BOSTON — In 2006, under Gov. Mitt Romney, Massachusetts became the first state to extend insurance coverage to all its residents. Now it’s looking to slow the growth of its health-care costs in equally groundbreaking ways.
In the next few months, Massachusetts is expected to take up legislation that would overhaul how doctors, hospitals and other providers are paid. The forthcoming payment-reform bill is expected to include many incentives for hospitals to accept “global payments,” or a flat fee for all the care delivered for a specific person or group of people.
The hope is to take away the financial incentives to provide more care when less might be equally effective.
“That’s been one of the biggest battles,” said JudyAnn Bigby, the state’s health and human services secretary, speaking at a conference last week hosted by the Lown Cardiovascular Research and New America foundations. “Some have characterized it as government intervention. We won’t require global payments but include incentives that would encourage providers to use alternatives to fee-for-service.”
So far, Massachusetts businesses have proved amenable to such payment changes. In many ways, they’ve moved in that direction without any direction from the government.
In 2009, Blue Cross Blue Shield of Massachusetts launched the “Alternative Quality Contract,” a sweeping attempt by Massachusetts’s largest insurance provider to pay doctors and hospitals for the quality of care they provide.
Under the Alternative Quality Contract, a medical group accepts a global budget to cover all health-care services for a set of patients. Groups can also earn a bonus, up to 10 percent, if they do well on 64 quality measures, including controlling blood pressure and delivering high-quality patient experiences.
The program has, in three years, attracted 12 provider groups that cover 615,000 state residents. It has shown some early, promising results on costs: A New England Journal of Medicine study last year found that spending grew more slowly among those participating in the Alternative Quality Contract than those using other financing strategies.
The payment-reform law that Massachusetts will soon debate could create new incentives for doctors, hospitals and providers to participate in a payment system that looks a lot like the Alternative Quality Contract.
“There’s a bit of Bay State pride tied up in this,” said Brian Rosman, research director for the Boston-based advocacy group Health Care for All. “We were the first to figure out universal coverage. Now we want to be the first to crack health-care costs.”
In February 2011, Gov. Deval L. Patrick (D) introduced legislation that would have moved all Massachusetts health-care providers to value-based payments (arrangements like the Alternative Quality Contract) by June 2015. A new government entity, created by the bill, would facilitate that change, setting various benchmarks and timelines.
Initially, Patrick’s bill did not gain much legislative traction, sitting unmoved for 14 months.
“This is very complex stuff,” said Lynda Young, president of the Massachusetts Medical Society. “With rightful reason, the House and Senate realized that this wasn’t something they could move fast on. I think a lot of the delay has to do with the complexity.”
But now the state legislature is looking to move forward. Late last week, the Joint Committee on Health Care Financing moved Patrick’s bill to the Ways and Means Committee. A Senate debate on payment-reform legislation is expected within the next month.
“In terms of taking [a bill] up to the full Senate, we’re looking at the week of May 14,” said David Falcone, a spokesman for Senate President Therese Murray (D).
The legislation that the Senate will ultimately consider stands to be significantly different from the governor’s original proposal. It is expected to include a hard cap on state health-care spending, which will probably be tethered to growth in the gross state product.
“The thing we know is that they plan to set a spending cap for health-care spending that will be linked to the gross state product, minus some percentage,” Bigby said. “Some say 0.5 percent, some say 1 percent, some say 2.”
Some groups have protested a spending cap that is lower than overall economic growth, contending that it could harm patients.
“We don’t feel that’s feasible,” Young said. “It’s very important for us to do cost control, but we also need physicians to have some say in the direction.”
Slowing growth in health-care costs is challenging, although not impossible. For the past two years, health-care spending has slowed on its own, growing at the same pace as the rest of the economy. Massachusetts has, for many years before its universal coverage law, had the highest health-care costs in the nation, leaving more space for potential cuts.