Old news

Massachusetts focused on coverage expansion first and is now turning to cost control. (Vermont is tackling these problems in the opposite order.) How will MA control costs? Governor Patrick cast his lot with ACOs and global payment.

Yesterday, the latest MA AG report was released. Despite the headlines in the Boston Globe and WBUR’s CommonHealth blog, the global payment results are not surprising:  insurance payments to proto-ACOs with global payment tools are higher than average. But this is not really news – we’ve known for a while that Partners and Atrius command higher rates through market power, not quality. (Prior post on the MA DHCFP report here) As the previous Report from the AG said in January 2010:

Variation in total medical expenses on a per member per month basis is not correlated to the methodology used to pay for health care, with total medical expenses sometimes higher for globally paid providers than for providers paid on a fee-for service basis.

What is more surprising is the expectation of short-term savings, without adequate empirical evidence. The bandwagon has been loaded up, and just now, the politicians might start to notice that global payment is a long-term project.

Looking at the evidence base, no one should be surprised. As a 2010 RWJF/Health Affairs Policy Brief noted, the results from the five-year Medicare Physician Group Practice demonstration have been mixed. A 2009 policy brief from RWJF and the Urban Institute carefully reviewed the evidence base:

We conclude that ACOs are no game changer in the short run because they require resolution of some challenging and complex issues as well as significant provider and policymaker learning, but nonetheless, they are important to try.

Blue Mass Group said it well yesterday: MA needs both provider market power reform as well as payment reform. Here at TIE, we’ve talked about this quite a bit (Austin’s NIHCM paper; market power issues for Partners; the proposed Atrius-Fallon merger; and other posts with the antitrust tag).

If the MA AG went after dominant providers wielding market power, that would be newsworthy.

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