Pioneer’s Statement on “Cost Containment” and Payment Reform Bill

Final Version of Conference Committee Bill Adds Hundreds of Millions to System

“Real cost-containment is only possible when we encourage patients to reward low-cost, high-quality providers with their business,” says Josh Archambault, Pioneer’s director of health care policy. “Instead of providing financial incentives for individual patients to take charge of their own medical care, this legislation rearranges the system based on accountable care organizations (ACOs) and changes in payment methods.  The legislation misses the mark by a long shot and will not lead to long-term, sustainable containment of health care costs.”

In recent months, Pioneer has distributed a series of blogs, videos, and op-eds outlining the bill’s shortcomings, noting that it:

• Fails to engage consumers in any meaningful way to bend the cost curve and address monopolistic pricing in the provider market,
• Promises an unrealistic health care growth rate compared to GSP, with savings estimates that are unsupported by evidence,
• Mandates delivery reforms that have mixed real world impacts on cost control,
• Imposes broad government control of the state’s health care system; and,
• Adds hundreds of millions in direct costs to the system through mandated reporting requirements, surcharges, fees and penalties.

“This bill contradicts the Speakers own commitment to not raise taxes,” says Jim Stergios, Pioneer’s executive director.  “The conference committee bill contains hundreds of millions of new surcharges, fees and penalties – all of which will be passed onto consumers.

The new legislation also grants sweeping regulatory oversight to government officials to determine ACOs’ financial solvency, set collaboration requirements, and track market-share interactions; determine payment contracts and risk management for health care professions; and decide on reimbursement totals to sustain medical research. And through the determination of need process, they will make major decisions on medical infrastructure and the approval of complex contracts. The opportunities abound for political mischief and litigation.

These approaches will negatively impact the market, and run the real risk of lowering the quality of health care in Massachusetts. This bill will reduce competition and product innovation in the insurance market. In fact, its policy goal is greater market consolidation with ACOs; review of new technologies and determination of need will slow innovation and flexibility.

“The legislation rehashes failed top-down strategies of the past, putting government in the position of mandating outcomes rather than creating incentives for individuals,” says Archambault.

Pioneer has long advocated reform approaches that engage consumers in the health care decision-making process and result in cost savings. A recent Health Affairs study found that expanding the use of patient-centered health plans, including health savings and reimbursement accounts, could save up to $100 billion a year nationally. The savings in Massachusetts could be considerable.

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