Controlling Health Care Spending in Massachusetts: An Analysis of Options

Managed Care and Health Care Reform: Everything Old Is New Again

“…Program features similar to those used by AHCCCS, including detailed oversight, health information technology, and payment adjustments to promote "provision of accessible and high quality care" were included in the proposal. 5,25,29 Remarkably, a news account of the proposal indicated that the commission had urged the state to "pay for care a new way." 30 The managed care backlash of just a decade before was seemingly forgotten.…”

“…25 Among the options identified by Rand, adoption of a bundled payment method, in which insurers would be encouraged "to provide a single payment for all services related to a treatment or condition" and thereby provide "a financial incentive to reduce the volume or intensity of services" was assessed as the most promising, with an estimated potential cost savings of up to 5.9% of projected total medical expenditure from 2010 to 2020. 25 A special Massachusetts commission tasked with addressing the state's cost overrun problem reached a similar conclusion, finding that paying providers on a fee-for-service basis "is a primary contributor to the problem of escalating costs and pervasive problems of uneven quality." 29 The commission recommended replacing fee-for-service reimbursement with a "global payment system" that would go beyond bundled payment methods that are episode-or setting-based, such as diagnosis-related groups (DRGs), and "prospectively compensate providers for all or most of the care that their patients may require over a contract period, such as a month or year."…”

“…Disenrollment and imposition of the savings opportunities. [25][26][27][28] The review was conducted by the Rand Corporation and published in August 2009. 25 Among the options identified by Rand, adoption of a bundled payment method, in which insurers would be encouraged "to provide a single payment for all services related to a treatment or condition" and thereby provide "a financial incentive to reduce the volume or intensity of services" was assessed as the most promising, with an estimated potential cost savings of up to 5.9% of projected total medical expenditure from 2010 to 2020.…”

“…[25][26][27][28] The review was conducted by the Rand Corporation and published in August 2009. 25 Among the options identified by Rand, adoption of a bundled payment method, in which insurers would be encouraged "to provide a single payment for all services related to a treatment or condition" and thereby provide "a financial incentive to reduce the volume or intensity of services" was assessed as the most promising, with an estimated potential cost savings of up to 5.9% of projected total medical expenditure from 2010 to 2020. 25 A special Massachusetts commission tasked with addressing the state's cost overrun problem reached a similar conclusion, finding that paying providers on a fee-for-service basis "is a primary contributor to the problem of escalating costs and pervasive problems of uneven quality."…”

“…54 Historical experience with public opinion and public response to the Rand report. 25 It is also reasonable to question whether Americans, especially older Americans, would accept the features that characterize health care systems in European countries, such as lower cancer screening rates; lower use rates and availability for high-technology medical services, such as dialysis, magnetic resonance imaging and computerized axial tomography; and markedly declining cancer screening rates with increasing age (Table 1). 47,48 Second, the notion that universal coverage will reduce health care costs by increasing population health-both because of an influx of healthier individuals into the covered enrollee pool and because use of preventive care will save money by reducing rates of serious illness and complications-is popular but refuted both by evidence and by experience with previous coverage expansions.…”