Gov. Patrick’s Regulatory Regime for Payment Reform

(Pioneer weighs in on Patrick’s Medical Unification Board plan. – promoted by Rob “EaBo Clipper” Eno)

 The Legislature held a hearing on the Governor's proposal to change the payment methodologies for the delivery of health care yesterday.

Full Written Testimony is on the Pioneer Blog

Pioneer was there, summary below: 

The bill before the Committee today would, as currently written, set up a framework for unprecedented regulatory intervention in the health care marketplace, and possible significant adverse impacts on health care access and costs in the Commonwealth. The issues of greatest concern are:

1) The Heavy Hand of and Role of Regulation: The 26 + instances in which major policy decisions are left to be made in the regulatory process.

2) Accountable Care Organizations or Bust: The overreliance of the proposal on Accountable Care Organizations while the data on cost savings and health outcomes is mixed at best, and nonexistent for many quality measures.

3) Where is the Consumer?: The lack of serious engagement of consumers with decision making tools and financial incentives to empower them to be better consumers of both health insurance and health care services.

4) Timing & Expectations: The realistic timeframe for reform to have a reductionary impact in health care spending is at least 5-10 years, with an increase in spending likely in the short term. In other words, the Governor’s plan is a long term play. These reforms will mean little to small employers that are seeing double digit premium increases for the third or fourth year now, and that trend will not change under this plan.

5) Medicaid: The Medicaid program accounts for over 30 percent of the state budget, and is crowding out spending on other public goods and providing suboptimal access to health care services for the population served. From a state budget perspective, any health care spending containment strategy must tackle reforming this program.

Payment reform is a means to an end, not the end in itself. The goal of any bill should not be to establish a majority of (ACOs) or to have lots of different payment methodologies in place, it should be to provide the best quality care while simultaneously reducing health care spending.

The Governor’s bill relies too heavily on the regulatory process– and the discretion of regulators and state officials– to regulate and rate-set our way out of the health care spending problem. The economic issues of this approach are many and quite weighty. There is the real possibility of our health care market becoming less competitive and innovative, more consolidated, and much more expensive under the vision being laid out.

However, just to be precise, the Commonwealth doesn't have a cost problem, we have a spending problem. A cost problem suggests you should price set. Simply setting prices will just get you “less costly” procedures, with more price shifting of course, but not better care. Our spending problem is that we spend too much on procedures that people don’t value the outcomes of. It is estimated that 30-40% of spending is on unhelpful care. We need to organize a system in which the spending decisions are ultimately with the family and not a bureaucrat.

With this being said any effort to control health care spending needs to focus on engaging consumers, promoting transparency of cost and quality data, targeting the 20% of patients that account for 80% of health care spending.

One of the most interesting, and often overlooked findings of the Attorney General’s report on cost drivers, was that the method by which a provider was paid did not correlate with better quality care, or even less expensive care. An alternative approach is possible, one in which the Commonwealth lays out a very broad framework to incentivize integration, innovative service delivery, and rewards consumer engagement. This approach produces fewer economic issues and is much more likely to lead to long-term savings.

The caution Pioneer brings will be echoed by many others today, what we lack is a financial interest in the outcome of any bill that passes. We are here today to stress the importance of engaging consumers in any change of the health care delivery system. Without more informed quality and cost conscious consumers, we will return back here in 5 to 10 years to determine the next top down approach to contain spending. Our advice is to go slowly now, and get the incentives correct the first time. 

Full Written Testimony is on the Pioneer Blog.

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