• Massachusetts cost control legislation comparisons

    Austin asked for some analysis of the Massachusetts House & Senate bills.  The House Bill has much more powerful cost control elements, with real potential.

    House – two striking provisions are pro-health plan and anti-Big Health System:

    • Smart tiering – really a way to bust up hospital systems without reversing the mergers. Forces providers to allow unbundling.  This could revolutionize health care antitrust law.
    • Directly addresses provider “payment imbalances” with tax on variations above 20%, absent a quality explanation.  Another nuclear weapon.

    Senate – weaker on cost control, but 3 unique things worth mentioning:

    • The Authority is an IPAB light, but unlike the federal board, it might actually see the light of day, with real people appointed and working.  I can see this transitioning over time.
    • Atul Gawande checklists (who can disagree?)
    • “Health system benefit” surcharges. Nice work on identifying positive externalities that health plans can’t capture (due to member turnover) and therefore plans have no business model to support (prevention, wellness, Health IT). 2 plausible routes:  allow plans to collaborate or tax them and have the govt provide these goods. The Senate Bill takes the second course. The House bill supports wellness and prevention generally without addressing this fundamental problem of positive externalities.

    In both bills:

    • Independent super-agency with more data and credibility (Senate, based on Div. of Health Care Finance and Policy; House, on the Div. of Health Care Cost & Quality)
    • Encourage alternative payment contracts (bundled, global, alt quality)
    • Workforce development
    • Transparency initiatives
    • University of Michigan Health System’s Disclosure, Apology and Offer program (soft med mal reform)
    • Use MassHealth (Medicaid) lives to jump-start local ACOs
    • Unlike almost every other state, in MA, the Attorney General is deeply involved, supporting more competitive health care markets.  Kudos to Martha and her excellent team.

    @koutterson

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    • One concern I have with the structure of smart tiering as written in the House bill – what’s to stop powerful hospital systems from negotiating themselves to a preferred tier for every service? Just because the option for smart tiering is there, how are insurers going to be able to negotiate for it effectively without getting steamrolled by a hospital system with substantial market power?