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Governor Launches Landmark Effort to Control Health Costs

Posted by Eileen McAnneny on Feb 17, 2011 3:28:00 PM

Governor Deval Patrick took an historic first step today toward resolving the health care cost crisis that for more than a decade has eroded the ability of employers to create economic opportunity for the citizens of Massachusetts.

Health care cost controlThe governor unveiled an initiative designed to reduce health insurance premiums over several years by encouraging a  shift from the current fee-for-service system of paying medical providers to one that encourages doctors and hospitals to form integrated networks, and rewards them for good patient outcomes and preventative care.

The administration stopped short of mandating the end of the fee-for-service system for privately insured patients, but set a goal of moving most Massachusetts residents into integrated Accountable Care Organizations (ACOs) by 2015.  In the meantime, the state will shift approximately 1.7 million state employees, Medicaid subscribers and Commonwealth Connector enrollees to ACOs by 2014.

Patrick also proposes to expand the strategy launched last year of disapproving health plan rate-increase requests that the commonwealth deems excessive. The cost overhaul bill would allow the Commissioner of Insurance to reject premium increases for which the underlying rates charged by doctors and hospitals are excessive.

The governor made clear during a noontime briefing with business leaders that the initiative will succeed only if it makes health insurance more affordable than it has been for employers and individuals.

“Massachusetts led the nation on health care reform and is poised to lead again on health care cost containment,” Patrick said. “With 98 percent of the Commonwealth’s residents insured, we have shown how government, consumers, insurers and providers can work together to realize the goals of health care reform. Our next major achievement in this arena will be controlling costs while ensuring that the people of Massachusetts continue to receive world-class care.”

The governor announced his cost control bill - An Act Improving the Quality of Health Care and Controlling Costs by Reforming Health Systems and Payments - during a speech to the Greater Boston Chamber of Commerce. He publicly acknowledged Associated Industries of Massachusetts President Richard C. Lord as someone who will play a key role representing employers as the landmark reform takes shape.

AIM, which has pushed aggressively for structural changes to the health care payment system, welcomed the governor’s proposal.  The association is reviewing details of the bill, but Lord said today’s announcement signals new momentum toward solving an issue that a staggering 97 percent of AIM member employers have identified as their top concern.

“Massachusetts has a unique opportunity and responsibility to solve the health cost puzzle.  Four years after the commonwealth became a model for expanding coverage, it’s time for Massachusetts to establish a model for making world-class health care affordable for employers who can no longer sustain premium increases of 20, 30 or 40 percent as they struggle to provide coverage to workers,” Lord said.

He stressed, however, that the commonwealth’s move to encourage, rather than mandate, use of global payments and ACOs means that employers will have to take the initiative to ensure they are included in the new cost-control system.

AIM also commended the Patrick proposal for including medical malpractice reform, a longtime AIM priority. The proposal would  emphasize prompt resolution of malpractice cases, de-emphasize “defensive medicine,” reduce the number of costly lawsuits and improve care.

The governor’s bill represents the latest in a series of developments that signal a developing consensus around the need to address health care costs:

  • The chief executive of Blue Cross Blue Shield of Massachusetts urged hospitals recently to adopt global payments and warned that providers who hold onto traditional fee-for-service arrangements face level or reduced payments.
  • Massachusetts employers are migrating to tiered health plans that reduce costs and preserve benefits by when companies and their workers do business with community hospitals and other facilities that deliver verifiably cost-effective health care.
  • The governor and the business community appear to be on the same page when it comes to helping struggling cities and towns reduce their cost of providing health insurance. The administration filed a bill recently that would require all cities and towns to either join the state-run Group Insurance Commission or institute a program “of equivalent value and cost.”

Topics: Associated Industries of Massachusetts, Health Care Reform, AIM, Health Care Costs, Health Insurance, Deval Patrick

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