Cutting Health Care Costs Through A Global Payment System

BOSTON — Gov. Deval Patrick pledged in his inaugural address to cut health care costs, and he said he would do that by changing the way we pay for care.

“This will be a challenge. There will be a great debate and resistance to change. But working families, small and large businesses alike, and governments too need a solution and they need it now,” Patrick said.

The governor is expected to file legislation later this month or early in February that would launch his plan to reduce health spending. WBUR’s Martha Bebinger joined Morning Edition Tuesday to explain what that would entail.

Bob Oakes: Under the governor’s bill, doctors and hospitals would no longer be paid for each individual service they provide. Instead, they would have a yearly budget for the care of their patients. How would this save money?

Martha Bebinger: Right now, if a patient has asthma or diabetes, they see a doctor or go to a hospital for the most part when they are sick. The health care system makes money on us being sick and there are few limits on the cost of care. With global payments, the budgeting plan the governor wants to use, doctors and hospitals will already have the money, so it will be in their interest to keep patients healthy and out of the hospital.

There are fears providers will tell a patient, ‘You can’t have that MRI, or knee surgery,’ just to avoid going over budget. But doctors and hospitals don’t get to keep money left over in their budgets unless they can prove that the patient with diabetes or asthma is getting the care they need.

A fundamental part of the bill would establish a new independent board or commission to oversee the transition to global payments. What’s the role of this board?

This board would set the rules related to global payments. It would set guidelines for new networks called accountable care organizations (ACOs) — this is a term you’ll start hearing a lot. With every health care movement we have to learn a new vocabulary. ACOs are networks of doctors, hospitals, mental health and rehab centers and home care agencies. Picture, Bob, if you are a doctor on a budget for my care, you want all the places you might need to send me to be in your network working off the same budget. You don’t want to get a bill from another local hospital for my appendectomy.

What if a patient wants to go to a specialist or hospital that isn’t in my, Dr. Bob’s, network?

The patient is free to go. But in reality, many of us go to the lab or specialist our primary care doctor recommends. We don’t know if he or she has a financial motive in making that recommendation. That’s something patients might want to start to ask.

This sounds like a huge change, with many steps that would take a year just to get underway, if the bill passes. So where are the savings the governor says we need now?

The administration is asking the same question. Here’s where we get to part two of the bill, or maybe a second bill. Since the transition to global payments will take a few years, the governor is considering a short-term cap on the increases hospitals can negotiate with insurers. The numbers aren’t set yet, but a 5 percent increase in one year might be the limit.

The other possibility is that this new board or commission would move ahead with global payments and have the option of capping rate increases if the transition takes too long.

It’s not hard to imagine the resistance the governor suggested this bill will trigger. Is his plan set?

The Patrick administration is working to balance the need to show some immediate savings against the claim that if the state is too heavy handed, hospitals won’t have any margin to try their own cost saving measures and will just have to cut jobs.

The House and Senate are not on board with this bill. The administration is hoping to get the endorsement for at least the outline of his plan next week from an advisory committee on payment reform legislation. And Patrick will need the backing of business, municipal and consumer group groups who say it’s time to tackle rising health care costs. We’ll see if the public thinks it’s time and that this is right way to proceed.

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  • Thomas Crocker

    This is wrong on so many levels. Do you really want government officials budgeting Doctor services? Where will the good Doctors go? How about out of Massachusetts. What do you think will happen to the quality of health care? If Doctor “A” gets the same as Doctor “B” for a proceedure then the winner will be the Doctor who does it the cheapest. We are heading this way anyway with the thanks of Obamacare. Many years ago social security was described as a means by which the government would provide for your retirement. If that is so why do we also have to have 401K’s? Some day, we will also have to have retirement type accounts to pay for health care.

  • Bev

    For starters “Thomas,” social security retirement fund only serves as a supplement, so your 40lK argument is moot! In addition, “rising health care costs MUST be tackled.” People like you, who are uninformed and are vulnerable to scare tactics live in fear of change. As a nurse, I support the attempt to make changes in our current health care system, where doctors and insurance companies are on the obscene financial remuneration end of this spectrum. Last but not least, with Harvard, BU and Tuft’s medical schools and first rate hospitals, doctors will not be leaving for greener pastures any too soon! Please remove yourself from your “fear bubble” that the GOP/TEA Party movement so want to keep you in and do your own research on this subject matter.

    Furthermore, do you want to have to continue to pay high premium rates? Your care will not be compromised. Do yourself a favor and become your own advocate when it comes to health care. I do and I get what I want every time by doing my research first and entering my doctor’s office fully aware of what my needs are and keep an open dialogue with my PCP.

    Bev of Boston, MA

  • Cynthia Beaudette

    The whole discussion of Global Payment sounds like two wolves and a sheep(in this case the physician)deciding what’s for dinner. If the public falls for this without as much as a bha bha, they deserve the massive decline in healthcare they are certain to get.

  • Michael Achey, MD

    You cannot have a system which saves money and gives patients completely free choice. Systems can save large amounts of money if they are free to use the competitive forces to reduce cost of specialty by choosing the lowest cost providers. If patients are free to circumvent the systems in place the whole concept fails. This has been a fundamental flaw with the capitated models of the past and will continue to plague future discussions. The insurance industry MUST be forced to allow restricted networks (or increase cost for out of ACG networks) to constrain migration. That is what will control costs and that is exactly what the industry is most reluctant to do.

  • Michael Achey, MD

    The most important relationship in health care is the Primary Care provider and patient. The proposed plans will put more financial pressure on the primary care providers as well as dramatically increase the complexity of the office visit and overall patient management. Patients should be terrified of this process as we primary care doctors have already been overwhelmed with implementing electronic records, struggling to meet Medicare’s 23 very difficult “meaningful use” criteria for the electronic record, and satisfying very complex quality measures for the major insurers. None of this relates to what motivated me to go to medical school. If other PCPs feel this way, there will be fewer of us left in practice a few years from now than there are now.

  • Vdreiber

    This is yet another way for insurers to assure their own profit. And there is no reason to believe that premium costs will go down for the patient. It has been said that in Massachusetts, health-care is a big employer, and must be protected. Yes, but NOT all employees are providers and other direct-care workers, scientists and technicians. The bureaucracy and corporate structure and executive compensation of insurance companies are what that discourse is all about. Protect business in MA, at all costs? On the backs of subscribers and providers.

    “Capitated contracts” (giving physician groups a budget per patient capita) have been tried in the past, and the responsibility for deciding level of care and necessary diagnostics are indeed in the hands of the provider organizations (rarely the individual physicians) hands. Since the largest percentage of all health care expenses are for the care of the fragile, and the chronically ill people of our commonwealth, it makes sense that that care-system should first be fully developed. There are systems of care utilizing home-health care (community workers, nurses, social workers, etc.) for these high intensity need patients. These systems work, and keep people healthier, and out of emergency rooms and hospital admissions.

    But will that be the way that the Commonwealth starts a new round of reform? Let us WAIT and see.

    Virginia D Reiber PhD is a clinical psychologist in Boston.

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