Quality & Cost Subcommittee Gets Its Hands Dirty

Earlier this month, the Quality and Cost Council established an ad hoc committee to discuss steps to achieve a key Council goal: “Reduce the cost of health care. Reduce the annual rise in health care costs to no more than the unadjusted growth in Gross Domestic Product (GDP) by 2012.” The ad hoc committee met today to draw up a list of recommendations to present to the full Council on 1/1/08. Today’s discussion focused on a list of options to reduce health care costs.

AG Martha Coakley’s rep, Quentin Palfrey, had the session’s money quote (from SH News):

“Nothing is taboo. Everything is on the table. This is potentially a crisis that could doom health reform if we don’t do something about it. We really need to think about even controversial things and we need to get our hands dirty,” said Quentin Palfrey, chief of Attorney General Martha Coakley’s health care division. “I don’t want to shy away from the notion that there may be tough medicine involved in the process.”

Recommended Step #1: The Council, with technical assistance from independent experts, will develop legislative, regulatory and other recommendations to control health care costs, and the Council consider these options, among others (each categories includes more specific examples):
• Rate regulation (insurers and providers)
• Controlling supply of services – revamped Determination of Need
• Reorganization of health care delivery systems
• Dissemination of information on clinical and cost effectiveness
• Payment system reform
• Malpractice reform
• Concentration of market power
• Consumer and employer demand and expectations of services

The recommendations shall include an estimate of cost savings and recommendations for implementation and tracking. The options will be prioritized by the Council, with assistance from experts, by effectiveness, ease of implementation and impact on access, quality and racial/ethnic disparities.

Recommended Step #2: The Council will adopt a standard of measurement of total annual health care spending in MA (the “MA Global Health Cost Indicator”) to track the annual increase (or decrease) in costs in total and within health care sectors.

Recommended Step #3: The Council will contract with independent experts to analyze causes of increases (or decreases) in health costs, including effects of: supply and demand for services and utilization trends; concentration of provider market power (by region and medical services); concentration of insurer market power; quality of care and avoidable medical errors; administrative costs; payment systems; overuse and inappropriate use of medical technology; and medical devices and pharmaceuticals.

Recommended Step #4: The Council will contract with independent experts to assist in preparing reports to the Governor, EOHHS Secretary, Senate President, Speaker and Chairs of the Committees on Ways and Means and Health Care Financing comparing variations in rates paid by insurers, insured health plans, self-insured entities, Medicare, Medicaid, uninsured person and other payers to health care providers in the Commonwealth within the constraints of disclosing proprietary information.

One concern was that the Council’s work on cost containment could become irrelevant if they don’t move quickly because there is movement at the State House and elsewhere. HCFA’s cost agenda includes 17 proposals to reduce health care costs and we are promoting legislation on these proposals. Learn more about our costs proposals by clicking here.

Great to see the Quality and Cost Council taking a leadership role in this.
Deb Wachenheim

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5 Responses to Quality & Cost Subcommittee Gets Its Hands Dirty

  1. Paul Levy says:

    Deb’s right.  This is a good list of things to consider, and it is excellent that the agenda is clearly laid out. There are lots of steps in properly analyzing these items. Does the Council have the resources to do that?

  2. Dave says:

    Thanks. We should study these prior programs and try to learn from prior mistakes. The Council should consider engaging a consultant to do a formal evaluation of past rate setting systems (ours and others) to see what lessons can be learned before drafting something up out of whole cloth.

  3. admin says:

    Just my recollections, Dave.

    DoN (referred to as “Certificate of Need” or CoN in most states) was generally evaluated as a failure in controlling the growth in overall health spending just about everywhere it was formally studied.

    Evidence on hospital rate setting generally showed that it did slow the rate of spending growth in states with mandatory systems. Most evaluations stopped around 1985. There is good evidence that Massachusetts rate setting had positive effects on controlling spending between the mid-70s and mid-80s.

    While there is no formal evaluation of which I’m aware, it’s fair to conclude that the system controls evaporated in the late 1980s, and that the system actually increased spending more than would have occured in it’s absence.

    It’s the experience in the latter period which convinced legislators in 1991 to deregulate hospital rate setting.

    Hope this is helpful.
    John McDonough

  4. Dave says:

    Massachusetts used to have a very stringent Determination of Need program that put every hospital expansion though layers of local, regional and state review. It was a complex process, and great for consultants and lawyers. Every so often, the legislature would override the DoN program by approving a specific project with special legislation. Here is my question: did it reduce the rate of healthcare inflation? I don’t recall that it did, but maybe someone (hint) can dig out the numbers.

    We used to have hospital rate setting (remember the Rate Setting Commission?). We had regulations for charge control, for approval of a statewide Blue Cross contract, and lots of other stuff. Did it work? My recollection, is “no.” Am I right?

    Lets try to learn from history (insert Santayana quote here).

  5. ? says:

    How independent could those “experts” be, if they contract with the Council as in recommended steps 3&4?

    Would any of them have the courage to bite the hand that feeds them?

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