Cost Trends Hearing 2013 Looks At State’s Health Ecosystem

Massachusetts has made progress in cost growth rates

Last week the Health Policy Commission (HPC) held the annual health care cost trends hearing. Chapter 224 transferred the responsibility to conduct the hearing to the HPC, in coordination with the Office of the Attorney General and Center for Health Information and Analysis (CHIA).

The two-day hearing focused on a public examination into the drivers of health care costs, including testimony from experts and witnesses and some tough questions from HPC Commissioners and state officials. Highlights included lots of discussion about the role inadequate behavioral health care plays in health care costs, the good and bad of provider consolidation, and much discussion about the impact of people moving from HMOs to PPOs. We were also struck by the incessant use of the cliché term, “right care in the right place at the right time,” which was always trivial, and has now become meaningless through constant repetition.

This was the fourth year of the cost trends hearing (see info on the previous years’ hearings here, and most of our reports here). The hearing used to be 3 and even 4 days long in past years. In HCFA’s testimony on the last afternoon, we dryly suggested that the hearing be lengthened again. Nobody laughed at our joke. We were kidding, but the hearing is an important opportunity for everyone in the state’s health care policy world to express their position, to listen to each other, and to think about the tough questions.

All the prepared testimony and presentations from the hearing are on the HPC site. We took notes and tried to summarize as best we can, but there’s obviously more that was said than we can report. But click on for our detailed take of all the discussions:

Day 1:

Opening Remarks
The hearing began with some inspirational opening remarks from Governor Deval Patrick. The Governor began by describing the history of MA health reform, which served as a model for the nation and led the way to the federal Affordable Care Act. MA is now setting the pace again by tackling the costs of health care. He noted that we are already on our way, as recent premium increases for the individual and small group market have been less than 2%, a significant improvement from earlier trends. Citing that state government is leading by example through payment reform changes in MassHealth and the Group Insurance Commission, he went on to state that Chapter 224 has left room to innovate with ample oversight but limited enforcement for failure. Success depends on cost containment and transparency – enough of the right information must be available. He also emphasized that market concentration must be reduced in order to increase competition. He closed his remarks by noting that MA first showed the nation the path to universal coverage and now the Commonwealth is leading the way by cracking the code on costs. Throughout his speech, the Governor emphasized that health care is a public good and that it must be accessible for all MA residents.

The Governor was followed by remarks from Representative Steven Walsh, Chair of the Joint Committee on Health Care Financing and one of the primary authors of Chapter 224. Walsh began his remarks by stating that the challenge facing the Commonwealth as implementation moves forward is to stay on path and be creative – it would be a missed opportunity for the entire system if the same people do the same thing a little differently. He emphasized that we need to keep in mind that we are all patients, and therefore all have a stake in lowering health care costs and increasing quality. Patients ought to be excited and relieved that we are building a system that rewards us for staying healthy. Consolidation, he noted, should be driven by quality of care and not quantity of rates.  He stated the need to take a close look at the rates paid, and focus treatment on the whole individual. Providers shouldn’t have to make the choice of serving patients or shutting down. He closed by noting that the legislature is monitoring the progress we are making and that the Commonwealth’s success in this area will inform the debate in Congress.

Executive Director of the HPC, David Seltz, then concluded the opening remarks on behalf of the HPC. He commented on the history and bipartisan nature of health reform in MA. He then reiterated the HPC’s mission, to lower costs and create better, more efficient and innovative care. Seltz reiterated the need to ensure quality of care is not sacrificed and that the patient must be kept at the forefront of the HPC’s mind in this work.

Opening Presentation: CHIA annual report
The first presentation of the hearing was given by Áron Boros, Executive Director of the Center for Health Information and Analysis (CHIA).

Boros presented some key findings from CHIA’s Annual Report on the MA Health Care Market. His presentation focused on two questions and four numbers from the report to guide and inform the discussion. The first question was – how can I measure this?  This question is important because what gets measured get done. Accurate and objective measurements give common ground and provide the surest path to accountability, as assertions must be backed by measurements. The second question was – what can I compare that to?  This question addresses the need to turn data into information, providing a context to derive meaning from data.

Boros then described four statistics related to each of the upcoming panels:

  • Panel 1 (achieving sustainable health care cost growth) should focus on 3/4 – the fraction of all health expenditures paid to hospitals and physicians.
  • Panel 2 (promoting accountable, high quality care) should focus on 35% – the percentage of commercial insurance enrollees whose care was coordinated by primary care physician groups paid using a global budget, meaning that fee for service payments still account for almost two-thirds of providers. He noted that while all global budgets in MA are HMO contracts, the trend is towards fewer people enrolling in HMOs.
  • Panel 3 (measuring impact on cost, quality and access) should focus on 45%, the percentage of commercial enrollees that are Blue Cross Blue Shield of Massachusetts (BCBSMA) enrollees. Despite this number, there is no good evidence that BCBSMA is able to use its size to drive down costs. On the provider side, while Partners, Atrius and Care Group received the most commercial payments, Partners and Atrius commanded the highest prices.
  • Panel 4 (advancing transparency, information and incentives) should focus on 2X, as premiums grew twice as fast as inflation between 2009 and 2011, even while cost sharing grew. Boros noted that speaking as an economist, he sees increased cost-sharing as providing incentives for seeking value-based care. On the other hand, his inner advocate sees this trend as a warning sign since cost-sharing is attached to people seeking care and may therefore indicate shifting cost from the healthy to the sick.

Mr. Boros closed his presentation by stating that CHIA is working on calculating total health care expenditures, which has not previously been measured. CHIA will publish the methodology for this calculation in winter 2013 and release the annual report with these findings in August 2014.

Following the CHIA presentation, various commissioners raised comments and questions for Boros. One comment, raised by Commissioner Paul Hattis was that he hoped CHIA would be able to calculate additional measures in the future, including the total medical expenditures (TME) for members in preferred provider organization (PPO) plans and tracking the out of pocket burden placed on individuals. Boros responded with the challenge of attributing care to one provider system if one is seeking care at different places under a PPO plan. HPC Board Chair Stuart Altman raised the question of how HMOs and ACOs today are truly different from managed care in the 90s, stressing that we need to be critical in what is being today to really change the delivery or care and improve the efficiency of our system.

Panel 1 – Meeting the Benchmark: Achieving Sustainable Health Care Cost Growth in Massachusetts 

Opening HPC PresentationHealth Care Cost Growth in Massachusetts
The first panel opened with a presentation focused on health care spending in MA led by Nikhil Sahni, Policy Director for Cost Trends and Special Projects at the HPC. Sahni stated that understanding MA health care expenditures can be done by looking at “spend”- the level of expenditures in a given year, and “trend”- the change in expenditures over time. MA spends 36% more than the US on a per capita basis on personal health care expenditures across all categories of services (slide 5). This is due to several factors including demographics, population health and utilization that are unique to the Commonwealth. MA also performs better than average across quality measures as compared to the US, while there are still areas for improvement (slide 11). On trends, Sahni noted that growth in personal health care expenditures per capita has been slower across all payers in MA than the US as a whole (slides 23 – 24). A key takeaway from the presentation was that MA has made recent progress but still has many opportunities to lower cost on the utilization and price side of health care.

Among the many questions and comments from the commissioners in response to the presentation, Commissioner David Cutler asked what areas of health care hold the greatest potential for savings. In response, Nikhil suggested that the HPC focus on hospital care, in particular outpatient care, as well as long term care and home health care costs across payers. Executive Director Seltz recognized the progress MA has made, but stressed the challenge that remains for how to sustain this progress.

Panel 1 Expert Witness Testimony and Discussion

The first panel of expert witnesses included:

Ms. Darlene Rodowicz, CFO and Treasurer of Berkshire Health Systems
Ms. Dianne Anderson, President and CEO of Lawrence General Hospital
Dr. Jeffrey Lasker, President and CEO of New England Quality Care Alliance (NEQCA)
Dr. Gary Gottlieb, President and CEO of Partners Health System
Mr. James Roosevelt Jr., President and CEO of Tufts Health Plan/Network Health
Dr. Eric Dickson, President and CEO of University of Massachusetts Memorial Health Care

(Pre-filed written testimony from all expert witnesses may be viewed online.)

Each witness first described some of their institutions’ cost containment challenges and achievements. Ms. Rodowicz stated the Berkshire Health had some significant challenges including retention difficulties and lower salaries. However, with a community health approach they have invested more in preventive health and improved community health status. Through an employee wellness program, per member costs have flattened and premiums have stayed the same for 3 years.

Next, Ms. Anderson stated that Lawrence Hospital serves a diverse population, including some of the poorest communities in MA. This brings many challenges, she noted, including Lawrence having some of the worst paid providers in the state. However, the hospital has the lowest TME in their region of the state, and through a Medicaid waiver they have made investments that drive down costs and improve quality. For example, through improving local access to primary and specialty care and improving chronic care management, their ED transfers and readmissions have decreased. She stated that provider pay inequities needs to be fixed.

The third panelist, Dr. Lasker, described how NEQCA has focused on improving quality via outcomes measures, and the success of their integrated care management program which has reduced ER costs. He noted that the culture change across the organization took 3 to 5 years. He pointed to the growing shift from HMOs to PPOs, which results in a lack of data on these patients. Without this data, it’s more difficult to give physicians the necessary tools to align incentives.

Next, Dr. Gottlieb described the steps that Partners is taking to lower the cost of health care, including accepting lower rates through renegotiated contracts and focusing on population health management and coordinated care. As part of this, all of the PCP practices have transformed to Patient Centered Medical Homes (PCMHs), which include integrated care management programs for medically complex patients.

Mr. Roosevelt stated that Tufts has kept its TME growth rate below the statewide level through value-based global budget contracts, such as the Tufts Coordinated Care Model (CCM) and product design incentives, such as tiered and limited network plans.  He noted that provider consolidation results in higher unit costs, and consolidation should be monitored to ensure that the result is better coordination of care.

Dr. Dickson stated that UMass Memorial they are focused on delivering the right care at the right time, focused on a coordinated model of care.  The use of innovative PCMHs has impacted overall health expenditures.

The commissioners then proceeded with questions for the expert witnesses. Some of the major themes that came out of the discussion were as follows:

  • Many of the provider organization witnesses cited the need to address payment disparities from commercial payers and low Medicaid reimbursement rates as a major barrier to investing in the resources needed for effective delivery system change.
  • The provider organizations pointed to the need to increase coordinated, integrated, community-based care through PCMHs and other community-based models that keep care local and focus on prevention, chronic disease management, addressing social determinants of health, and improving community linkages. Many of the providers are already making significant progress on this front, but investments in these resources are critical.
  • Better integration of behavioral and physical health is crucial but remains a challenge. On the insurer side, avoiding carve outs can be important to increasing quality scores and having more comprehensive information. On the provider side, challenges remain regarding recruitment and supply of mental health professionals, inadequate payment rates, and lack of payment incentives under fee for service arrangements.
  • Many of the commissioners focused on the need to decrease overall health expenditures. One way to address this is through decreasing potentially preventable admissions and readmissions.
  • The witnesses all noted that collection of and access to better patient level data needs to be increased and improved. This includes data on the total experience of care and real time all payer data, as well as patient reported outcomes measures that allows providers to pair quality data with cost data.
  • All of the expert witnesses forecasted that their institution or organization would be under the state health care cost growth benchmark for this year.

Panel 2: Transforming the Delivery System: Promoting Accountable, High Quality Care

Opening Presentation – Addressing Structural Barriers to Efficiency Problems and Solutions
The afternoon session began with a presentation from Dr. Karen Feinstein, President and CEO of the Pittsburgh Regional Health Initiative. Her presentation focused on ways that provider organizations can improve care delivery through increased efficiency. She focused on the concept of providers adopting “lean production” thinking as a strategy to improve quality and lower cost. She also outlined the various barriers to achieving system reform including: healthcare organizations not being structured for high performance; the lack of education that health care professionals receive in creating high performing organizations; and the lack of incentives for high performance. She noted that the current system does not adequately reimburse for certain services, particularly for patients with complex care needs, and despite the amount spent, provider organizations have not addressed adequate population management.

Following her presentation, Commissioner Cutler asked whether the HPC should be pushing at the provider level or state level in facilitating these improvements. Dr. Feinstein responded that providers and payers should come up with solutions and the HPC should hold them accountable and potentially help to move things faster. She also noted that work must be done to empower consumers and give them a motivation to look at and then act on data.

Panel 2 Expert Witness Testimony and Discussion

The first panel of expert witnesses included:

Dr. Richard Lopez, Chief Medical Officer of Atrius Health
Ms. Deborah Devaux, Senior Vice President of Blue Cross Blue Shield of MA
Ms. Kate Walsh, President & CEO of Boston Medical Center
Ms. Antonia McGuire, President & CEO of Edward M. Kennedy Community Health Center
Mr. Daniel Moen, President and CEO of Sisters of Providence Health System

(Pre-filed written testimony from all expert witnesses may be viewed online.)

In his opening remarks, Dr. Lopez of Atrius discussed three key strategies to delivering high quality care: 1) ensuring that patients receive the right care at the right time and in the right place; 2) providing patients with appropriate care in a cost effective manner; and 3) continually looking at ways to improve efficiency. As barriers to integration, Dr. Lopez cited to the increase in PPO products associated with fee for service payments and open access and limited access to data because of privacy laws.

Ms. Devaux of BCBSMA stated three ways that BCBSMA is promoting high quality care: 1) payment reform under the Alternative Quality Contract (ACQ) to incent hospitals and physicians to restructure care and reduce medical expenses; 2) product design to engage members and employers and encourage the use of high value services, including tiered network offerings, decision support tools and cost estimation tools; and 3) better health management through medical and pharmacy management programs.

Ms. Walsh of Boston Medical Center (BMC) remarked that BMC’s expenses have declined and they have the lowest commercial rates in MA. Through the readmissions project called RED (Re-Engineered Discharge), they have created systems of care that provide patients with personalized information about their conditions and medications, including bedside counseling about medication and follow-up. This has improved medication adherence and reduced unnecessary admissions. She stressed the need to move more towards global payments.

Ms. McGuire of the Kennedy Health Center remarked on the importance of community health care and preventive services. As the health center serves a large population of refugees, they view cultural and linguistic competency as important. They also service a large uninsured population and are responsive to social determinants of health.

Mr. Moen closed out the opening remarks by stating that Sisters of Providence Health System, which includes Mercy Medical Center in Springfield, was an early adopter ACOs and managed care.  At Mercy Medical Center, their Care Connect program focuses on care integration, using quality technology to measure patient flow and using care coordinators. They also have programs for vulnerable populations, such as Health Care for the Homeless, homecare services through the PACE program, and the Providence Behavioral Health Hospital’s Mental Health and Substance Treatment Program.

The commissioners then had the opportunity to question the expert witnesses on the panel. Some of the major themes from this discussion included:

  • The shift in MA from HMO to PPO products may work against efforts to transform the delivery system through global payments and other payment reform efforts. While some employers prefer PPO products because of increased provider choice and access to out-of-state care, these products do not contain the incentives to coordinate and manage care that exist under HMO products. However, carriers are increasingly attributing patients in PPO plans to primary care providers based on claims data, but many agreed that there is still a lack of data on PPO members.
  • Increased access to primary care and preventive services are important components of transforming the delivery system. Better patient care includes examining the societal stressors that cause patients to show up at the ER and engage in risky behavior, which sometimes may be a non-medical intervention. As one example, paying for air conditioners for patients with asthma saved an enormous amount of costs. Many cited the need for more resources and investments in community-based services such as health workers and case managers, which are not typically reimbursed under fee for service arrangements. Many also noted the need for administrative simplification and standardization and investing in hospital – community health center linkages.
  • The need for better integration of behavioral and physical health arose again in the context of delivery system reform. Examples of integration included placing behavioral health clinicians physically in primary care practices with open scheduling; payers insourcing behavioral health; having substance abuse literate PCPs; and increasing depression screenings.
  • Within the delivery system, there are structural changes that can and should be made to increase efficiency.

Public Testimony

At the end of Day 1, members of the public were invited to testify before the HPC board members. First to testify was Lora Pellegrini, the President and CEO of the Massachusetts Association of Health Plans (MAHP). Ms. Pellegrini stated that one of MAHP’s biggest concerns is provider consolidation because it leads to enhanced bargaining power and increased health care costs. She recommended that providers intending to merge explain exactly how they will lower health care costs and increase quality of care and make that information publically available. Second to testify was SEIU Local 509 president Susan Tousignant, who spoke about the disparities in the amounts paid to providers. The final speaker to testify, Dr. Alan Woodward discussed the progress being made in medical liability reform and the public health problems associated with smoking and tobacco use. He decried the spread of candy-flavored tobacco products aimed at children, and called for increased investment in public health and prevention, particularly tobacco control.

Cost Trends Hearing Day 2

Opening Remarks
The second day of the cost trends hearing began with remarks from Attorney General Martha Coakley. Coakley emphasized the unique role her office has played in the health care cost debate, starting with the groundbreaking initial report on costs, and subsequent reports (all available here). Data is crucial to effective policymaking. She made a strong, personal call for better behavioral health care.

Senate President Therese Murray was next to speak. Introducing her, HPC Executive Director David Seltz mentioned that it was 10 years since he interviewed to be her health care aide at the Senate Ways and Means Committee. He praised her unwavering commitment to the Commonwealth’s health care system, which led to Chapter 224. In her remarks, Senator Murray discussed the need to focus on whole health and the overall wellbeing of the patient, including behavioral health. She also cited how chronic disease accounts for the vast majority of health care costs, yet much chronic disease can be prevented. She urged a focus on wellness and prevention. She also expressed disappointment at the rejection by the federal government of the state’s request for a waiver of federal insurance rating rules.

Senate President Pro Tempore Senator Richard Moore closed out the opening remarks by discussing the importance of Ch. 224. He urged flexibility in implementation, if some are unable to meet the cost growth goal due to factors outside their control, like federal funding cuts or a voter-initiated hospital staffing ratio law. He also advocated for using cost sharing incentives to drive patients to use care more efficiently, by, for example, waiving deductibles for using an urgent care center instead of an emergency room.

Presentation: Office of the Attorney General
The Office of the Attorney General kicked off the day with a presentation touching on key aspects of the annual Examination of Health Care Cost Trends and Costs Drivers report. Assistant Attorney General and Chief of the Health Care Division Tom O’Brien began by walking through the history of MA health reform, emphasizing the unique environment of support from the provider, insurer and consumer communities. He touched on the many challenges MA faces, including health care spending exceeding economic growth, the lack of price transparency and the lack of incentives for the right care at the right location.

Courtney Aladro, Assistant Attorney General in the Health Care Division, then walked through the recent market efforts designed to improve health cost and use focused on purchasers, plans and provider groups. She described how employers and individual health care purchasers have increasingly moved to health insurance products with tiered networks and high deductibles, and have moved to PPO products away from HMO products. She noted that consumer incentives under products that encourage value-based purchasing may come into tension with the push towards provider risk arrangements with provider incentives. She also pointed out that adjusted TME is actually higher in products with higher cost-sharing, and stated the need to examine this trend for tiered and limited network products.  Moving the payer side, she described how health plans negotiate different amounts with providers to care for patients of comparable health, reflected in variation in risk budgets, PPO and HMO payment rates, and across providers serving different populations that vary by health status and geographic design. Bella Gorman of Gorman Actuarial, who contributed much of the actuarial analysis for the report, walked through some of the statistics showing these trends. Lastly, the presentation focused on how providers are entering new risk contracts and taking on increased insurance risk without consistent mitigation by health plans. Provider consolidations and alignments are also taking place with adequate analysis of the potential benefits and cost implications.

Following the presentation, the commissioners shared concerns that despite the movement to PPO products, these products may not contain provider incentives to redesign the delivery system. EOHHS Secretary Polanowicz noted the high cost on providers for collecting large deductibles, and suggested that providers should be consulted regarding the impact of products with high deductibles and cost sharing on both cost and access.

Panel 3 – Evaluating Market Structure: Measuring Impact on Cost, Quality and Access 

Presentation: Addressing Impact of Provider Consolidation
Dr. Paul Ginsburg, President of the Center for Studying Health System Change, next gave a presentation focused on the impact of provider consolidation on MA health care costs and quality. Hospital consolidation, he noted, is on the rise because in order to increase provider leverage/revenue and respond to the push for coordinated and integrated care. Dr. Ginsburg cited research showing how provider consolidation drives up prices, which can lead to higher insurance premiums.  He also described the recent growth of hospital acquisition or affiliation with physician groups, resulting in direct effects on prices and other challenges. He then describes the market and government approaches needed to limit the impact of mergers on prices, including better information in price and quality for enrollees and incentives to steer patients to low cost providers.

In response, some commissioners raised that more accurate and timely data is needed for tiered network plans, as well as better ways for consumers to understand this information. Discussion also focused on the need to weigh the benefits vs. the costs of mergers, and the challenge of what do to after a merger if the benefit is not there.

Panel 3 Expert Witness Testimony and Discussion

The third panel of expert witnesses included:

Dr. Deborah Kovacs, Chief Medical Director of Action Medical Associates
Ms. Christina Severin, President and CEO, Beth Israel Deaconess Care Organization (BIDCO)
Mr. Eric Shultz, President and CEO of Harvard Pilgrim Health Plan
Dr. Howard Grant, President and CEO of Lahey Health
Mr. Kim Hollon, President and CEO of Signature Healthcare Brockton Hospital
Dr. Ralph de la Torre, President and CEO of Steward Health Care System

(Pre-filed written testimony from all expert witnesses may be viewed online.)

Each witness then gave a brief opening statement.  Dr. Kovacs described Action Medical Associates as an NCQA certified Patient Centered Medical Home that has been able to manage the cost of care over many years through efforts such as managing risk and eliminating barriers for primary care services.

Ms. Severin of BIDCO discussed that the organization has been operating as an ACO since 2012, with a focus on quality improvement, innovation and putting patient care first. Despite efforts to increase commercial risk contracts, she noted the decreasing percentage of patients in risk contracts as HMO patients are rapidly moving away to PPO and self-insured products. She also noted that price disparities in peer institutions result in a disproportionate share of resources in the system.

Mr. Schultz of Tufts commented that consolidation is creating disruptions for consumers as physicians move from one group to another. He discussed the importance of engaging consumers in a pragmatic way, such as through the new consumer cost and quality transparency tool called Now iKnow.

Dr. Grant of Lahey described the need for consumers to make informed decisions in real time. He stated that the requirements for financial investments in care coordination and electronic health records, for example, are dwarfing the costs saved with consolidation. He emphasized that the current fragmented market must come together to create competition and address disparities for Ch. 224 to be successful.

Mr. Hollon stated that Brockton Hospital has had success in meeting the triple aim despite the disparities in their patient population.

Dr. de la Torre described how Steward functions as a community-based ACO with near total adoption of risk, focused on care and quality management. He stressed that Steward cannot dictate prices since 2/3 of their patients are on Medicaid and Medicare. He noted Steward’s limited network products with Tufts and Fallon as a way to significantly decrease premiums.

Following these opening remarks, the commissioners proceeded with questions for the expert witnesses. Some of the major themes from the discussion include the following:

  • Despite the concern regarding the trend away from HMOs to PPOs, some of the witnesses noted the value of PPOs to purchasers. Carriers are developing models to reasonably attribute patients to PCPs through claims data and PPOs may still be able to work with global payments and result in better coordinated care. Employers should still be educated but need to strike a balance in market demand.
  • There is not a one size fits all for risk sharing approaches. The size and scale necessary to bear risk depends on the members. In order to create incentives for behavioral change, risk must be shifted just enough to get the attention of physicians, but don’t need to have full risk provider systems to effect change.
  • There is a need to address price disparities in both the commercial market and for Medicare/Medicaid but no consensus on how that should be accomplished. Potential solutions include legislation aimed at high cost providers; pushing ACOs/global payments for Medicaid; mandating percentage of premium pricing; and market-based innovations to put counter pressure on higher cost providers and reward good outcomes. Some acknowledged that strategies such as narrow networks can motivate hospitals to lower rates in order to be included in the network, but cautioned that such products may also impact the continuity of patient/physician relationships.
  • Market consolidation may also have a positive impact, especially for care coordination for small hospitals and for some providers to stay in business. However, such organizations must also be held accountable through monitoring rates and total medical spend. Consolidation can be a way for small provider organizations to migrate to global payments without sacrificing quality.

Panel 4 – Empowering Purchasers: Advancing Transparency, Information and Incentives

Remarks: Office of Consumer Affairs and Business Regulation
The afternoon session opened with remarks from Barbara Anthony, Undersecretary of the Office of Consumer Affairs and Business Regulation. Ms. Anthony discussed the importance of the Chapter 224s transparency provisions as a way to empower consumers as “pesky patients” who ask questions and demand understandable answers on price, cost and quality. Carriers and providers have the opportunity to innovate and lead through developing online and telephonic cost estimators and transparency tools. Her office will be investigating and closely monitoring these tools to ensure they are consumer friendly.

Presentation: Empowering Purchasers: Advancing Transparency, Information and Incentives

The final outside expert of the hearing was Dr. Suzanne D. Delbanco, Executive Director of Catalyst Payment Reform. Dr. Delbanco’s presentation focused on empowering purchasers by advancing transparency, information and incentives. As part of this strategy, she focused on payment design to cut waste or reflect/support performance, as well as initiatives on price transparency and reference and value pricing.  She emphasized the need to combine price and quality information to better engage consumers. She also stated that information alone doesn’t change behavior, suggesting that information should be paired with incentives such as those associated with value based insurance design and patient activation measures.

The discussion following her presentation focused on the need to better engage employers in purchasing decisions.

Panel 4 Expert Witness Testimony and Discussion

The fourth and final expert witness panel of the hearing featured:

Mr. William Grant, Chief Financial Officer of Cummings Properties
Mr. Janis Liepins, VP of Marketing for Fallon Community Health Plan
Ms. Dolores Mitchell, Executive Director of Group Health Insurance Commission
Mr. Brian Rosman, Research Director at Health Care For All
Mr. David Shore, President of MA Association of Health Underwriters

(Pre-filed written testimony from all expert witnesses may be viewed online.)

In his opening remarks, Mr. Grant of Cummings Properties stated that it’s paramount to have timely access to data that can be translated into useful information. He shared that a high participation level in their wellness programs had a significant impact on cost and helped to hold their premiums level.

Mr. Liepins of Fallon discussed the limited network products that have premiums 12% lower than their broad HMO products. He remarked that in order for cost control efforts to be successful, true coordination is key and prices must be fully transparent to consumers. He suggested that having a fixed employer contribution amount would make costs more fully transparent to consumers.

Ms. Mitchell discussed the various strategies that GIC has used to promote cost containment, all of which helped somewhat but not enough. She described the current strategy as more aggressively pushing delivery system redesign through global payment reform methods that share both gains and losses. The goal is an absolute reduction in total spending in order to reverse not just bend the cost curve.

Mr. Rosman of HCFA pointed out that while beyond looking at how much costs are rising, we need to see who is paying higher costs. Evidence from the AG and CHIA reports indicate that consumers face higher cost sharing. This represents shifting costs to the sick, which violates the equity principle of insurance as a sharing of the costs among healthy and sick. He suggested that value based insurance design, where plans cover certain high value services with no cost-sharing, can help when cost-sharing becomes a barrier to accessing care. He also noted that consumers are often confused with tiered network products as the price and quality data is not consistent across carriers.  He pointed to the Ch. 224 Prevention and Wellness grant program focused on prevention as a key way to keep people healthy and prevent the onset of costly chronic diseases.

Mr. Shore of the Association of Health Underwriters remarked that as the voice of employers, he sees employer tools to effectuate engagement with employees as key.  He stated the importance of educating employees that when they are through with all out-of-pocket costs, a cost to the market still exists.  He remains mindful of plan design and doesn’t support removing all out-of-pocket costs.

Following these remarks, the following major themes arose during the discussion with the commissioners:

  • Public health and prevention approaches should be a focus of cost control efforts even if the return on investment is further down the road. Several panelists gave examples of approaches to address root causes of chronic illness, such as ensuring access to a park in a community to decrease childhood obesity or providing an air conditioner to address problems with asthma.
  • While transparency tools on cost and quality are important, many patients will still rely on the opinions of others or their own experiences in making decisions related to care. Strategies to engage patients include shared decision-making, asking patients the right questions and ensuring they have all the information needed to manage their health problems. Patient engagement/confidence can also be measured and incorporated into quality measures.
  • Several of the panelists discussed how employers dictate the products that insurers offer, which is one reason for the growing uptake in PPOs. The purchaser community needs to be more behind payment and delivery system reform efforts and more engaged. However, the employer community also wants to retain choice and flexibility and needs help with engaging the workforce. Greater employer engagement may take a long time but is a necessary piece of the system.
  • A number of the panelists emphasized that the HPC must remember that its job is to protect patients and not providers. While buy-in from the provider community is important, the entire quality/cost discussion should not focus on whether doctors and hospitals get harmed.
  • Health insurance as a common good and shared responsibility that everyone contributes to. This is an underlying principle of Chapter 224 and critical to the success of the law.

Public Testimony

The hearing concluded with public testimony from Cynthia Tschampl of the Medical Advisory Committee for the Elimination of Tuberculosis, and a student from UMass Boston.

The HPC is accepting written comments until October 11, 2013 and should be submitted electronically to HPC-Testimony@state.ma.us. If comments cannot be submitted electronically, they may be sent by mail, post-marked no later than October 11, 2013, to the Health Policy Commission, 2 Boylston Street, 6th floor, Boston, MA 02116, attention Lois H. Johnson.

That concludes our report on the annual health care cost trends hearing. Until next year! (and comment if you made it all the way to the end)

   -Alyssa Vangeli and Lara Shkordoff

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