Health Wonk Boot Camp Report – Rolling out Payment Reform

This week, the Division of Health Care Finance and Policy (DHCFP) held its annual public hearing on health care cost trends , or as we endearingly call it — health wonk boot camp, at Bunker Hill Community College.

This year’s edition was way less wonky than in the past, and much more focused on what’s happening now in our health care delivery system. Discussion outlined the challenges of implementing reforms and transitioning from the current fee-for-service payment structure to an integrated global payments model. The hearings were also less crowded than in the past, as most of the usual suspects in state health policy were focused on the House payment reform debate, which started on the second day of the hearings. As usual, our full report is after the jump.

Politicians and Policymakers Open
The Monday morning sessions started with EOHHS Secretary Bigby, who welcomed Governor Patrick. Secretary Bigby (see her remarks here (pdf)) emphasized the need for transformation of our delivery system, towards care integration. She highlighted the progress being made by MassHealth’s Patient Centered Medical Home Initiative.  She warned that minor tinkering may produce short-term results, only to be erased when pressure is let off.  She also noted that savings will come not from denying services to people, but by addressing unnecessary care due to avoidable admissions and readmission and appropriate use of medications.

Governor Patrick began with the unsustainability of health cost growth, and the recent decline in spending growth in Massachusetts. He refuted those who attribute price moderation to the recession, noting that that prices grew slower not during the depth of the recession, but when the state began actively “getting serious” about premium increases.

He listed his four core principles for payment reform legislation:

  1. An ambitious but reasonable cost control goal
  2. Flexibility on how to achieve the goal
  3. Accountability for the implementation, including support for the House bill’s reliance on a repurposed state agency, rather than an independent authority
  4. Sensible tort reform

He said that while he is not convinced that a luxury tax makes sense, he did support enhancing the authority of the Attorney General to address the cost impact of market power.

Next, Senator Richard Moore, Senate co-chair of the Health Care Financing Committee, testified (see his statement, updated, here) that the Senate’s goal is to control health cost growth without harming the health care industry. He counseled caution in setting a goal below inflation, and said that the Senate supports an independent agency to oversee implementation of reforms. He hoped work on the bill would be completed by the middle of July, certainly by the end of the session, July 31.

Several House members scheduled to present were not there, due to the House debate that was imminent. Attorney General Coakley submitted a written statement (pdf).

The final morning speaker was Insurance Commissioner Joe Murphy, who listed some of the actions the Division of Insurance has taken to reduce premium growth.

The Monday afternoon panelists were:

  • Greg Pope, Director of RTI’s Health Care Financing and Payment Program
  • Rick Lopez, Chief Medical Officer at Atrius Health
  • Steve Bradley, VP of Government & Community Relations and Public Affairs at Baystate Health
  • Frederica Williams, President and CEO of Whittier Street Health Center
  • Dr. Jack Kelly, CMIPA Independent Physician Group.

“We often hear talk of low-hanging fruit in the healthcare industry, but as it turned out, it wasn’t easy to save [on costs],” Pope stated, referring to the Medicare Physician Group Practice (PGP) demonstration. Launched in 2005, the demonstration was Medicare’s first physician pay-for-performance (P4P) initiative. According to Pope, only two of the ten provider groups achieved savings in the demonstration’s five year run. “Even vanguard groups had limited success,” he reported.

So what needs to happen to achieve significant savings?
Pope suggested stricter incentives on providers, such as limited provider networks, lock-ins, or tiered networks. “Beneficiaries must have skin in the game,” he insisted.

Provider incentives came up a lot in the hearing, specifically on the topic of health promotion and disease prevention. “We used to be more reactive than proactive,” Kelly observed, after 30 years practicing general internal medicine, “that’s beginning to change now.”

Public Health and Prevention Critical
Bradley asserted that “actively engaging the community in public health is the best way to reduce costs.” He suggested that population health outcomes, consumer satisfaction, and the percentage of medical expenses spent on public health, education and prevention be used to measure performance under the new integrated payment models. “When treating a patient, we’re treating the patient’s family as a whole,” he proposed, acknowledging that a patient’s community  is a critical part of addressing a patient’s overall health. “People spent 0.001% of their time in [a medical provider setting], and even less in hospitals,” Lopez commented. “We need to figure out better ways to touch patients where they are – in the home and at work.”

The consensus among the panelists was that an integrated payment model should incentivize health outcomes. “We rely too heavily on process data rather than outcome data,” Kelly asserted. Williams recommended incentives for innovation, such as medical community and group visits as means to reduce hospital readmissions.

It isn’t news that preventive and wellness measures improve health outcomes and lower costs of care. But providers face considerable barriers with the current fee-for-service payment system and the lack of integration among healthcare providers, limiting their ability to perform these vital services. For example, under a fee-for-service system, physicians are reimbursed for performing amputations, but there is no billing code for checking up on diabetic patients to prevent the infections that can cause a patient to lose a limb.

Behavioral Health Integration
Lopez explained how the separation of behavioral health services from physical health under the current payment structure has crippled overall quality of care. He added that “confidentiality, for better or for worse, limits the transfer of information.”

Williams concurred, pointing out that 80 percent of Whittier’s patients have been diagnosed with psychosocial issues, and in order to provide better care, the health center began redesigning its payment structure toward an integrated patient-centered medical home (PCMH) back in 2003.

Lopez suggested further that preferred provider organizations, like Medicare, are not conducive to integration because they don’t require a patient to choose a primary care physician (PCP). In an integrated care model, the PCP acts as ‘general contractor,’ responsible for organizing a network of community health workers, behavioral health practitioners, specialists, and any other health professionals needed to care for a patient’s health.

“The biggest problem in integrating the healthcare system is weaving all the pieces together,” Lopez articulated, “Right now, everyone is working very hard in their silos.” Pope asserted that “the existing deficiencies in health care can only be solved by organizing our personnel and facilities.”

Lopez added that successful integration should connect hospital care, ambulatory care, and home services. On that note, he emphasized the need for collaboration between payers and providers, noting that most of the potential savings for ACOs and facsimiles will be in hospital services, so “it is important that hospitals work with us on transitioning care.” He favored policies for shared savings and risk-sharing based on quality measurements, such as readmission rates.

Day 2: Stakeholder Perspectives

On the second day, a panel of  industry stakeholders brought an interesting perspective on recent shifts in the healthcare marketplace. As we are in the midst of health reform, we are beginning to see what is and isn’t working in our current payment system. The goal is to move towards an integrated model, where providers are paid to keep patients healthy, with an emphasis on prevention and wellness. Both a highly political and debated topic, rising healthcare costs threaten the sustainability of the entire system.

The morning panel included:

  • Mark Rich, Executive VP of Corporate Development and Strategy at Steward Health Care System
  • Rich Weisblatt, Senior VP of Provider Network and Product Development at Harvard Pilgrim Health Care
  • Mark Waldman, Treasurer and Collector for the Town of Wellesley
  • Diane Anderson, President & CEO of Lawrence General Hospital
  • Eric Swain, VP of UnitedHealthCare
  • Gary Gottlieb, President & CEO of Partners HealthCare
  • Jon Hurst, President of Retailers Association of Massachusetts
  • Jeanne Wyand, Senior Consultant at Towers Watson
  • Kate Walsh, President & CEO of Boston Medical Center

The first topic of discussion was the Pioneer ACO Model, Medicare’s new budget-based reimbursement model currently being tested by 32 health plans across the nation, five of which are in Massachusetts. The initiative will test the impact of different payment arrangements in helping various organizations achieve the goals of providing better care to patients and reducing Medicare costs. Gary Gottlieb of Partners HealthCare views the transition as a good one. “We can provide incentives for primary care physicians based on quality measures and accessibility within practices. For specialists, we can look at care redesign with a similar incentive system.”

Jeanne Wyand of Towers Watson commented that large employers would struggle with the transition to episodic payments (bundled payments that cover all services a patient needs for an entire episode of care).

Moderator Michael Bailit moved onto the topic of market consolidation and price variation. ACOs host potential for market consolidation, as Eric Swain of UnitedHealthCare explained that increased provider power creates higher costs.

In concluding the topic of health care cost containment, Kate Walsh of Boston Medical Center put it nicely, “reimbursement has not caught up with rhetoric. We need consistency and liability within payment to reduce costs.”

Keynote address on integration of behavioral health
Prior to the afternoon panel, Chris Counihan of MassHealth spoke briefly on their integration of behavioral health in primary care. The goal is to integrate by partnering with providers, managed care entities, advocacy groups, and members. Counihan’s work is reducing healthcare costs by focusing on the 5-10% of members who account for 50% of spending. One initiative, Community Support Program for Persons Experiencing Chronic Homelessness (CSPECH), provides Medicaid reimbursement for community-based support services for chronically homeless individuals who are placed in permanent housing.

The afternoon panel discussion on provider and consumer engagement in the healthcare market included:

  • Ken Smith, Executive Office of Elder Affairs
  • Ellen Bishop, Massachusetts Coalition of Nurse Practitioners
  • Ronald Dunlap, Cardiologist at South Shore Cardiology & Vice President of Massachusetts Medical Society
  • Brian Rosman, Research Director at HCFA
  • James Fuccione, Director of Legislative & Public Affairs at Home Care Alliance of Massachusetts

A takeaway from this discussion was that reform will be challenging but beneficial in the long-haul. Panelists reiterated the observation that consumers don’t like change because they fear it. The demand for health care is inelastic — people want the best care regardless of cost.  In order to shift the dollar-centered paradigm to a patient-centered focus, the panel suggested empowering patients to be more involved in their health care.

Brian Rosman of Health Care For All spoke further on the topic of patient engagement, highlighting three principles for patient-centered integrated care:

  • greater transparency so patients better understand the complexity of the system,
  • quality measures so patients’ health outcome are incorporated in payments
  • risk adjustment that takes into account socioeconomic and cultural factors that impact a patient’s health

Dr. Dunlap stated that only 10% of patients are medically literate. This is a serious problem, especially since the patient should be the in the center of the entire process. Overall, the panelists agreed that patients need to be held accountable for their health decisions. And to ensure this, panelists suggested patient education as well as IT improvements (for sharing medical records).

As the hearing ended, everyone scurried back to the House chamber for the unfolding debate. This was most likely the last hearing conducted by DHCFP in its current configuration, as both the House and Senate bills envision a dramatic transformation of the agency. Next year’s hearings may be very different. Whatever – we’ll be there.
-Kaitlyn Rhodes and Sarra Sabouri

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