News & Events

Patient-Centered Global Payment System

A decision was made today for Massachusetts to move from its current ”Fee for Service” payment for health care to a “Patient-Centered Global Payment System.”

The goal is to reduce healthcare costs in MA, which has among the highest costs in the U.S. And despite the money spent, still over 50% of MA adults over 50 and over half of all adult diabetics do not receive preventive care. And as we all know, other huge problems exist: patients endangered by nightmare scenarios with inadequate staffing, patients placed in corridors, some hospitals and systems continuing to make huge profits with others, particularly safety net hospitals, in danger of collapse, an insurance industry which has run away with free care pool funds which used to go to hospitals. Etc etc.

A special Commission (mandated by the legislature last year) estimates that preventable ER visits in MA total $398.5 ml and preventable hospitalization $582 ml. Without intervention, healthcare costs are expected to double by 2020.

The report, though 74 pages long, is still sketchy on details, as Dolores Mitchell, GIC (insurance) commissioner and Lynn Nicholas, MHA president, noted today. Blue Cross appears delighted with the plans to date from comments by Andrew Dreyfus at today’s final meeting to vote on and release the report below (which MHA’s board already overwhelmingly voted up yesterday, prior to the report being made public today).

The basic concept is that “Accountable Care Organizations” (ACOs) will form —consisting of primary care, hospitals, specialists and home health providers – who will be paid to assume all responsibility for a patient’s care. There will be participation by both public and private payers ( Medicare and Medicaid) via a federal waiver. The new structures will have to include “Medical Homes” (which is a relatively new term for basically just good primary care. Good primary care happens when SOMEONE, generally a nurse, is charged with coordinating patients’ care so they don’t fall through cracks in the system and end up re-hospitalized or worse. The intention is for patients to retain their choice of provider. Insurance plan benefit redesign was not part of this project—employers may redesign insurance plans but are not required to do so.

The Commission reported that this effort will succeed where past payment reform efforts have failed, for the following reasons: “ better data available; plans to provide extensive support to providers (to help especially providers, especially small ones, figure out how to do this); incentives to improve quality; increased risk adjustment (i.e., bifurcation of risk into (1) insurance (uncontrollable) risk and (2) provider risk (i.e., providers losing money due to problems they should be able to prevent) where THIS time providers will only have provider risk to fear; and because there will be linkages between payment and performance.”

If you have any questions, feel free to contact me.
Mary Crotty
781 830-5743

Recommendations of the Special Commission on the Health Care Payment System
Section 44 of Chapter 305 of the Acts of 2008 mandated the creation of a Special Commission on the Health Care Payment System to “investigate reforming and restructuring the system to provide incentives for efficient and effective patient-centered care and to reduce variations in the quality and cost of care.” Section 44 established three responsibilities for the Special Commission: (1) to examine payment methodologies and purchasing strategies, (2) to recommend a common transparent methodology, and (3) to recommend a plan for the implementation of the common payment methodology across all public and private payers in the Commonwealth.

The legislation designated three categories of appointments to the Special Commission: three ex officio members, one member to be appointed by the Senate President, one member to be appointed by the Speaker of the House, and five members to be appointed by the Governor.

The Special Commission met on nine occasions between January and July 2009 to create a set of principles to guide the development of payment policy recommendations, elicit and consider input from key stakeholders, assess and debate alternative payment approaches, and arrive at recommendations for payment policy.

Recommendations of the Special Commission on the Health Care Payment System – Full Report (PDF)

Appendices A-G (20.7 MB) (PDF)

Individual Appendices
Appendix A: Section 44 of Chapter 305 of the Acts of 2008: An Act to Promote Cost Containment, Transparency and Efficiency in the Delivery of Quality Health Care (PDF) |Word
Appendix B: Special Commission Meeting Agendas (PDF)|Word
Appendix C: Memos on Basic Payment Models and Complementary Payment-Related Strategies (PDF)|Word
Appendix D: Presentations to the Special Commission (PDF)|
Appendix E: Special Commission Meeting Minutes (PDF)|Word
Appendix F.I, Public Input Statements and Appendix F.II, Stakeholder Engagement Memos (PDF)|
Appendix G: List of Stakeholder Meetings (PDF)|Word

Meeting Presentation:
Recommendations of the Special Commission on the Health Care Payment System (PPT)

Leslie Kirwan
Secretary, Executive Office for
Administration and Finance

Sarah Iselin
Division of Health Care Finance and Policy

See: Complete Special Commission on the Health Care Payment System meeting schedule and associated materials
If you have any questions or need assistance regarding this report, please contact the Division of Health Care Finance and Policy at (617) 988-3100.