MetroWest Daily News: State’s mixed record on health reforms

Share on Facebook
Share on Twitter
Share on

Massachusetts has chosen to incubate health care solutions rather than wait on the rest of the country. That impulse is correct, provided we take the task seriously. The past 90 days have given us two examples of big policy changes — one empirically based and understated; the other hasty and oversold.

First the good news.

For some time now, state healthcare officials have been working on a limited experiment to integrate care for those eligible for both Medicare and Medicaid. So called “dual-eligibles,” have for too long received uneven and uncoordinated care. Two different sets of rules often require duals to schedule multiple appointments as limits are set on billable procedures per visit.

The state has a financial incentive to change that. While duals comprise only 15 percent of total Medicaid beneficiaries, they account for almost 40 percent of the state’s $5.5 billion cost.

Starting in January, under an agreement with the federal government the state will integrate entitlement care for 110,000 of Massachusetts’ 270,000 duals. Duals may opt out of the new program, but there is solid evidence that we can both save money and improve care for these high-cost patients, regardless of where they receive care.

Between 2005 and 2010, the US Medicare Office conducted a pilot for accountable care organizations (ACO), the Physicians’ Group Practice (PGP), with some of the nation’s most respected practices. (An ACO is a network of medical professionals and hospitals that share responsibility for providing care.) The silver lining in an otherwise disappointing pilot was the savings that came from the dual-eligible population.

Grace Marie-Turner and Robert Helms, authors of an award-winning entry to Pioneer Institute’s 2012 Better Government Competition, developed many of the ideas for a “dual eligible fix” years ago when they served on a US Medicaid Reform Commission. Massachusetts joins 14 other states in expanding a reform that the evidence suggests is likely to succeed.

Now the bad news.

This summer, Massachusetts enacted a little discussed, but widely trumpeted 349-page price-capping law that supporters claim will shave $200 billion off our healthcare bills. The new law caps annual healthcare cost growth. To get there, it applies ever-greater government control and oversight, and mandates how we pay for and deliver care.

But instead of addressing provider market concentration, which Attorney General’s office reports demonstrate is the strongest driver of costs in Massachusetts, the new law grants preference to ACOs with the explicit goal of furthering market consolidation. This destroys any hope of competition and gives even more control to a small number of providers.

Furthermore, there is no consistent evidence that ACOs save money for the general population. In the PGP pilot, only two of ten ACOs achieved first-year savings of two percent and only half achieved savings after three years. Inexplicably, Massachusetts will now require all healthcare entities to cut their growth rate by roughly 3.4 percent in the first year and even more in future years to be below overall state economic growth.

The fact is that ACOs are HMOs with more technology; they suffer from the same problems that led to many HMOs’ demise in the 1990’s. Why should we now expect the same fixed, capitated payments that were the centerpiece of HMOs to produce dramatically different outcomes?

The Attorney General has documented that capitated contracts often cost more than fee-for-service, with no indication that they provide higher-quality care. Yet as with ACOs, the new law gives preferential treatment to capitated and bundled payment contracts.

Finally, the law imposes hundreds of millions of dollars of assessments, fees, penalties and compliance mandates, and puts in place an expensive regulatory regime that any other industry would reject as misguided. Does anyone seriously think patients will not ultimately pick up these costs?

The duals proposal and price-capping law highlight two very different paths for healthcare reform. One is methodical, thoughtful, and focused. The other is a complex, massive, unrealistic plan developed behind closed doors and pushed in the last hours of a legislative session. It is, as a result, sometimes incoherent.

Healthcare accounts for 18 percent of our state’s economy and insurance costs are eating into employees’ paychecks. Only when problems are well understood can real reform take hold. It’s a lesson state and federal healthcare policymakers would be wise to learn.

Jim Stergios is executive director and Josh Archambault is director of healthcare policy at Pioneer Institute, a Boston-based think tank which recently published “The Great Experiment: The States, The Feds and Your Healthcare.”

Read more: