In Mass., Administrative Burdens Weigh Heavily
And with the law’s cost-containment requirements now on the books, things may get worse. Dr. Dupee said that “the handwriting is on the wall: Reimburse ment is going to start going down across the board. Otherwise, there is no way to manage the cost of this thing.”
Cost Containment Lags
No rigorous cost controls were included in the reform plan when implementation started. The intention was to get every one covered first and then begin looking at the cost side of the equation. A 2008 addition to the law began laying the groundwork for cost control by setting up several councils to study how best to rein in spending.
The main work is in a 2011 proposal by Gov. Deval Patrick (D), which urged a shift from fee for service to global payment for state employees, Medicaid recipients, and enrollees in the Commonwealth Care program. Those groups account for about 25% of the state’s residents. The call for a shift for those workers survived in the final cost-containment package that was passed by the state House and Senate on July 31, but hospitals and physicians and other providers will not be required to participate in a ternative payment methods.
“Global payments aren’t for everyone, and fee for service still has a vital role to play in our system,” said Dr. Richard Aghababian, president of the Massachusetts Medical Society, in a statement issued after the law’s passage.
The law is expected to result in $200 billion in savings by 2027. Among other things, it will establish a statewide growth target, which can be no greater than the growth in the state’s overall economy. A Health Policy Commission – which sounds a bit like the Affordable Care Act’s IPAB (Independent Payment Advisory Board) – is being established to enforce the benchmark, and also to certify new payment methods and new delivery models.
Physicians and other health care providers will be required to pay a total surcharge of $60 million, which will go toward a Distressed Hospital Trust Fund, a Prevention and Wellness Trust Fund, and an e-Health Institute Fund.
Hospitals will be assessed $135 million in contributions to the funds. Gov. Patrick estimated in a recent speech that the state spends $67 billion a year on health care and that it would account for 54% of the state’s budget in the fiscal year that ended June 30, with most of it going to the state’s Medicaid program, and to subsidies for Commonwealth Care.
Health costs have been and still are higher in Massachusetts than almost any where else in America. The average total medical expenditure in the commercial market was $414 per member per month in 2010, which was a 3% increase over 2009 expenditures, according to the commonwealth’s division of health care finance and policy. Not huge, but a growing burden.
How Does the Mass. Program Work?
Most Massachusetts residents now have some kind of health insurance. As of the end of 2010 (the latest figures available), 411,000 residents had gained coverage under the health care reform law, according to the commonwealth’s Division of Health Care Finance and Policy.
About 5.4 million of the state’s 6.5 million residents were covered. Plans are chosen through the health insurance exchange, called the Commonwealth Health Insurance Connector.
Those plans include the following:
Commonwealth Care.
Open to anyone with an income of up to 300% of the federal poverty line. The state subsidizes their coverage and pays for coverage for those with in comes up to 150% of the poverty line.
Commonwealth Choice.
Plans – rated bronze, silver, or gold – must meet certain coverage and cost standards
Mass Health.
This is the state Medicaid plan, which covers children in families up to 300% of the poverty level. As is the case in the U.S. Affordable Care Act, there are disincentives for residents and employers to go with out health coverage. Employers with 11 or more workers must either cover their workers or pay the state a contribution of up to $295 per year per worker. Adults with incomes greater than 150% of the poverty level must either buy insurance or pay a penalty. In 2011, penalties ranged from $19 to $101 a month. As more residents gain coverage, the number paying the penalty has decreased: In 2008, 45,000 paid; in 2010, 44,000 were assessed a penalty.
