Massachusetts and the Movement Towards Developing Global Payments

I have blogged in the past about how health care reforms efforts in MA are a good harbinger of what the rest if the country will face in the next few years as the ACO is enacted. While reform efforts in MA increased access as hoped, costs have continued to sky rocket. Earlier this year the MA DOI denied rate health insurance company premium increases for both the individual and small group markets saying they were too high. HIs took the state to court saying the denials were illegal. Both parties reached a compromise that allowed an average increase of 12%. This settlement of course did nothing to address the issue of increasing medical costs.

One of the major reasons health care costs have continued to grow is the reimbursement system for providers, fee-for-service. Simply put providers are rewarded for how much health care they provide so over utilization results. A change in the reimbursement structure is therefore required that would reward providers for the quality of the care they provide. One such alternative is a global payment which would be given to an ACO responsible for the care of its members.

Both state and HI officials have been working on establishing such a system. So what is the latest in the state?

Dr. Judy Ann Bigby, secretary of health and human services for Massachusetts heads a working group of state officials and healthcare executives tasked with doing just that. They met this month to begin drafting a payment reform plan.

Some private insurers in the Bay State are already trying out global payments for the care of chronic conditions such as diabetes and high blood pressure. Blue Cross Blue Shield of Massachusetts, which covers three million Mass. residents, has moved 32% of its HMO business to global payments. Tufts Health Plan says that 20% of its business, mostly through its Medicare Advantage program, is contracted on a global payments basis, according to the Boston Business Journal.

This is going to be a long slog but it will be interesting to see where things go and what lessons can be learned for the rest of the country.