Health care payment reform is not enough, Coakley argues

Says market clout must be tackled

By Matt Murphy
State House News Service / November 20, 2010

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Attorney General Martha Coakley cautioned yesterday against a “full-scale push forward’’ on payment reform to address spiraling health care costs without addressing the underlying issue of market clout. Coakley said the market factor has led to a disparity in pricing among providers without a clear link to quality of care.

Seeking to make an imprint on the looming debate over cost control, Coakley said yesterday that she planned to produce a follow-up early next year to her yearlong investigation that identified market leverage as a driving force behind escalating health care costs.

Coakley, speaking at the annual conference of the Massachusetts Association of Health Plans, said that she has directed her staff to resume its examination of the health care market in Massachusetts to study models of care delivery and the associated costs.

She said payment reform alone will not succeed in changing a “flawed market that doesn’t work.’’

“A shift to global payments by itself is not the panacea to controlling costs,’’ Coakley said. “Implementing payment reform without addressing the market leverage issue outlined in our report is like trying to fix the roof on a house without fixing the flawed foundation.’’

Coakley spoke as the Patrick administration readies a push to overhaul the state’s health care payment model by moving toward set payments to doctors and providers based on individual patient care and outcomes, rather than the current fee-for-service model. The global payment system would require doctors, hospitals, and other providers to band into groups that would split payments, better coordinate patient care, and, it is hoped, improve quality.

Coakley said the report produced by her office and released in January showed how wide disparities in pricing and reimbursements for procedures and care could not be linked to quality of care. She said increasing transparency for consumers around pricing would be the best start to gaining control over market-driven pricing.

“If we seek to better align payment incentives and control cost growth, then we must begin to shift how we purchase health care to align payments with value, measured by those factors the health care market should justly reward, such as better quality and efficiency,’’ she said.

The annual conference gathered health care executives from across the Commonwealth for a discussion about driving forces behind the high cost of care in Massachusetts and steps that could be taken to lower those costs, which have devoured available funds in households, businesses, and government.

“What is wrong with our health care system is that the system is not set up to reward and encourage coordinated, integrated, patient-centered, and cost-effective care,’’ said Health and Human Services Secretary JudyAnn Bigby, according to prepared remarks.

“Governor Patrick wants to address the health care cost problem by addressing the systemic problems that drive up health care costs,’’ she said. “Instead, we reward volume and technology.’’

Bigby said the solution must include a shift in the payment and care delivery system to reward value over volume.

Though legislation has yet to be crafted, Bigby said the administration would probably pursue a strategy that “guides and encourages’’ the formation of accountable care organizations that will gradually accept “more and more responsibility for the overall care of their patients.’’

“We believe that primary care medical homes should be the foundation of integrated systems and that payments should reward primary care providers to take care of or coordinate care of patients across clinical settings,’’ Bigby said.

Bigby said it could also require the creation of an entity to oversee the development of accountable care organizations and pilot programs, under the federal Affordable Care Act, that the state wants to pursue.

Average monthly health insurance premiums increased by 12 percent between 2006 and 2008, disproportionately affecting small businesses, said David Morales, the administration’s commissioner of health care finance and policy.