Our guest blogger is Emily Oshima, a Research Associate/Policy Analyst with the Health Policy team at American Progress.
On Monday, Gov. Deval Patrick of Massachusetts again urged state lawmakers to address rising health care costs in his annual state of the state address. Patrick first introduced a bill, “An Act Improving the Quality of Health Care and Controlling Costs by Reforming Health Systems and Payments,” in February 2011 in an effort to achieve comprehensive delivery system and payment reform.
Patrick’s proposal calls for replacing the current fee-for-service payment system, which creates incentives for providers to deliver more services – even unnecessary care, with a global payment system, which encourages more coordinated patient care and rewards providers for better patient health. It aims to “significantly reduce” fee-for-service payments by the end of 2015 and, as Patrick explained, “stop paying for the amount of care, and start paying for the quality of care.”
The Massachusetts bill encourages greater price transparency, consumer protections against rate increases, and medical malpractice reform to reduce the costs of defensive medicine. The legislation creates incentives for providers to better coordinate patient care and lower costs through Accountable Care Organizations (ACO). Such arrangements have already improved care for more than 100,000 Blue Shield of California patients in California and San Francisco, where better coordination among health care providers has flattened premium increases, lowered hospital readmissions by more than 20 percent, and saved $20 million in 2011.
Numerous hospitals, physician groups and insurers across the nation are adopting the ACO model in hopes of duplicating this success. For instance, Massachusetts is already home to nine ACO entities and 32 health care organizations are participating in HHS’ Pioneer ACO initiative to improve care and lower costs for Medicare patients.
Health reform in Massachusetts was wildly successful in expanding coverage to more than 98 percent of the population and now lawmakers must tackle their next big challenge: cost control.