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Mass. Weighs ‘Global’ Health Care Payment System (MC)

Associated Press Online
July 17, 2009

In a bid to rein in escalating health care costs, Massachusetts is weighing a "global" health care payment system designed to reward doctors and hospitals for keeping patients healthy by emphasizing preventative care.

A proposal recommended Thursday by a state panel working to find ways to reduce health care spending would replace the existing fee-for-service system with one that compensates providers ahead of time for the care their patients will likely require over the course of a given contract period, such as a month or year.

While Massachusetts is home of the nation’s most ambitious health care law, which mandates near-universal coverage, it’s also home to some of the highest health care costs in the country. Insurance premiums have grown almost every year for the past two decades at a pace exceeding annual cost of living increases — threatening the future of the landmark law.

Controlling costs is a key element of the national health care debate as the Obama administration and Congress work on a plan to provide coverage to nearly 50 million uninsured Americans.

Proponents see the change as crucial to the long-term success of Massachusett’s landmark 2006 health care law. They say the current system encourages the misuse and overuse of medical services, driving up costs.

The recommendations have the backing of top lawmakers and key officials in Gov. Deval Patrick’s administration. Skeptics say the plan is too fuzzy and could have unintended consequences. They say the state should focus on more immediate cost-saving measures.

A global payment system would encourage more coordination among a patient’s physicians, nurses, hospitals and other care providers, proponents say.

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The costs would be estimated by looking at past experiences and assessing future risk, based in part on patient demographics and known medical conditions.

The panel recommends the state gradually adopt the new system over the next five years.

Leslie Kirwan, chairwoman of the state authority that oversees the health care law, said high health care costs don’t necessarily translate into the best care possible.

"Massachusetts has led the nation in expanding health insurance coverage to virtually all of its residents," she said. "It is now poised to lead the nation in tackling the challenge of containing health care costs and improving the quality of care."

Skeptical health care providers say they want to see more details of the plan, major elements of which must be filed as legislation and approved by lawmakers and the governor before taking effect.

The Massachusetts Medical Society, which represents 22,000 physicians in the state, said doctors would need help adjusting to the new payment model, including managing the financial risk associated with caring for large groups of patients.

"A big transition like this has never been done on such a broad scale, so it must be done very carefully, deliberately and thoughtfully," said Dr. Mario E. Motta, the group’s president.

Lynn Nicholas, president of the Massachusetts Hospital Association, said that since hospitals would be taking on a greater risk under a global payment system, that risk should be clearly defined and within the control of providers.

Nicholas said the state also shouldn’t lose focus on more immediate cost-saving measures, like medical malpractice reform and better practices around end-of-life care.

"The ultimate success or failure of payment reform … will depend on thoughtful and responsive answers to certain key issues," she said.