MA payment reform – the Governor’s bill

I just read Governor Patrick’s health care bill, HO1849, a mere 33 pages. My quick summary: He is casting its lot with ACOs, embracing the BCBS Alternative Quality Contract (as described in Health Affairs), and regulating both.

  • State-level ACOs.  The Medicare ACO rules are leaving many cold, including highly integrated providers like the Mayo Clinic. No worries, the Governor has fully embraced state-based ACOs. Many payers; integrated providers; one contractual model.
  • Transparency in pricing. Follows the AG’s groundbreaking report last year with more transparency and attempts to equalize pricing between providers.  That’s very good news for Steward Health Care, which bought 6 Catholic community hospitals from Caritas and recently acquired 2 more hospitals.  Their website already proclaims Steward to be a “community-based accountable care organization.”
  • Competition. Many have raised antitrust concerns with further provider integration. This legislation proposes several responses:  diligent review by the AG (and Martha has a good health care division) (secs. 2, 4); and a very interesting provision that prohibits provider “bundling” of services (ie, prohibiting the famous teaching hospital from forcing plans to also contract with their community hospitals) (sec. 17). We’ll get an early test of MA ACO antitrust policy by seeing the AG’s response to the proposed Atrius-Fallon Clinic merger. I predict approval. On the anti-bundling provision, I’m not sure how that works in an ACO environment. I thought integration was the point.
  • Fraud & abuse. The bill asks the AG to ask the feds for better ACO waivers from Stark II and AKS (sec. 2(c)). I would add CMP to that list in a hurry. The federal Waiver Rule looks pretty good, but needs to expand to cover state ACOs too (ie, a state ACO contract should not be considered a financial relationship, remuneration, or an inducement for Stark II, AKS or CMP purposes). The feds should do this willingly – it’s totally the right thing to permit state experimentation.
  • Med mal reform includes a 6 month cooling off period (sec. 19) and limited admissibility of physician apologies (sec. 20).  Hopefully, they will consult with some of the local experts with good empirical work in this area.
  • Cost shifting by providers is made illegal in Sec. 3 (they should talk to Austin)
  • Provider rate increases are capped annually by a percentage set by the Commonwealth (Sec. 17).  Not an all-payer rate setting system, but a step in that direction.
  • ACOs must join a mandatory reinsurance pool, which they fund and operate on a non-profit basis (Sec. 17).  Trying to hedge ACO insolvencies is a good idea, given what happened in the 1990s.
  • More state boards and commissions than I can keep track of.

The hearing will be next Monday, May 16 before the MA legislature’s Committee on Health Care Financing (10:00 am in Gardner Auditorium at the State House).


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