Controlling Health Care Spending — The Massachusetts Experiment

Composition of Massachusetts Residents Newly Covered under Chapter 58 (as of 1/1/08) (Photo credit: Wikipedia)

As debate rages on about implementation of the Affordable Care Act (ACA), national attention is once again focused on Massachusetts, which instituted a similar comprehensive health care reform package in 2006. After expanding health insurance coverage to almost 98% of the state population, Massachusetts is now struggling to control increasing health care costs that threaten the continued viability of its reforms. This second phase of health care reform presents entirely new challenges. Whereas expanding coverage has popular appeal, cost control does not. Whereas expanding coverage injects additional dollars into the health care system, cost control does the opposite. Whereas expanding coverage can be relatively simple, cost control is difficult. Yet despite these obstacles, Massachusetts forges ahead, with a combination of public and private efforts at payment reform on an unprecedented scale.

Massachusetts spent more than $61 billion on health care in 2009, a figure that places it among the highest-spending states in the country.1 In the past 5 years, growth in health care spending has consistently exceeded economic growth, resulting in challenges both for lawmakers dealing with a constrained state budget and individuals required to purchase coverage privately. In fiscal year 2012, health care will consume 54% of the state's budget, up from 49% in fiscal year 2009, with the bulk going toward Mass Health (Medicaid) and individual subsidies for purchasing health insurance. For individuals, monthly premiums for a minimal (“bronze”) plan purchased through the Commonwealth Choice connector (the state insurance exchange) increased from about $175 in 2007 to $275 in 2012 (a 57% increase), despite slowed growth in overall health care spending since the start of the recession in 2008.

To address these concerns, Governor Deval Patrick convened the Massachusetts Special Commission on the Health Care Payment System, which voted unanimously in July 2009 to recommend that the state transition from a fee-for-service to a global payment system within 5 years. The commission also encouraged providers to band together into accountable care organizations (ACOs) — organizations of providers held jointly accountable for spending and quality of care for a defined population of patients. Meanwhile, the Health Care Quality and Cost Council, created by the 2006 coverage-expansion law, issued its Roadmap to Cost Containment in 2009; in it the council argued strongly for global payment and systemwide redesign to lower spending.2Recognizing that price and volume together account for spending, the Office of the Attorney General and the Division of Health Care Finance and Policy embarked on a landmark effort to document the substantial price variations in the state — illustrating, in several influential reports, the role of providers' market power in determining the prices charged to commercial insurers.3

These activities culminated in a comprehensive payment and delivery reform bill released by Governor Patrick in February 2011. The bill proposes migrating into global payment arrangements most state employees and Medicaid enrollees, groups that together include about 25% of Massachusetts residents.4 It also encourages but does not require providers to form ACOs — with the state providing oversight of market power and price transparency — and includes provisions for malpractice reform favored by physicians. The bill also grants the commissioner of insurance the authority to strike down increases in insurance premiums that result from excessive increases in underlying provider-payment rates. The appropriateness of increases in provider-payment rates will depend on how they compare with growth in the Massachusetts gross state product (the state-level equivalent of the national gross domestic product) and the growth of total medical expenses in the providers' particular region. Combined with global payment, this authority to indirectly regulate providers' prices would be among the strongest policy tools available for cost control. Since the bill's release, state legislators have been drafting their own proposals, and both public and closed-door debates have intensified. The legislative outcome remains unclear.

While the state aggressively pursues its agenda, innovations in the private sector have arguably taken the lead. Most notably, Blue Cross Blue Shield of Massachusetts, the largest commercial insurer in Massachusetts, launched the Alternative Quality Contract (AQC) — based on global payment with shared savings and shared risk, as well as pay-for-performance incentives — with seven provider organizations in 2009. Since then, the AQC has been extended to cover more than a dozen provider organizations and more than 600,000 enrollees. Encouraged by provider organizations and the AQC, Harvard Pilgrim Health Care and Tufts Health Plan, the state's other major insurers, have also negotiated global payment contracts with their provider networks, which will probably push the number of enrollees in commercial insurance plans that have global payment arrangements to more than 1 million.

Finally, and perhaps most important, the Center for Medicare and Medicaid Innovation launched its Pioneer ACO program in January 2012 with 32 advanced provider organizations around the country. Among them are 5 large organizations in eastern Massachusetts (Atrius Health, Beth Israel Deaconess Physician Organization, Mount Auburn Cambridge Independent Practice Association, Partners Healthcare, and Steward Health Care System), which will together care for approximately 150,000 Medicare beneficiaries (roughly 75% of Medicare beneficiaries in the Boston area) under their Pioneer contracts. Additional provider organizations in the state will probably join the Medicare Shared Savings ACO Program later this year.

These synergistic efforts by public and private payers have resulted in a watershed moment in Massachusetts health care. By our estimates, if the Group Insurance Commission, which purchases insurance for state employees, and Medicaid follow Medicare and commercial payers into global payment, substantially more than half of residents of eastern Massachusetts would be cared for by providers working under risk-based contracts. Primary care physicians will have the opportunity and responsibility to steer resource utilization for their organizations, and providers in all specialties will have strong incentives to better coordinate care, improve quality, and intensify their focus on patient-centered care. Referral patterns and the movements of patients from one provider system to another will probably change considerably. Similarly, with strong incentives to reduce spending, provider organizations will probably take an active role in identifying and discouraging the use of low-value services. Opportunities will be ripe for designing incentives within organizations directed at individual physicians as well as teams of providers.5

Yet immense challenges loom. Because enrollees in preferred-provider organizations and most employees of self-insured firms remain largely outside of global payment arrangements, the fee-for-service system retains a substantial role. With global payment expected to constrain spending for a growing proportion of patients, undesirable spillover effects, such as cost shifting onto the fee-for-service population, may occur. At a macro level, Massachusetts relies heavily on specialty-driven tertiary care delivery systems not only for its health care but also for jobs and the education of thousands of physicians-in-training each year. Indeed, health care is an engine of the Massachusetts economy. A crucial question is whether lawmakers will gain the stakeholder support needed to embrace cost control and tackle the roots and drivers of Massachusetts health care spending, given that unintended consequences for the labor market and the broader economy may lie downstream.

No matter the outcome, this wholesale Massachusetts experiment should offer invaluable lessons for other state and federal cost-control efforts, particularly as the ACA is implemented. One lesson is already resoundingly clear: the growth of health care spending threatens the sustainability of every other public service, from education, to public health, to infrastructure, to defense. Indeed, health care spending is the most important determinant of our growing national debt. In a society of limited resources, the imperative for cost control now comes from outside health care. Payment reform may well be a reasonable beginning, but fundamental reform of the delivery system is needed if we are to truly succeed.

Disclosure forms provided by the authors are available with the full text of this article at NEJM.org.

This article (10.1056/NEJMp1201261) was published on April 11, 2012, at NEJM.org.

SOURCE INFORMATION

From the Department of Health Care Policy, Harvard Medical School (Z.S., B.E.L.); and the Division of General Medicine and Primary Care, Beth Israel Deaconess Medical Center (B.E.L.) — both in Boston; and the National Bureau of Economic Research, Cambridge, MA (Z.S.).

REFERENCES

1. 1
   Centers for Medicare and Medicaid Services. National health expenditure accounts (httphttp://s://www.cms.gov/NationalHealthExpendData).
2. 2
   Massachusetts Health Care Quality and Cost Council. Roadmap to cost containment. October 21, 2009 (http://www.mass.gov/hqcc).
3. 3
   Examination of health care cost trends and cost drivers: report for annual public hearing, June 22, 2011. Boston: Office of Attorney General Martha Coakley (http://www.mass.gov/ago/docs/healthcare/2011-hcctd.pdf).
4. 4
   An act improving the quality of health care and controlling costs by reforming health systems and payments. Boston: Commonwealth of Massachusetts, 2011 (http://www.mass.gov/governor/docs/legislation/paymentreformlegislation.pdf).
5. 5
   Landon BE. Keeping score under a global payment system. N Engl J Med 2012;366:393-395
   Full Text | Web of Science | Medline

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Futuros sanitarios en España

Fuente: elgerentedemediado

Por: Sergio Minue

Mientras Sergio Minue se desespera ya no por los copagos, sino por como se puede llevar esto a la práctica. Este hermosa mujer , cuyo audio no hemos omitido pero es mejor verla que escucharla, está en el original, con una cara angelical les cuenta esto a los españoles. Gente desagradecida si las hay, aqui en Argentina nos han tocado para tareas peores, bigotudos, pelados, al menos ellos pueden recrear su vista. Pero ante título tremenebundo de Sergio, también vale decir que otro mundo es posible, aunque la lucha no está siendo fácil. Ni aún en esta América Latina acostumbrada a las mismas recetas que hoy les imponen. 

El futuro no es lo que solía ser

“Poner en valor lo que tiene mucho en valor, puesto que no hay cosa que tenga más valor que una medicina que cura enfermedades. Hemos adoptado una medida que ya estaba adoptada…”

Este interesante discurso no forma parte de un capítulo de Barrio Sésamo ni tampoco a ninguna antología del granYogi Berra ( el autor de aquellos maravillosos aforismos como “el juego no se acaba hasta que se termina” o el no menos grande de "el futuro no es lo que solía ser"), sino de la reciente comparecencia de la actual Ministra de sanidad española, Ana Mato, ante la aprobación de las medidas del gobierno español para incrementar el copago farmacéutico. La medida aprobada dista de ser sencilla de entender y aún menos de aplicar. En un sistema sanitario “balcánico”, con diecisiete sistemas sanitarios sin coordinación, conseguir establecer diferentes tramos de copago en función de la renta de los ciudadanos no parece que vaya a ser tarea fácil.
El propio ministerio considera que el cambio estará en vigor en un par de meses, previsión bastante optimista, teniendo en cuenta que requiere poner a disposición del sistema sanitario la información fiscal sobre la renta de pensionistas y activos. Al margen de las consideraciones de carácter legal sobre la medida, es razonable pensar que implantar una medida semejante no será ni fácil ni barato, y además hará aún más farragosas y burocráticas las consultas de los médicos de familia, ya de por si bastante  colapsadas.
Es hilarante comprobar con que facilidad ven el proceso de implantación de la medida los generadores de opinión pública, periodistas y tertulianos de los medios de comunicación españoles, esos sabios que de todo saben gracias a algún extraño milagro (en la tertulia de Julia Otero sobre los recortes, por ejemplo, participaban tres grandes expertos en la materia: un militar retirado, un aficionado al arte, y un periodista). Curioso país en los que buena parte de la decisión y la información sobre asuntos tan complejos como es el sistema sanitario y su financiación esté en  manos de personas con tan escasos conocimientos sobre el terreno que pisan.
En uno de los trabajos realizados por los alumnos de nuestro Máster de Salud Pública, analizaron la formación, previa a su nombramiento, de los ministros de sanidad españoles  a lo largo del periodo democrático. Es ilustrativo repasarlos.
De los 18 ministros de sanidad y hierbas afines ( consumo, bienestar social, servicios sociales, igualdad) 7 eran licenciados en derecho, 3 en economía, 1 en derecho y economía, 1 en economía e ingeniería industrial, 2 en medicina, 1 en físicas, 1 en sociología, 1 sin licenciatura alguna y otra con dudas de que llegara a culminarla.
Por supuesto llama la atención que solo 2 de 18 hayan sido médicos. Es impensable imaginar un gobierno donde el ministro de Economía pueda ser sociólogo,  y mucho menos carecer de estudios superiores. De Guindos es un tipo que me produce recelo, con esa pinta de tiburón de Wall Street, y esos oscuros antecedentes con el lado oscuro de la economía ( Lehman Brothers). Pero aparenta saber de lo que habla. Lo que no ocurre con su compañera Mato, metida en un traje que le viene grande, como ocurrió con su antecesora, la no menos célebre Pajín.
Albert Jovell siempre ha defendido la idea de que el ministerio de sanidad debería ser dirigido por  un médico, opinión con la que coincido en buena medida. Pero siendo sorprendente el hecho de que solo 2 de 18 ministros de sanidad procedan del ámbito sanitario ( el 10%), aún sorprende más la escasa relevancia del conjunto de ministros, donde el número de éstos que han dejado cierta huella y muestras de competencia se cuentan con los dedos de una mano. No deja de ser llamativo que el informe sanitario de mayor trascendencia lleva el nombre de un ministro de Economía (Abril Martorell). En este país ha habido, hay y habrá, afortunadamente, muchas cabezas brillantes que sepan de sanidad y sean capaces de gestionarla con acierto, de todas las tendencias políticas. Pero lo llamativo es que casi siempre, la sanidad es considerada como una cuestión menor que puede ser dirigida, casi, por cualquiera. Las consecuencias, como vemos, las pagamos todos.

En epocas de ajustes......alguien entenderà esto ?

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The Savings Illusion — Why Clinical Quality Improvement Fails to Deliver Bottom-Line Results

Stephen S. Rauh, M.B.A., C.F.A., Eric B. Wadsworth, Ph.D., C.P.A., William B. Weeks, M.D., M.B.A., and James N. Weinstein, D.O.

December 14, 2011 (10.1056/NEJMp1111662)

Article

References

It has become a core belief in U.S. health care that improving clinical quality will reduce health care costs. It seems intuitive that reducing readmissions, shortening lengths of stay, and building efficiency into clinical processes will reduce resource utilization and thereby lower costs. Certainly, evidence suggests that there is no association between high quality and high costs.1 Yet true bottom-line savings from improved clinical quality rarely materialize, and costs continue to climb. Manufacturing and service companies around the world have demonstrated the cost benefits of improving product quality and production efficiency. So why haven't nearly two decades of work on improving health care quality had a measurable effect on health care costs?

The explanation lies in the cost structure of the typical health care setting. Its management and organization create a rigid cost structure that is relatively insensitive to small changes in patient volume, resource use, or the severity of patients' health conditions. This fixed-cost dilemma leaves most health care costs insensitive to changes in volume and utilization, so clinical quality improvements typically create additional capacity rather than bottom-line savings.2 An examination of the different cost layers highlights the distinction between variable costs, such as supplies and medications, where reduced use produces true savings, and fixed costs, such as facilities and ancillary services, where the costs persist despite reduced use.

To better understand the cost structure of health care delivery, it can be useful to consider how different costs behave depending on the degree to which they are sensitive to changes in resource utilization. The four cost layers we have identified are defined in the tableBehavior of the Various Cost Layers in the Health Care System..

Clinical improvements that reduce layer 1 costs, such as those of supplies and medications, will generally create bottom-line savings, since these are the only truly variable clinical costs in a hospital. To generate savings by reducing use of the resources that account for layer 2 costs, the need for the resource must be reduced enough to allow elimination of a payable unit. For instance, a single nursing unit might have to discharge multiple patients before any savings in hourly nursing labor costs could be captured by allowing an hourly employee to go home early. Reducing layer 3 resources — those for equipment, operating-room time, or physicians' salaries, for example — almost always produces additional capacity without bottom-line savings. If an intervention reduces operating-room time by 15 minutes, the costs of the equipment and salaried staff required to run the operating room do not change. Nonclinical layer 4 costs are primarily fixed in the short run, but reducing administrative labor costs by achieving administrative efficiency will produce true savings in future operating cycles.

Because of these cost behaviors, quality-improvement efforts that reduce lengths of stay or readmissions or increase radiology throughput do not create substantive bottom-line savings. They generally create capacity to treat additional patients. Similarly, efforts to expand the access of disadvantaged populations to primary care under the assumption that such access will be paid for through avoiding use of high-cost care sites — such as emergency departments — do not generate cost savings. The cost of staffing and equipping an emergency department does not change if there are small reductions in utilization. Indeed, improved access will increase health care costs if new physicians and staff are hired to serve new patients in primary care practices.

Although capacity creation does not generate bottom-line savings, it does create an opportunity to admit another patient and collect additional revenue. Because health care costs are relatively fixed and do not change much at the margin, the cost of admitting a new patient is remarkably low, making volume growth a highly profitable strategy. Volume growth also can give the appearance of reducing costs, since the cost per case decreases when the high fixed costs are spread over a larger number of patients, although total costs will probably continue to rise. Growing volume and increasing revenue, rather than creating true bottom-line savings, are typically at the core of the business case for high-quality care.3

Because of the rigid cost structures, incremental reductions in resource use are unlikely to generate cost savings for either a health care setting or the health care system. The most meaningful way to achieve savings is to focus on overall reductions in utilization rates for health care services and to eliminate the associated unnecessary capacity.

In a recent article, Kaplan and Porter argue that most health care costs are not fixed.4 Postulating that personnel costs can be adjusted and space reallocated on the basis of demand and patient mix, they suggest that cost behaviors are not responsible for the inability to generate cost savings, but “management inattention” is. Although we do not dispute this logic, its practical application is dependent on both procedure volume and the time horizon required for aligning resources with demand. High-volume procedures and treatments for which resource use can be standardized across the cycle of care and for which capacity can be readily adjusted to accommodate appropriate volume appear to be best suited to the aggressive cost management advocated by Kaplan and Porter. Presumably, lower-volume treatments and procedures would have to be consolidated regionally to be more amenable to effective cost management. Until that happens, the fixed-cost dilemma will remain an obstacle. Cost layering provides management with a framework for targeting changes that will generate the most immediate savings.

Whereas quality improvement is producing significant benefits for patients, quality initiatives will continue to produce disappointing bottom-line savings as long as the capacity created is used to support growth in patient volume. As the U.S. health care system begins shifting its focus from volume to value, hospitals will need to adapt their cost structures and capacity to accommodate lower per capita utilization rates as well as reductions in the per-episode intensity of care.

Disclosure forms provided by the authors are available with the full text of this article at NEJM.org.

This article (10.1056/NEJMp1111662) was published on December 14, 2011, at NEJM.org.

SOURCE INFORMATION

From the Dartmouth Institute for Health Policy and Clinical Practice, Lebanon, NH.

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