News Column

Massachusetts Healthcare Experiment Enters Second Phase

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March 24--BOSTON -- Seven years after ordering near-universal health insurance coverage for its residents, Massachusetts is still struggling to contain spiraling health care costs.

The Massachusetts health reform "experiment," signed into law by former Gov. Mitt Romney, is widely viewed as a precursor to President Barack Obama's Affordable Care Act.

But if there's one thing that can be learned from Massachusetts, it's that "access" alone to health care is not a panacea for fixing a broken health care system. Perhaps that's why Romney, the Republican presidential nominee, did not endorse the Affordable Care Act as a cure for the nation's health spending woes.

Mandating health insurance coverage for most all citizens has had little success in reining in Massachusetts' medical spending. The Boston area, for instance, remains one of the nation's costliest places to obtain health care.

"On a per capita basis, we have one of the most expensive health care systems in the country," Andrew Dreyfus, president and chief executive of Blue Cross Blue Shield of Massachusetts, told a recent conference in Boston of the Association of Health Care Journalists. "If we do nothing, we're going to bankrupt this state."

Massachusetts' politicians and health industry leaders have taken the next step. Several months ago, as a follow-up to its 2006 law mandating health insurance coverage, the Massachusetts state legislature passed a new law that sets goals for cost controls for hospitals, health systems and insurers.

This law provides a glimpse into the fierce struggle that federal officials are sure to face in attempting to cut health care costs on a national level.

Massachusetts politicians now speak of the Massachusetts Health Reform Law of 2006, which was implemented in 2007, as simply the opening salvo in a series of legislative skirmishes that are necessary to reform a dysfunctional health system.

The 2006 law established the Commonwealth Health Insurance Connector Authority, a state agency that acts as an insurance broker to offer private health insurance plans to residents. The state imposes financial penalties on individuals who do not obtain insurance, and also penalizes businesses with 10 or more employees who do not offer health coverage.

Mass. Gov. Deval Patrick, a Democrat, told the journalists' conference that both major political parties worked together to create health care reform in his state but, more importantly, "stuck together to implement it."

The governor said that 98 percent of Massachusetts residents now have health insurance; more than 90 percent of residents have a primary care physician; and 76 percent of businesses in the state offer health insurance to their employees.

And, he added, expanding health insurance coverage to uninsured residents added only about 1 percent to the state's health care costs.


Still, the governor and others emphasize that "cost containment" is the next goal in Massachusetts' ongoing health reform initiative. In August, Patrick signed a health care cost control bill whose aim is to slow the state's rapid growth of health spending.

Massachusetts state government, which is required by law to pass a balanced budget, has experienced cuts in most other spheres of activity. But health care costs continue to grow exponentially -- squeezing other parts of the state budget and outstripping new tax revenue.

The Boston Globe reported in September that medical debt remains virtually unchanged since 2006. About 17.5 percent of Massachusetts residents said they had difficulty paying medical bills in 2010.

"Health care cost containment is much more complex than wrestling with the access issue," said David Seltz, executive director of the Health Policy Commission, a state body established by the new law to track cost-containment issues from a consumer perspective. The commission is governed by an 11-person board that has "one of the strongest conflict of interest protections in state government," he said.

Among other concerns, the commission's primary functions include examining changes in health care management; conducting a cost and marketing review of health care prices from a consumer's perspective; and taking steps to ensure that consumers know how much a specific medical procedure will cost.

The Affordable Care Act focuses primarily on efforts to ensure access for all U.S. citizens to health care, rather than ways to achieve cost controls. However, it also established a 15-member Independent Payment Advisory Board, which has the task of recommending savings in Medicare that do not affect coverage or quality.

Massachusetts' new cost-containment law doesn't set a specific budget for health care. But the state's health industry leaders have agreed to establish a goal that medical spending not exceed the overall growth rate of the state budget in 2014, or about 3.6 percent.

The commission plans in 2015 to begin identifying those Massachusetts health systems and hospitals whose cost growth doesn't meet the state's goals.

Still, the law does not appear to have enough regulatory teeth to take significant action against any offenders.

Seltz emphasized that the commission is not an enforcement agency; it's a monitoring agency.

"Let's try to do this together -- with government, payers and insurers," he said. "There's a sense that we're in this together."

Blue Cross' Dreyfus agreed that health systems, hospitals and insurers must work together to "improve quality and lower cost. ... We still have quality, safety and reliability issues."

Still, hospital administrators and patient advocates in Massachusetts and elsewhere worry that attempts to drive down health costs will result in more costly and intrusive regulations.

"What we get with this is a lot of regulation," said Dr. Tim Ferris, vice president for population health at Partners Healthcare system in Massachusetts. "So there's no question this is having a profound effect on every provider.

"It's different this time. It's not just insurers and providers, it's government," he said. "Is the state entering the private doctor-patient relationship?"

Some doctors fear an erosion of their autonomy in medical decision-making. Consumer advocates worry that patients may be left with fewer choices.

Innovation that will help achieve cost savings, Ferris said, is most likely to happen through "physicians who persuade other physicians. ... Cutting leaves the status quo in place with all of its flaws -- or you can change the payment system."


Private industry has taken the lead in Massachusetts in designing health reform models.

In 2009, Blue Cross -- the state's largest insurer -- set up an experimental project called "Alternative Quality Contract," which is designed to reduce the growth of health spending and to improve quality of care and health outcomes.

The program, which was reviewed favorably by Harvard medical researchers, has changed the health payment structure in Massachusetts from the conventional "pay for service" model to a "pay for quality" system that rewards the insurer and its provider network for keeping patients healthy.

Dreyfus said that 85 percent of Blue Cross health providers in Massachusetts now use the new contracts, which cover all medical services. The insurer pays a "global budget" fee per member, per month -- depending on a person's health status. Cost-effective management of that person's health is a "shared risk" undertaken by Blue Cross and its network of health providers. If a patient's care runs over budget, Blue Cross and its health providers share the excess costs. If the patient's care is under budget, the insurer and providers share the savings.

"It's starting to work. It's a good model," said Dreyfus, adding that the new contracts have held price increases to a 2 percent to 3 percent increase for the last couple of years. "But it's a means, not an end."

Similar arrangements called Accountable Care Organizations are cropping up in various states, including Missouri. The Affordable Care Act has provided seed money for some of these experimental projects.

Partners, which is Massachusetts' largest hospital system, has participated in a Medicare demonstration project that identified its highest-risk patients. With an average age of 75, they took on average 12 medications, and among the patients' problems were many cases of dementia, Parkinson's disease and heart failure.

Partners' Ferris said the health system hired "care managers" to focus on these patients and explored ways to maintain their health. After three years, he said, the program was able to lower the hospitalization rate of these high-risk patients by 20 percent, resulting in substantial cost savings.

Pediatric cardiologists at Boston Children's Hospital have pursued a novel effort to eliminate unnecessary costs and provide the highest quality care.

Several years ago they first tried clinical practice guidelines, a tool meant to standardize "best practices" and reduce variation in health care. But medicine is constantly changing. The doctors found the guidelines often obsolete, offering few insights into improving care or how to deal with unexpected findings.

So the 10 pediatric cardiologists began gathering data on their own clinical decisions in treating children's symptoms and conditions. They created Standardized Clinical Assessment and Management Plans (SCAMPs), a quality improvement program that collects and analyzes data on clinical decisions and poses clinical questions for further evaluation.

For dozens of medical conditions, SCAMP software has an algorithm with a decision tree that guides doctors in how to treat each patient. Departures from recommended care are expected. Doctors write explanations for their decisions, which can be used to adjust and refine the SCAMP.

Clinicians need "flexible, evidence-based standards" that continually improve care while decreasing unnecessary testing and reducing costs, said Dr. Kathy Jenkins, senior vice president and chief quality and safety officer at Boston Children's and a professor of pediatrics at Harvard University. She credited SCAMPs with a reduction of about 26 percent in certain patient charges at Boston Children's.

SCAMPs programs have been adopted at other New England hospitals and leading institutions across the country, including the Children's National Medical Center in Washington.

Donald Berwick, a Massachusetts health reformer and the former director of the Centers for Medicare & Medicaid Services in Obama's administration, agreed that increased quality of care could result in savings.

"Better care costs less than worse care," he said, pointing to such examples as the Nuka tribal health system in Alaska as well as Project Echo in New Mexico, an innovative health project aimed at rural and under-served areas. "Better care. Better health. Lower costs. It exists."

Still, key players in Massachusetts' lucrative health industry acknowledge that cutting costs will not be easy.

"We're in for a rocky road, nationally," Blue Cross' Dreyfus said.

"The key here is pace," Partners' executive Ferris said. "If we go too fast, we'll lose the (health care) providers and the patients."


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