Report On Hearing Regarding Governor Patrick’s Healthcare Cost Control Bill

• Hearing was the first of several
• Bill would change healthcare payments and organizations
• Everyone “pro” cost control, but some details at issue
• Providers concerned with over-regulation, lack of flexibility
• Others want public-option, public wellness provisions
• Committee concerned with cost estimates and funding

 

 

The joint committee on healthcare finance held its first hearing regarding Governor Patrick’s bill entitled, “An act improving the quality of health care and controlling costs by reforming health systems and payments,”[1] on May 16.  This was the first of several such hearings to be held in various locations throughout the Commonwealth.  I was able to attend the first four hours of the approximately seven-hour hearing.

 

The bill attempts to control costs by directing that all insurance payments will transition from the current “fee-for-service” model to a global payment scheme.  In a global payment scheme, healthcare providers are paid lump sums to treat patients rather than being paid separately for each test, procedure, office visit, etc.  The bill calls for the creation of “Accountable Care Organizations” (ACOs), which are associations of providers that receive some benefit for restraining healthcare costs.  The bill also calls for various changes to state agencies’ powers, including giving the Insurance commissioner the ability to review insurer-provider contracts in addition to reviewing premium rates themselves.  There are also minor changes to malpractice law in the bill, although the effect of these on overall costs is expected to be minimal.

 

In addition to the Governor, Attorney General Coakley and several secretaries, there were 49 individuals or groups who spoke.  These ranged from providers (Massachusetts Hospital Association, Atrius Health, etc. ) to insurers (Massachusetts Association of Health Plans, Blue Cross Blue Shield, etc.) to advocacy groups (The Greater Boston Interfaith Organization, Healthcare for All) to individuals.  This hearing was a bit unusual in that no one actually said they were opposed to the bill.  Not too surprisingly, no one is willing to be seen as against controlling healthcare costs.  The devil, however, is in the details.

 

The speakers had several concerns.  First, they seem concerned with the bills possible conflating of ACOs and global payments.  The push for ACOs raises serious anti-trust issues, which need to be dealt with.  ACOs, as defined by the Federal Government[2], tend to be larger and expensive to create.  This puts a strain on smaller physicians groups.  Global payments, on the other hand, can at least in principle be made to any size practice.  Also, a move toward ACOs would limit competition, which is not desirable.

 

Providers also raised concerns about the “overly-regulatory” slant of the bill, calling it “government and cabinet centered.” They expressed a strong desire for flexibility, which the bill allows little of.  Hospitals in particular were also concerned about inadequate reimbursement rates.  If they are under-reimbursed for publically insured patients (Medicaid and Medicare) then the cost shifts to privately insured patients, but if  there are limits on what private insurance may pay, the hospital has nowhere to recoup its costs nor to raise money for capital improvements.

 

Other speakers addressed the possibility of adding a “public option” to the plan, of public health and wellness campaigns as a way to control costs, issues of assessing the solvency of ACOS, how they would be licensed and whether any fee-for-service would be allowable (the implication of the bill as written is no).  Insurers also pointed out that they have already begun the transition toward global payments and that legislation requiring it might not in fact be necessary.

 

The committee also raised concerns. In particular, they are concerned with the differences between ACOs and the HMOs of the 1990’s.  Apparently, ACOs are “quality and access driven,” whereas HMOs were primarily cost-driven.   Also, there was concern over getting an accurate cost-estimate for the bill, since some provisions will require spending, such as funds for healthcare IT and innovation incentives.  The committee  was also concerned over what will happen with federal spending in this area and how that will affect Massachusetts’ ability to fund the bill.

 

All in all, the hearing was very interesting.  After the other hearings are held around the Commonwealth, some bill will certainly make it to the floor.  Exactly what that bill will be and which of the concerns raised at the hearing will be addressed remains to be seen.