I Pledge My Faith in Bureaucracy- Mass Health Reform II

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bureaucracy cartoon

The House version of payment reform creates a new mega agency, the Division of Health Care Cost and Quality. To be fair, the House collapses a few other state agencies into the new Division, but there is no question this entity is given far-reaching and broad regulatory power. The Division will be independent and “not subject to the supervision and control of any other” public entity. (Section 29, subsection 2(a))

The controversial federal Affordable Care Act drew negative attention for how many times the Secretary of HHS was instructed to act on major policy, roughly 700 times in 2,700 pages.

The House’s bill outdoes the ACA by requiring the division to take action 163 times in 178 pages, or almost once every page. The mandate approach results in 941 instances in which the House mandates action in the bill, by using the word “shall.”

A sample of the dizzying and expansive Division’s responsibilities includes but is not limited to:

  • Assessing a number of penalties, fines, and surcharges. I counted 26 in the bill. Some are one-offs, others reoccurring and some are sticks to be utilized to guarantee compliance. Of course, most of the cost of these will be passed onto patients one way or another.
  • Setting acceptable standards for alternative payment methodologies.
  • Overseeing and being involved with alternative payment contracts.
  • Developing quality metrics including parameters for clinical outcomes, but limiting insurer’s use of quality data outside of division approved metrics.
  • Defining and overseeing accountable care organizations on many levels.
  • Designing and managing the state-wide health technology infrastructure needed to meet the mandated 5-year window for Health IT.
  • Monitoring and participating in workforce development and planning. Including multiple student loan forgiveness programs, and other recruitment and retaining programs to keep doctors in state or practicing in under-served areas.
  • Setting out extensive mandated transparency mechanisms for consumer education on cost and quality data and trying to improve administrative simplification.
  • Surveying patients annually for their perception of access to services, including many subgroups such as the homeless.

Yet many questions about implementation remain, and policymakers should look very closely at the following:

  1. Will transparency without the correct tools and incentives for consumers backfire? For many patients, high-cost correlates with higher quality. Of course the Attorney General’s report proved this theory wrong, but if you provide patients with cost data but their health plan is not set up to incentivize the use of  low-cost high-quality providers, you will have many seeking out the most expensive folks. (The direct opposite goal of this legislation.)
  2. As the Division sets up uniform reporting of revenues, charges, costs, and utilization (that by statute will need to be in line with federal reporting standards) will the state follow the federal government’s ACA lead of 140,000 coding categories? For example, if you’ve been bitten by a turtle for the second time you would use code W5921XD.
  3. Will the Division have the expertise and technological knowledge to implement the many goals laid out in the legislation? Even with numerous expert advisory committees, many of the functions the Division will be conducting are replicating what the private sector currently does. One only has to look at the Health Care Cost and Quality Council to see an example of a great public advisory board that has struggled to produce a meaningful product that has wide market penetration. Policymakers should ask if is a good investment to ask a public entity to run so much, when you are trying to reduce spending.
  4. The issue of privacy and health information technology is complex and expensive. The bill currently waves its hand on this issue, and serious thought is required.
  5. What will the Division cost to run? The most likely smaller Connector costs roughly $30 million a year to run. How much more should we expect this mega-agency to cost?
  6. Finally, policymakers should take a serious look at the wide-ranging authority given to the Division. On multiple occasions, the Division is instructed to “take actions necessary to ensure….” or “promulgate regulations or guidelines to implement the findings of this section.” We must ask if we are comfortable with bureaucrats holding the reins to 18% of our state’s economy, that may not have the expertise, resources, or shared values that we do to balance the trade offs associated with government centered cost controls. They decide where billions of dollars will be directed or granted from trust funds.  Do we trust their judgment and are we confident that industry influence will not sway these few government officials?

Much more to come.

Find me on twitter: @josharchambault

  • Roger Wilson

    Joshua, I am confused by your reference to “the private sector.” How much of healthcare is in the private sector now? Aren’t most hospitals nominally non-proifits along with some insurance companies? And isn’t a lot of the industry revenue from government programs? Isn’t the continual cost escalation a function how little healthcare is in private hands now? Certainly a lot of private individuals and companies are making big bucks in the current system (that is why reform is so hard) but it certainly doesn’t look like a private sector. And how could cost and price tranparency be any worse than our current system where price is unknown to most consumers and practitioners making medical decisions?

  • http://www.pioneerinst.wpengine.com Joshua Archambault

    Roger,
    Fair point for clarification. By private sector I was referring to non-profit insurers and providers. The bill requires this new Division to do many of the functions that these institutions conduct as normal business practice. I am not sure how replicating them in the public sector will save money.
    The issue with transparency requires some thoughtfulness because if consumer are not empowered and provided the right incentives to use that information, you will have industry interests use it for their gain without the benefit of lower costs.