The Politics Of A Healthcare Spending Overhaul

Been there, done that — sort of. Massachusetts passed a health coverage law, but must do more to control health care spending to make sure the state, employers and individuals can afford health care.

A special state commission is mapping a plan to redirect billions of dollars spent on health care in Massachusetts. The idea is to spend less on health care by rewarding doctors for helping patients stay healthy instead of rewarding them delivering unlimited care when patients get sick. If that sounds straightforward, it's not.

First, let’s establish that this is a big undertaking that would touch the lives of virtually everyone in Massachusetts. The Special Commission on the Health Care Payment System is proposing to reorganize the way more than $55 billion is spent on health care in this state every year.

With that much money at stake, those involved and those watching were surprised that a diverse group of commission members agreed early and easily to throw out the way things work now, where doctors and hospitals are paid based on how much care they give sick patients. And then almost as quickly and easily, they decided to replace it with this thing called “global payments.”

“The fact that this group so quickly came to that conclusion makes me very confident that this is the right model, ” said Leslie Kirwan, one of the payment commission co-chairs. As secretary of administration and finance, she would be one of the key figures trying to translate the commission’s plans into action.

“There’s no doubt that the fact that we’ve all pointed to global payments as the way of the future is easy as compared to charting a thoughtful, workable transition for how to get there,” Kirwan said.

The commission is working on a strategy to gradually transition each part of the state’s health care system to this new way of paying for care over five years. The transition will probably include requiring that every resident choose a primary-care provider. That doctor or nurse practitioner would have to join a network that includes labs, a pharmacy, maybe a community health center and a hospital.

The network or organization would get one annual payment for each patient, based on age or other factors, no matter how many services you use. If you stay healthy or your doctor helps you stay healthy, the organization does well. If you don’t, the providers could lose money. The commission says there would be incentives so that doctors would not limit necessary care or reject the sickest patients.

“This is one of the most important conversations that is happening in the Commonwealth. It’s going to have long term implications," said Rev. Hurmon Hamilton, with the Greater Boston Interfaith Organization.

However, he is not happy with how that conversation is going so far.

“Consumers have not been central, like in health care reform. We were at the very center of passing it. So I think the process to date has been flawed to the extent that consumers have not been at the center and that needs to be corrected,” Hamilton said.

Convincing consumers that this change will improve the care they receive — not restrict it — is essential to “selling” this idea. And so far, consumer groups are watching from the sidelines. Global payments are a form of capitation or managed care — the system reviled for denying needed care in the 1990s.

Supporters say this version is different because doctors would get bonus payments for keeping patients healthy. Celia Wcislo, with SEIU in Massachusetts, said persuading people to try managed care again might work with the right goal.

“Is it just to squeeze cost out of the systems or it to develop a better, more logical and healthier delivery system? If it’s for the second, this is a struggle worth having,” Wcislo said.

A third cautious consumer group, Health Care for All, says if patients are going to try managed care again, they will expect to see who is being paid to do what and why this time.

“It’s going to take some considerable protections to make sure that consumers are comfortable. This could be very helpful or very dangerous and we want to make sure it is implemented in the right way,” said Brian Rosman, Health Care for All’s research director.

Business groups agree there is a right way and wrong way to move towards global payments, but for different reasons. Jim Klocke with the Greater Boston Chamber of Commerce favors taking the first steps towards global payments such as helping doctors adopt electronic health records. But he doesn’t like the idea of government forcing providers to adopt a new payment system.

“Then monitoring that new system and imposing very heavy price caps and price restrictions if it’s not going the way they want it to. That’s a very strong approach,” Klocke said. “There’s a long history that says when you do that it backfires. It usually causes more problems that it solves.”

The commission is considering a board that would intervene if hospitals or doctors aren’t moving quickly enough towards global payments. Some estimates show that 20 percent of providers in Massachusetts already use a system similar to global payments. But Partners HealthCare CEO James Mongan says more than half the doctors and hospitals in the state are not set up to provide or manage all of a patient’s care and aren’t ready for the financial risk.

“People are not in a position where they want to leap in. People want to be careful that they’ve not taken steps in the dark, but that they’ve gone ahead with their eyes wide open,” Mongan said.

He suggests that once the commission’s report is done, the legislature should take six months or a year to study the challenges of such a major change — which brings us to the politics of getting this done.

You have cautious or leery stakeholders, a legislature that is preoccupied with the budget and angry at Gov. Patrick for his critiques of their major bills and a governor who plans to be in the thick of a re-election campaign next year. Massachusetts Taxpayers Foundation President Michael Widmer wonders whether there will be the political will to move another major health care measure.

“Given the fact that we’re in a global economic meltdown and have a full legislative agenda — I think as the question of the very difficult details emerge and the politics surrounding that — it will become a vastly more difficult proposition to undertake something like this than the health care access reform of three years ago,” said Widmer.

But the Patrick administration says, to deal with its budget shortfall and to keep the health coverage law afloat, the state has to control health care spending. Senate President Therese Murray says she supports the concept of global payments. In the House, Health Care Financing Chair Harriett Stanley, who is on the commission, says she expects her colleagues will eventually support global payments as well. But she anticipates a multi-year, difficult debate.

“There are going to be winners and losers in this solution. Everyone is going to have skin in the game. And it’s going to be convincing some forces that we just simply have to change the way we do business right now,” Stanley said. “Obviously, that’s benefiting some folks more than others and we need to level the playing field a little bit.”

Massachusetts would need significant federal support to restructure the incentives that drive doctors and hospitals to deliver more care — even when it is not helpful.

Commission members say so far it seems the Obama administration is reviewing similar changes. And federal Medicare leaders have expressed interest in working with Massachusetts on a pilot plan that would align federal spending with the changes the commission is considering.