Health Cost Panel: Complex Challenges For A Ref Who Can Only Blow Whistle

health cost commission

The new Mass. commission on containing health costs (Martha Bebinger)

As WBUR’s Martha Bebinger was on her way back from today’s inaugural meeting of the board of the new state Health Policy Commission — a key instrument of the state’s health-cost-containment law — she kindly fielded my interrogation: “So what struck you most?” Her reply, edited:

I’d say what stood out to me was that they recognized that the main focus of the law, the key element of the law, is setting a health-care cost-containment goal, but that it is going to be a pretty complex process, both to figure out what that goal should be and to determine the best way to reach it.

Board chair Stuart Altman said he feels like he’s a referee who can blow the whistle but not issue a penalty.

In the area of what that goal should be, what’s at issue isn’t just what the state economic growth is, but what it is over time. So it’s looking more at a trend than at a fixed number, and that’s a difficult concept for many people to grasp, both patients and providers.

We do know what the target is going to be for 2013, 3.6 percent. But this is really a question about the next four years after that, when it’s supposed to be right at the potential Gross State Product.

And then if you start to ask, ‘Okay, so what will it mean to get there?’ that’s when it really gets complicated. Because in the process of figuring out whether providers are keeping costs under control, the state is at the same time trying to overhaul the health care system with a focus on prevention.

So that might mean, for example, that — and this is an example that Health and Human Services secretary JudyAnn Bigby used — say you have a primary care practice that is doing a great job at keeping people out of the hospital, but their costs are rising at 5 or 6%. Do you say, ‘That’s fine because you’re saving us money,’ and on the other hand you tell specialists, ‘Your costs can’t grow at all, or maybe only by 2%’?

There also seems to be great misunderstanding out there about how insurers and providers are supposed to think about the goal. So we hear, for example, that some insurers are starting to tell providers, or providers are telling suppliers, ‘We can’t pay you more than 3.6%, that’s the cap,’ but in fact it’s not about everybody doing everything at the same level. It’s about holding overall spending at that level, but making adjustments within that so we get better care.

WBUR’s Martha Bebinger

And in fact, the board doesn’t have the authority to tell anybody what they can or can’t do, but they do have the authority to review what they’re doing and see if it fits the goal the state has set.

Board chair Stuart Altman said he feels like he’s a referee who can blow the whistle but not issue a penalty. They can regulate, but they can’t regulate. They can oversee and manage and maybe cajole, but they can’t actually say yes or no, although eventually they can say, ‘You have to have an improvement plan.’

One other pretty big area of concern is that the state is going to start registering and licensing all larger provider groups. There were a number of concerns raised today about doing that really carefully.

The Division of Insurance will have to certify that a provider is ready to take on risk in a new global payment contract, so that if they go down they have money to cover losses. Several people raised the point that in the nineties, providers didn’t really know how to do this, and so a lot of people got in over their heads and went under because there wasn’t really careful education or scrutiny of just how much risk people were ready to take on and if they understood that. So that’s something the Division of Insurance has to take on pretty soon, and offer some guidance. There’s a lot of trepidation about doing that carefully.

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  • David Immanuel Frenkel

    See for a recent forum held at MIT Broad includung the chairman of the AMA covering ways to save over a trillion dollars per year in costs. The forum was organized by the New England Healthcare Executive Network.

  • David Immanuel Frenkel

    Containment seems like a wholly inadequate goal. Americans spend almost 18 pct of GDP in their healthcare vs 9-10% in other advanced countries. We need systemic cost reduction to drive out waste, fraud and get in line with best practices. This should be our number one national priority. The goal, get healthcare costs down to 10 pct of GDP by 2022.

  • David Moskowitz

    Martha, why not tell people about the Harvard Business School conference you attended Wed and Thurs, where I gave you a perfect example of how stubbornly healthcare as an entire industry resists cost-containment? Remember, I told you that I published a paper showing how to PREVENT 90% OF DIALYSIS back in 2002, and absolutely nobody in healthcare including Medicare cares a whit about it?

    • Martha Bebinger

      David – the conference was off the record, for me. I think the same rules apply to you, although you can, of course, talk about your paper (which I will read and get back to you). Thanks for the nudge!