The Next Health Reform Move: Overhauling Payment Practices

Massachusetts is once again on the cusp of leading the United States in health care reform.

In 2006, the state addressed the issue of providing coverage to the uninsured. Now, with 98 percent of the state’s residents covered, state policymakers are turning to the cost of care. Massachusetts leaders are working on a groundbreaking attempt to show the nation that almost universal health care can be achieved while also maximizing cost effectiveness and increasing the quality of care.

We at Health Care For All have organized a consumer-based coalition, called the Massachusetts Campaign for Better Care, focused on payment and delivery reform. The coalition formulated 10 principles expressing our priorities for patient-centered payment reform. These principles need to be embedded in any successful payment reform effort to ensure that as we lower the cost of our health care, patients experience higher quality and that the most vulnerable are protected.

Soon, Massachusetts lawmakers will begin debating comprehensive payment reform legislation. The proposals, building on legislation filed in February 2011 by Gov. Deval Patrick, will seek to remake our health care system to reward value and quality, rather than volume and quantity. Re-orienting the way doctors, hospitals and other providers are paid can align incentives to promote patient-centered care that focuses on health and disease prevention, ultimately lowering health care costs.

In the upcoming debate, the Campaign for Better Care will advocate for a number of policies we believe are crucial to effective reform.

For starters, we believe that, in shifting payment methodologies away from the fee-for-service model, steps must be taken to address the particular requirements of those with special needs, people with disabilities and chronic illness, immigrants, the homeless, people with low and moderate income, seniors, and children. In order to avoid the pitfalls of capitated arrangements like those experienced in the 1990s, payment policies should take into account the higher costs incurred by patients who experience barriers to care due to socio-economic status, language and other social and cultural factors. To this end, we must develop and use risk adjustment factors to the rates being paid in order to protect patients with high medical utilization.

In addition, health care system reforms must be accompanied by a renewed commitment to funding public health and community-based prevention. Expanded investment in prevention and public health will lead to a reduction in overall health care costs.

Also, the patient needs to be a partner in their health care and must be given the proper tools to be engaged. Patients and providers should collaborate in care plans that provide patients with the necessary skills, confidence and knowledge. Programs like chronic disease self-management and shared decision-making have demonstrated that increased patient confidence and engagement improves care and lowers health care costs.

Finally, our health care system is overly complex and fragmented. Tests get repeated, records go missing and no one is paid to look out for our overall health. We can achieve cost reduction and quality improvement by rewarding coordinated care. Providers with higher rates of preventable events, like preventable readmissions, inappropriate hospital admissions, or preventable complications, should face financial consequences.

Massachusetts is proud to have provided a template and test bed for reforms that became part of the Affordable Care Act. As the state is poised to continue down the health reform road, consumers will be active to make sure reforms lead to better, more affordable care.

Paul Williams is the payment reform policy coordinator for Health Care For All in Massachusetts.