nurses Association, Nurse Practitioners, the League of Community Health Centers, and advanced psychiatric nurses. Each group added their particular concern to the mix.

By the end of four hours, the legislators heard a broad range of supportive views, each mixed with specific concerns and many with some trepidation.
-Brian Rosman and Igor Gorlach