A new report by the Massachusetts Medicaid Policy Institute describes how MassHealth is well-positioned to lead the state’s transformation toward a system of global payments. Executive Director Anya Rader Wallack (also a member of the state Health Care Quality and Cost Council) explains:

There is a broad consensus that public and private payers need to better align provider payments to encourage delivery of effective, efficient and high-quality care. Among the many solutions being considered at both the federal and state levels is the use of global payments. Fee-for-service payments are the predominant model for paying health care providers in Massachusetts. Global payments have been recommended by both the Special Commission on Health System Payment and the Massachusetts Health Care Quality and Cost Council as a means of reigning in health care costs and improving care coordination.

Under global payments, providers would be paid a set amount to provide all care for a person for a defined contract period (e.g., a year or a month). With payments fixed, providers would have a disincentive to provide costly and unnecessary care. The underlying concept is that providers get a single global fee regardless of the resources a patient uses, though the payment is adjusted for some differences in patients’ health.

So, for example, under global payments doctors treating a woman who is overweight and has both diabetes and depression would receive a higher payment for that patient because she has two chronic conditions. But, because their payment is capped, they still would have an incentive to help the woman lose weight. They also would want to manage her diabetes and depression on an outpatient basis, avoiding costly complications of the diseases, including potential hospital stays. They might also include lower-cost providers such as physician assistants or nurse practitioners in the team caring for the woman.

All of these steps could reduce the total cost of care, leaving more money for either provider payments or investments in improved care. Read more…

A recent report revealed that individuals in Massachusetts are still heading to the emergency room for non-emergencies, even though that troubling practice was supposed to decrease with universal health care coverage.

Anya Rader Wallack, interim president of the Blue Cross Blue Shield of Massachusetts Foundation (one of the funders of the report) and Executive Director of the Massachusetts Medicaid Policy Institute, explains how a few simple changes in health care delivery can begin to fix this complex problem:

The persistent use of emergency departments (ED) for non-emergency conditions is rooted in complex factors at the patient, provider, and organizational levels. Yet some of the solutions are elegant in their simplicity: evening hours at health clinics, making better use of physician extenders, and basic patient education. This is yet another lesson from the Bay State’s experience with near-universal health insurance coverage.

A policy brief released last week by the Blue Cross Blue Shield of Massachusetts Foundation, the Commonwealth Fund, and the Robert Wood Johnson Foundation provides, for the first time, a robust, data-driven picture of who seeks emergency care in Massachusetts — and why. Those who visit their local EDs for treatment have trouble accessing care in other settings, and frequent users of EDs (those who visit them three or more times a year) are a sicker, more disabled, and more chronically ill population than other working-age adults in the state. This suggests some chronically ill individuals may be using the ED for primary care.

Forty-four percent of those surveyed had visited an emergency department for a non-emergency condition in the previous 12 months. Of those, 76 percent needed care after normal operating hours; 56 percent had been unable to book an appointment with a health care provider as quickly as they needed; 53 percent reported that it was simply more convenient to seek care in an emergency department; and 39 percent had been directed by their primary care physician to go to their nearest emergency department.

If the absence of insurance coverage was a factor in a patient’s decision to seek care in an ED for a non-emergency condition, we could expect to see such use of EDs decline in a state where nearly everyone has health insurance coverage. Yet that hasn’t happened in Massachusetts. Read more…

We are starting to see fractures in the national health reform coalition. Among the defectors are the nation’s governors, who weighed in on the plan last week during their annual summer meeting. It seems support for reform among this group is at best tepid. This is a shame. Health care reform, if done right, should appeal to most states’ top politicians. Meanwhile, backing from the nation’s governors is critical for the successful implementation of any reform plan that comes from Washington.

Under the right kind of national health care reform, states would have much to gain:

• Fiscal relief. Medicaid made up 21 percent of the average state budget in fiscal year 2008. This includes both state and federal funds, and the federal share has increased temporarily under the federal stimulus bill. Nonetheless, increasing medical care costs, particularly when combined with caseload increases due to an economic downturn, crowd out other priorities and force very difficult choices in state capitols in terms of coverage, eligibility, and provider payments. Health care reform could provide badly-needed relief for states by supplying federal funding for low-income subsidies, stemming the erosion of employer-sponsored insurance and any associated increase in Medicaid caseloads, and buffering states against economic downturns by increasing federal matching rates during recessions. Of importance for Massachusetts, it also could level the playing field between our employers and those in other states by imposing national requirements for employer coverage.

• Long-term care reform. Read more…

The one thing we can all agree on when it comes to controlling health care costs is that payment reform is essential. Beyond that, there’s not a lot of consensus – or knowledge – about how to do it.

The Special Commission on the Health Care Payment System, which has been charged by the legislature with examining alternatives to fee-for-service payment in the Massachusetts health care system, is pursuing bold reform. It seems willing, for example, to endorse budgeted payment mechanisms that fundamentally change the incentives in our health care system. Such changes, if implemented correctly, will permit health care providers to enhance revenue not by simply increasing the volume of services they provide, but by providing better care at a lower cost.

But payment reform alone will not eliminate our cost problem or allow us to slow spending while maintaining or improving quality of care. To do that, we need better information systems to support provider decision-making and tighter linkages between providers to coordinate care and reduce waste.

And that’s where the Health Care Quality and Cost Council’s (QCC) Roadmap to Cost Containment comes in. Read more…

In Massachusetts, just 32 percent of enrollees in MassHealth, the state’s Medicaid program, are elders and people with disabilities, yet these groups account for 63 percent of state Medicaid expenditures. The disproportionate share of costs is due, in part, to the expensive and labor-intensive long-term care needs required by many in both demographics. This includes assistance with Activities of Daily Living and Instrumental Activities of Daily Living. The former includes help with bathing, dressing, and getting in and out of bed, while the latter also includes help with preparing meals, paying bills, and managing medication.

State demographic trends show that both populations are going to grow rapidly over the next decade. The total number of individuals with disabilities between the ages of 16 and 64 is expected to increase by 12 percent between 2004 and 2015; subsets of this population, such as those under age 24, are expected to grow by more than 20 percent. Medicaid, in this state and nationally, is the primary payer of long-term support services and yet it covers far less than the nearly 20 percent of the state’s population that at any time could be in need of this assistance.

The amount of money spent on long-term care is considerable. A November, 2007 study by the AARP Public Policy Institute estimated that approximately 700,000 to 1 million Bay State residents provided approximately $8.8 billion Read more…

The Commonwealth is at a crossroads. In order to sustain the rising cost of health reform, we can pursue one of two strategies. The first would be “every payer for itself,” with Medicare, Medicaid, the Connector, and the private sector doing their bit to control spending for their chunk of the pie. The second would be the development of a more comprehensive and thoughtful approach that controls costs with an eye toward transforming our delivery system.

The latter, of course, is the strategy most likely to work over the long term. So the question is not what we should do. It’s whether we can bring to the table those who have the greatest ability to control health care costs, get them to set aside some of their self interest, and develop bold new approaches to solving the problem. The state has already shown that it can be a national leader in expanding health insurance coverage to the uninsured. In just two years, Massachusetts cut its rate of uninsured from approximately 13 percent to just three percent. Employer-sponsored health insurance is holding steady. And residents of the Commonwealth generally are happy with the effects of Chapter 58.

But we eased our way into this deal by putting more money in the system. Chapter 58 included Medicaid rate increases for providers, and Medicaid managed care plan rates have increased at about five percent annually in recent years. Payments to safety net providers continued as we moved gradually from a system of paying for the uninsured through the free care pool to an insurance-based mechanism. And for the second year of the Commonwealth Care program, the Connector negotiated a nine percent rate increase with MCOs.

The add-more-money strategy was not sustainable, particularly in the face of an economic downturn. Read more…

Much good has come from the 2006 Massachusetts health reform law, and there have been a number of calls of late to use the Massachusetts plan as a model for national reform. The praise is well-deserved. That said, if Massachusetts is used as a model for national reform, there is one element we want very clearly to change – the requirement that coverage expansions be budget neutral under the terms of a Medicaid waiver.

Massachusetts has operated its Medicaid program under a federal research and demonstration waiver since 1998. These waivers, authorized under section 1115 of the Social Security Act, allow states to deviate from the normal federal rules governing Medicaid. For example, states have used waivers to cover categories of adults and children not normally covered by the program and to increase beneficiary cost-sharing beyond the nominal amounts allowed under federal law. In exchange for increased flexibility, states must adhere to budget neutrality requirements – the program changes can not cost the federal government more than it would be spending without the waiver.

To live within budget neutrality limits while expanding insurance coverage, states like Massachusetts have pursued several strategies to produce cost savings that can be applied to coverage expansions: Read more…

Now that the dust has settled on the Democratic Presidential primary, those of us who are fixated on politics and health policy have begun to focus on the next major frontier — the potential for some sort of significant health care reform at the national level following the November election. There’s no question that the country is poised to make history on health reform. The public is clamoring for change and the candidates are listening.

Both of the presumptive presidential nominees, Barack Obama and John McCain, have articulated proposals for major changes in the health care system if they are elected. While their plans differ in significant ways, they each have the one thing in common that we must carefully monitor: the potential for a major impact on the success of the Massachusetts health reform plan.

Obama proposes an expansion of Medicaid and SCHIP, and a system of income-based subsidies for those who do not qualify for public coverage. Read more…

Policy-makers and opinion leaders in Massachusetts understandably are focused these days on activity at the Statehouse. Lawmakers are making critical decisions about state expenditures for the remainder of the current fiscal year as well as the next. These decisions have enormous implications for MassHealth, the state’s Medicaid program. MassHealth pays for services for more than 1 million Bay State residents. Its expenditures account for about 20 percent of total health care spending in Massachusetts. And its funding is critical to safety-net providers, such as health clinics and community hospitals, who provide services to some of the most vulnerable among us.

Medicaid also is central to the success of the health reform law passed two years ago. Chapter 58 expanded Medicaid coverage and provided for increased outreach to eligible populations. Since July of 2006, more than 100,000 additional residents of Massachusetts have been enrolled in MassHealth. Medicaid also helps finance the premium subsidies that make coverage affordable to low income Massachusetts residents through Commonwealth Care, which now covers nearly 177,000 people.

Attention to the state legislative process from Medicaid-watchers is therefore well-placed, but there is another front we should be watching: Washington D.C. Read more…