Massachusetts health care payment plan gets renewed attention: Global payments to replace fee for service?

Federal health reform and Massachusetts health reform may find a point of convergence in the development of ACOs (accountable care organizations) and the payment mechanisms that will make them tick (or hum, or do whatever it is that we want them to do).  The Federales will be holding a listening session next week on the issues raised by ACOs across the HHS and FTC landscapes.  Meanwhile, back in Boston, the inner circle of health care regulators and the regulated community are busy hashing out an approach to global payments that could be ready for prime time by January 1.

The need for payment reform in Massachusetts has been well-documented — see the health care market report from the AG's office, as well as an earlier report on the imperative to keep insurance risk on insurers and place performance, or quality, risk on providers.  Now, this may be easier said than done, but we've got some of the best and brightest working away at the issue.

Unfortunately, the Massachusetts legislature blinked, and has not mandated the approach across the board — at least not yet.  Initially, the global, or bundled, payment for episodes of health care approach is being tentatively applied to just a couple of types of episodes of care. (See Section 64 of Chapter 288 of the Acts of 2010 – the small group market reform legislation enacted this summer.)

This baby-steps approach, while better than nothing, is likely fueled at least in part by the inside baseball nature of the discussion: any change may produce losers — or at least that's the way the zero-sum-game-players see it, and none of the folks at the table wants to be a loser.  On the bright side, it seems that MassHealth (Massachusetts Medicaid) may be heading in this direction sooner rather than later, which may end up dragging other payors along as well.

Implementing global payments for episodes of care will go a long way towards incentivizing providers to join together in ACOs — not only for purposes of qualifying for an as-yet-to-be-defined CMS demo project, but also for purposes of improving outcomes, and improving financial performance for all providers involved.

David Harlow
The Harlow Group LLC
Health Care Law and Consulting