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Mass. legislators tackle health costs in bills that spark support; concern

As the federal government clears a huge hurdle of national health care reform — the Constitution — officials at the state level are tackling another key challenge in cost.

But change isn’t easy, and proposals from the state House and Senate have sparked mixed reviews in SouthCoast and beyond.

“We can no longer afford to keep at this pace of growth in health care,” said Rep. Antonio F.D. Cabral, D-New Bedford, of the need for the legislation. “It’s going to bankrupt not only families. It’s going to bankrupt state government. It’s going to bankrupt municipalities.”

About six years after Massachusetts passed its health care reform law in 2006, nearly all of its residents are insured.

While health care is universally accessible in the state, “it is not yet universally affordable,” Gov. Deval Patrick said in a February, 2011 speech on cost containment.

Health costs left unchecked would represent about a third of the median income for Massachusetts families by 2016, Patrick said in that address, while health spending already equaled about 40 percent of state spending.

If not slowed, Massachusetts’ health care costs would hit $123 billion by 2020, Patrick’s office predicted at the time.

In May and in June, respectively, the Senate and House gave their own prescriptions for the problem.

The Senate was first, announcing a bill that would set benchmarks for health cost growth based on the state’s overall economic growth.

Through this and other measures, the Senate predicted a savings of about $150 billion over 15 years.

The House followed with a bill of its own, also setting health cost growth targets and predicting a similar savings of more than $160 billion over the next decade-and-a-half.

Rep. Christopher Markey, D-Dartmouth, called the House version a “very well-balanced” bill. Among its strengths, he said, is that it works toward stabilizing Medicaid payments and calls for regional health cost growth benchmarks in addition to a statewide one.

“Obviously it doesn’t  go as far as what everybody wants,” he said. But “I feel comfortable with the progress.”

Now in conference committee, the two bills represent the next step in a series of legislation following Massachusetts health care reform law of 2006,  according to Anna Gosline, director of policy and research at the Blue Cross Blue Shield of Massachusetts Foundation.

“The efforts being made now are certainly very helpful,” said Sen. Mark C.W. Montigny, D-New Bedford. But thanks to the influence of special interests, he said, the efforts “never go far enough.”

similar bills

The two voluminous bills from the House and the Senate contain many similarities.

Both promote the shift to Accountable Care Organizations, a key facet of the federal Affordable Care Act that calls on medical providers to coordinate care for patients. Both bills push for the use of electronic medical records. Both would bring medical malpractice reform, through provisions that give legal protections for doctors and other medical providers when they admit errors and apologize for them

The House and Senate bills also mandate cooling-off periods before patients could bring legal action.

Both promote the use of alternative payment models, such as global payments — for example, paying a provider for all care related to a single medical episode or need — over a fee-for-service model, which reimburses providers for individual tests or procedures.

Keith Hovan of Southcoast Health System and Southcoast Hospitals Group said fee-for-service gives medical providers a “perverse incentive” for more, albeit not always necessary, care.

“If the easiest way to come up with your cardiac diagnosis is a blood pressure cuff and an (electrocardiogram), that might be 25 bucks,” said Hovan, president and CEO of the hospitals group and its parent health system. “In the fee-for-service world, (you) get the blood pressure, do the EKG, order a stress echo “¦ and, ‘By the way, we should probably cath you.'”

The Senate and House bills both also promote greater transparency in health care.

Both bills also expand requirements of the state’s determination of need process, according to Gosline of the Blue Cross Blue Shield of Massachusetts Foundation. Through this process, the state’s Public Health Council is charged with approving or denying health care facilities’ requests for major investments or service changes.

But Hovan described how more work would still be needed in a realm where he said approvals often lag for months.

“I think we could move the ball faster and provide venues to lower the cost of care if we could … streamline that process,” he said.  “I’ve got an empty cardiology facility sitting in Fall River I can’t use because (the Department of Public Health) hasn’t been in to inspect it yet.”

key differences

But key points distinguish the two.

While both bills set growth benchmarks for health costs, the specifics vary. The Senate’s version calls for the health care cost growth to exceed the state’s overall economic growth  by half a percentage point in 2012-2015 before becoming level in 2016. The House’s version proposes a statewide health cost growth benchmark  that would be equal to the state’s economic growth before dropping slightly below this level in 2016-2026. After that, the growth in health costs would be allowed to rise above it by a single percentage point.

Sen. Montigny called the House target “tighter” and said he prefers this cost proposal over the Senate’s.

Rep. Cabral, likewise, said the House benchmark is stricter than the Senate’s in an effort to “squeeze more waste out of the system.”

Lynn Nicholas, president and CEO of the Massachusetts Hospital Association, called the House’s benchmark “foolish.”

“Both bills call for the target. There’s a lot of ‘Kumbaya’ about doing this, which is unprecedented,” she said. “Our messaging on the target is that, ‘We need time.'”

Although Nicholas complimented some aspects of the bills, the Massachusetts Hospital Association thinks the gap between overall economic growth and the growth of health costs should be closed much more gradually than outlined in either the Senate or the House plan.

About 70 percent of hospitals’ costs are labor-related, according to Nicholas.

“If you have to squeeze too fast too hard to meet some target,” she said, “the only quick way to do it is through layoffs, and really affecting the workforce, which affects the economy.”

changes for hospitals

Another major difference between the bills  is a provision in the House version that would require each hospital in a system to negotiate separately with insurance payers. Only hospitals where a certain percentage of patients are served through an alternative payment model would be given an exception.

This rule would be a major change for Southcoast, where St. Luke’s Hospital in New Bedford, Charlton Memorial Hospital in Fall River and Tobey Hospital in Wareham  negotiate as a group.

“The whole purpose of reform really should be about developing systems of care, so that we could much more cost-effectively bring providers together,” sharing risks and rewards, according to Hovan, who sits on the MHA’s board of trustees. “For me, that component of the House bill runs counter to what it is we’re really trying to accomplish.”

Since the 1996 merger that formed the health system and hospitals group, Southcoast “has been working to enhance communication, to become more efficient and lean and to think and act as one organization,” said Stephen Canessa, Southcoast Health System’s executive director of government affairs and a former state representative. The House negotiating provision “would certainly work against that.”

Rep. Markey said he disagrees with this part of the House bill and said even hospitals that aren’t part of systems should be able to negotiate in groups with insurance payers.

Another concern MHA and the Massachusetts Medical Society share is the House bill’s establishment of a luxury tax. This tax would be charged to hospitals, physician organizations and ambulatory surgery centers with services priced 20  percent above the statewide median, according to the MMS.

The luxury tax would benefit a trust fund to support distressed hospitals.

As with the House’s cost benchmarks, Montigny defended this part of the House bill.

“I’m not necessarily saying it’s the right answer or not, but I’m glad it’s in the debate,” he said of the measure, which is absent in the Senate version.

The House bill recognizes that “a lot of these services can be delivered at lower-cost hospitals,” Montigny said. “If (a hospital is) going to be significantly higher than the cost average, then (that hospital is) going to pay, and that fee is going to go into helping the suffering community hospitals.”

The MHA argued in a position paper that the luxury tax would create “unprecedented regulation of hospital revenues.” The Massachusetts Medical Society said it “comes dangerously close to rate setting.”

Both the House and the Senate bills promote alternative payment methods and direct public-payers, such as Medicaid, to adopt them.

But the House bill takes a more aggressive approach, by fining private payers a monthly penalty for not complying.

When it comes to the private sector, government shouldn’t micromanage, according to the MHA’s Nicholas.

“The movement on the private sector to these payment methodologies and these ways of doing care needs to be voluntary,” she said. “

and the future?

Exactly what will remain of the bill after it emerges from conference committee remains to be seen.

Though saying both bills have good provisions, Montigny predicted neither will go far enough.

“Even if you take the best practices from both bills, I am skeptical that we will see the kind of savings necessary for the business owner paying the insurance, the taxpayer subsidizing insurance and ultimately, the policy holder who cannot afford these premium increases,” he said.

Rep. Cabral complimented many facets of proposed legislation, ranging from the increased transparency to support of wellness initiatives.

With the Supreme Court’s ruling last week on federal reform, “it was clearly decided that we can have universal health care,” Cabral said. By addressing costs and quality in Massachusetts, “now we’re going to the next level.”

But Hovan said neither bill truly deals with a major issue — the state’s “chronic underpayment” for Medicaid.

Approximately, 20 percent of  Southcoast Hospitals Group’s patients are on Medicaid/MassHealth, according to Southcoast officials.

For each dollar the group spends on these patients, Southcoast is reimbursed about 72 cents.

Nicholas similarly stressed the problem.

“Government has a role in transparency, in providing data … looking at best practices,” she said. “But the other role is, ‘Pay your fair share.'”


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