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Commission: Change the Way Employers, Consumers Pay for Health Care

Posted on January 23, 2015

The commission overseeing health-care policy in Massachusetts is calling for widespread adoption of new payment methods that reward doctors and hospitals for results rather than the number of procedures they order.

health_careThe Massachusetts Health Policy Commission reports that such cost-saving payment plans have been adopted more widely within public insurance programs such as Medicare and Medicaid than in the commercial insurance market. The commission, in its 2014 Cost Trends Report released last week, sets a goal that 60 percent of people insured through health maintenance organizations be covered by so-called Alternative Payment Methods by next year.

Also included in the commission report are recommendations to increase the information available to employers and consumers, and to push hospitals to address the significant variations in cost that exist for the same medical procedures with the same outcomes.

“The commission’s recommendations are important to employers as Massachusetts strives to maintain a world-class health care system that is affordable,” said Richard C. Lord, President and Chief Executive Officer of Associated Industries of Massachusetts and the employer representative on the Health Policy Commission.

“Health-care costs have moderated, but are projected to accelerate again in the next several years. The ability of Massachusetts to address structural issues in the health care market will in turn determine the ability of employers to provide good health-insurance benefits to workers.”

The 11-member Health Policy Commission is an independent state agency that develops policy to reduce health-care cost growth and improve the quality of patient care. The commission also monitors the commonwealth’s health care market, providing data on the impact of health care mergers, guidance for reform of the delivery and payment systems, and investments into community hospitals.

The report’s conclusions include:

  • Between 2012 and 2013, total healthcare expenditures grew at a rate of 2.3 percent per capita,
    a rate that is lower than the statutory benchmark of 3.6 percent.
  • Hospitals vary widely in prices charged for an episode of care with similar quality outcomes. For hip and knee replacements, for example, academic medical centers are 23 and 15 percent more expensive than New England Baptist, respectively, without substantial differences in quality outcomes.
  • Five hospital systems accounted for 56 percent of commercial discharges in 2014, up from 51 percent in 2014.
  • The rate at which patients are treated and later re-admitted to Massachusetts hospitals is higher than the national average, and the federal government will penalize approximately 80 percent of all hospitals in Massachusetts for higher-than-expected Medicare readmission rates in fiscal year 2015.
  • Almost half of all emergency room visits were avoidable in 2012. Rates of overall emergency department use varied by a factor of two across regions of the state.
  • Behavioral health is a critical factor in overall medical usage and cost. The commission indicates that the spending differential between patients with and without behavioral health conditions is pronounced for many medical conditions.

The Health Policy Commission echoed the advice that AIM regularly provides to employers – offer employees plan choices that include value-oriented products, or embed value-based concepts into their chosen plan offering. Value-oriented plans encourage employees to seek high-quality care in reasonably prices settings such as community hospitals.

The commission maintains that health care costs are crowding out important initiatives in both the private and public sectors.

“The rising cost of health care has resulted in increasing government dollars going to health care and away from other priorities. This phenomenon does not solely apply to government; businesses and consumers have to squeeze their budgets to pay for health care,” the report says.

“From Fiscal Year 2004 to Fiscal Year 2014, government spending on health care has crowded out other government priorities, a trend that continued into FY 2015. With the exception of direct spending on health services for individuals, every other area of government spending was cut or grew more slowly than Gross Domestic Product (GDP).”