Massachusetts Healthcare Reform


Like the community organizations that must increase outreach efforts to formerly disenfranchised healthcare consumers, the administrators who fulfill the law’s mandates, and citizens who will be comparing new health plans, hospitalists may find themselves working harder once the law is implemented.

Massachusetts’ lawmakers garnered huge headlines across the nation in April when the Democratic-dominated state legislature passed a health insurance reform bill nearly unanimously, and Republican Governor Mitt Romney signed the bill into law. This summer, health policy experts are hard at work implementing the first of many mandated stages of the legislation. Other states will watch Massachusetts in the next year as administrators hammer out details of the much-heralded bipartisan statute. Much remains to be done, however, and effects of the statute on patients, hospitals, and physicians remain unclear.

The hope is that the state can ensure nearly universal health insurance coverage for its estimated 500,000 citizens who currently have none. The Massachusetts statute aims to accomplish this feat by offering subsidized insurance coverage to those earning up to 300% of the federal poverty level (facilitated by a Medicaid waiver now being finalized between the state and CMS); assessing $295 per employee from businesses with 11 or more employees who do not provide coverage; and requiring purchase of affordable individual insurance products by those to whom such products are available.

Can the complex, market-driven compromise work? If all staged implementations go into effect as planned, will they be sustainable? Once in place, how might these reforms play out for the practice of hospital medicine? The Hospitalist recently solicited opinions from several hospitalists, physicians, a network president, and health policy experts to get some idea of what the future may hold for healthcare delivery in Massachusetts.

The hope is that Massachusetts can ensure nearly universal health insurance coverage for its estimated 500,000 citizens who currently have none.

Key Features of the Legislation

As the number of uninsured Americans continues to grow, and reform at the federal level has stalled, many states have been working on their own plans to increase access to insurance and healthcare. The linchpin of individuals’ and businesses’ shared responsibility, health policy experts say, was key to the bipartisan support shown for the Massachusetts insurance reform bill. As of July 1, 2007, every citizen over 18 will be required to obtain health insurance. Businesses with 11 or more employees must pay $295 per employee if they do not offer coverage. (This provision was vetoed by Governor Romney when he signed the bill, but it was subsequently overridden by the legislature.)

The legislation—hundreds of pages long—stipulates an approximate two-year timeline for implementing all phases of the plan, and includes state tax penalties for individuals who don’t comply with the requirement to obtain insurance. The law also creates a state authority, The Commonwealth Health Insurance Connector, to set eligibility standards for subsidized policies, expand Medicaid enrollment, determine affordability guidelines, and approve of plans submitted by private insurers to be offered to consumers. It is anticipated that The Connector (its nickname) will act as a clearinghouse, linking individuals and small businesses with choices of affordable health plans paid for with pretax dollars.

Some of the features lauded by most—even critics—include expansion of Medicaid enrollment; policies with no to low premiums and no deductibles, on a sliding scale, for individuals and families earning up to 300% of the federal poverty line ($29,400 for individuals and $60,000 for families in the contiguous 48 states); and portability of the policies. In addition, young adults can remain covered through their parents’ policies until they become independent or reach age 25. Other specially designed low cost, limited coverage plans will be offered to young adults between ages 19 and 26.

In the press, the statute has been touted as providing “universal care,” but critics doubt that the coverage will be truly universal. For instance, they claim, based on U.S. Census data, that the number of uninsured in Massachusetts is closer to 714,000—not the 500,000 that resulted from bilingual telephone surveys used by those who drafted the bill. Those who espouse a single-payer solution to the insurance crisis, such as Physicians for a National Health Policy and Mass-Care (the statewide coalition of organizations that back single-payer healthcare), argue that mandating purchase of individual plans will shut many working families out of the market. Even administrators and physicians interviewed for this article admit that to generate affordable policies, insurers may have to limit networks and benefits. And increasing the number of insured citizens may have no effect on the rising tide of healthcare delivery costs. With so many unknowns, and a complicated administrative system to initiate, the task of fulfilling the statute’s mandate is daunting.

Where It Is Now

Reached in mid-July between meetings, Jon M. Kingsdale, PhD, newly appointed executive director of the Commonwealth Health Insurance Connector Authority, reported that his board had met five times since June 7. Included in its busy schedule: generating a plan of operations and a budget and hiring staff. The Connector also met its first legislative deadline, which was to develop and issue regulations and criteria by July 1, 2006, for contracting with health plans for the Commonwealth Care Health Insurance Program, or C-CHIP. This is the state-subsidized health plan for people earning up to 300% of the federal poverty line that will begin on October 1, 2006. Key features of C-CHIP and other components of the Massachusetts health reform include no premiums for those who earn less than 100% of the federal poverty line, increased coverage for children, and increased Medicaid reimbursement rates for providers (a good thing for hospitals). Premiums for those earning 100%-300% of the federal poverty line will be set according to a sliding scale, but none of the C-CHIP plans include deductibles. Funding for this plan will come from federal and state matching Medicaid funds made possible by a waiver currently being negotiated between Massachusetts and CMS. (Formal approval had not yet been granted by CMS as of July 21.)

As to the insurance products for those earning above 300% of the federal poverty level, Dr. Kingsdale says The Connector board will address affordability criteria once C-CHIP deadlines have been met. The legislation calls for The Connector to provide its seal of approval for plans that are offered and make determinations about continuing or withdrawing approval. After two years, the agency will formally evaluate the program and make recommendations for changes.

Reactions to the Plan

Joseph Li, MD, assistant professor of medicine at Harvard Medical School and director of the Hospital Medicine Program at Beth Israel Deaconess Medical Center in Boston, admits that his excitement about the insurance statute is somewhat tempered. His personal opinion, which does not reflect his group’s or hospital’s opinion—is that he will “believe it when it’s truly enacted.”

Massachusetts has passed healthcare care reform bills in the past: Witness the 1988 legislation under Governor Michael Dukakis that was later repealed. Nevertheless, Dr. Li says, “I’m glad to see it happen. A lot of people have been wondering how we are going to address the issue of the 45 million uninsured in this country. This is one step toward that, but there are really a lot of ifs, ands, and buts on whether it will truly be pulled off in a year or two.”

Shortly after the ceremonial signing of the bill in early April, Nancy C. Turnbull, president of the Blue Cross Blue Shield of Massachusetts Foundation, co-wrote an editorial with Philip W. Johnston, calling the legislation a “bold insurance experiment.” Both Turnbull and Johnston were part of the Dukakis team that helped create that administration’s 1988 healthcare reform bill, which was later repealed. In their 4/16/06 Boston Globe editorial, the authors noted that the consensus for passing the April legislation bodes well for the plan. Recently, Turnbull said she was still optimistic about the workability of the reform.

Praising The Connector’s “aggressive implementation schedule” (for the expanded Medicaid coverage and the C-CHIP), Turnbull points out that outreach and public education will be key to the success of the plan’s subsidized coverage components. To that end, she anticipates that the Foundation will fund grants to community-based organizations to help them with the “significant new responsibilities” of community outreach to enroll those eligible.

What’s “Affordable?”

The individual mandate deadline is July 1, 2007, and before that date The Connector is charged with making determinations about affordability standards. “Over the next six months,” explains Turnbull, “they will have to decide what portion of household income it is reasonable to expect people to contribute toward health coverage.”

People such as Steffie Woolhandler, MD, MPH, a primary care physician in the Department of Medicine, Cambridge Hospital and Harvard Medical School (Boston) and a co-founder of Physicians for a National Health Program, which favors a single-payer system, worry that insurers will rely on high deductibles and co-pays to make premiums affordable.

“Consumer-directed healthcare is terrible for patients,” says Dr. Woolhandler. And under the payment structure of high-deductible insurance policies, “payment is terrible for docs because most of what we bill is in that early part of spending before the deductible [is met].

“I’m a primary care doc,” she continues, “and most patients who come to my office would be paying out of pocket in that consumer-directed healthcare situation.”

Calling the statute a hoax, Dr. Woolhandler maintains that it won’t achieve universal healthcare, and, in fact, will financially penalize working families.

Turnbull acknowledges that concerns such as those voiced by Dr. Woolhandler are well-founded because insurers and employers have traditionally resorted to increased cost-sharing to regulate premiums. However, she says, “If we don’t find ways to make good coverage more affordable, then the individual mandate will not go into effect for many people.”

Asked what he would say to critics who do not think private insurance companies can structure products that are both affordable and of good quality, Dr. Kingsdale says, “It’s up to them [the insurance companies] to prove you wrong. A well-functioning market with a lot of good information, which is what this reform calls for, can improve upon the plans available to what is perhaps the least well-functioning part of the existing insurance market: the non-group and small-group insurance market.”

Determination of good quality, affordable benefit packages will be a difficult decision. “In my personal view, I think we will have failed if, as a result of the mandate, we succeed only in requiring people to purchase coverage that is not adequate,” says Turnbull, “because then we will have traded ‘un-insurance’ for underinsurance, and that’s not a good policy outcome either.”

I’m glad to see [universal health coverage in Massachusetts] happen. A lot of people have been wondering how we are going to address the issue of the 45 million uninsured in this country. This is one step toward that, but there are really a lot of ifs, ands, and buts on whether it will truly be pulled off in a year or two.

—Joseph Li, MD

Some Likely Effects

For his hospitalist group at University of Massachusetts (UMass) Memorial Medical Center in Worcester, the new legislation “will not represent any new change in our mission or change in the composition of our typical patient panels,” says Glenn Allison, MD, chief of the Division of Hospital Medicine.

Hospitalists, in general, are accustomed to and adept at caring for unassigned patients included in the uncompensated pool, he notes, and at UMass, caring for these patients is a major mission of the hospital. Dr. Allison is hopeful that the legislation holds promise for bringing many previously marginalized and uninsured people into the healthcare system.

Thomas H. Lee, MD, MPH, network president of Partners HealthCare System, Inc, Boston, believes everyone in Massachusetts wants the healthcare reform to work. All stakeholders must “face reality,” he says, and realize that lowering the cost of healthcare is imperative. “It’s clear that the whole healthcare system must become more efficient. The imperative for that was present before this legislation was passed, and I’m not sure the pressures for that imperative are going to change qualitatively.”

One change Dr. Lee does foresee due to the legislation’s dependence on market reforms is that resulting insurance products will “spend a lot less money on patients than existing ones do. There are going to be a variety of pressures on doctors and hospitals to either be much more efficient or take less money for what they do,” he says. “Given that choice, most of us would rather become more efficient.”

Another consequence of affordable insurance products may be a narrowing of provider networks. And a narrow network product, says Sylvia C.W. McKean, MD, FACP, medical director of the BWH/Faulkner Hospitalist Service at Brigham and Women’s Hospital in Boston, “might result in a reduced number of patients going to tertiary care hospitals, which currently care for a large number of indigent patients.”

Even though standards of affordability and details of insurance products have yet to be generated by The Connector and insurers, Dr. Lee also believes that narrowing of benefits and networks will be one likely consequence of the legislation. This will entail some difficult choices about the range of services hospitals and physicians can offer. But, he says, “I think it’s worth doing painful, difficult stuff, and making painful, ugly choices in order for everyone to have necessary catastrophic care and to have access to basic preventive care. We should be willing to live with some of that ugly stuff because it will, in Massachusetts, at least, give us a chance of preventing the need for even uglier outcomes, which is, 10% of our population not having any coverage at all.”

Dr. Lee believes that hospitalists will be critical to the success of hospital efficiency. “To the extent that institutions can use hospitalists and other systems to become much more efficient and reduce readmissions, it’s going to mitigate the need for the narrowing of benefits and networks,” he says.

Now that these [formerly uninsured or underinsured] people will have doctors and will be tied into the healthcare system, these services can be performed in the right setting, instead of using more expensive inpatient resources.

—Glenn Allison, MD

Upshot for Hospitalists

Unknowns about the workability of and funding for the legislation abound. It’s not clear whether shifting costs to individuals (by mandating they purchase private insurance) and employers (via the $295 per employee fee) can bridge current deficits in compensation and care. Dr. Lee points out that “it’s still an open question of whether there is going to be enough money. But clearly, there are going to be insurance products that spend a lot less money on patients than existing ones do.”

Dr. Li does not believe these funding questions will affect the bottom line for his hospitalist group because their compensation is based on productivity, as measured by relative value units (RVUs).

The next 10 months or so leading up to the July 1, 2007, deadline for purchase of individual health insurance policies will be revealing for consumers and physicians alike. Although the devil will be in the details, Dr. Lee notes, “The big picture is not uncertain. We know there is going to be more transparency, more data, on quality and efficiency.”

That means that hospitals’ delivery of care will endure more scrutiny, and that pay for performance will become commonplace.

The influx of patients into the healthcare system, which legislators hope will be a consequence of greater access to care, will necessitate some consciousness-raising for hospitalists, Dr. Allison maintains. While hospitalists already work closely with other providers on the multidisciplinary team (social workers, case managers, and primary care physicians), they will have to strengthen those collaborations to ensure that patients don’t fall through the cracks. Community outreach may become part of the hospitalists’ job description.

For example, he explains, many preventive or follow-up services that are now being performed in the hospital because patients have no primary care physicians can now be referred to outpatient sites. “Now that these people will have doctors and will be tied into the healthcare system, these services can be performed in the right setting, instead of using more expensive inpatient resources,” he says.

Steering patients to community-based preventive services, such as early cardiac and cancer screenings, will fall to hospitalists, who will be “on the frontlines seeing these patients and referring them appropriately as they leave the hospital,” says Dr. Allison. Hospitalists and all providers will also be evaluated by how well they deliver culturally competent care—another mandate of the statute. To steer through these changes, hospitalists must become much more conscious, he says, of costs, communications, referrals, and resources. “That, as far as I can see, has not been a major emphasis of hospitalist literature or debate.”

A Role to Play

Dr. McKean and others contend that by virtue of their skill set and core mission, hospitalists will have much to contribute toward moderating the costs of healthcare. “The good news for hospitalists,” says Turnbull, “is that if we’re successful in providing health coverage to many people who are now uninsured and if that coverage is adequate there should be more people receiving primary and preventive care and services. This should prevent them from needing to go to the hospital in the first place. We should also be able to create more rational systems of care for people, so that when patients are in the hospital, they need to be there, and they can take full advantage of the talents and contributions that hospitalists make.”

Dr. Kingsdale agrees with the assessment that hospitalists will have a potentially significant role to play in improving the delivery, efficiency, and quality of care, as well as reducing medical errors. He hopes the new insurance products generated by companies will include financial incentives for hospitals and other providers who will be doing “the difficult work of changing their systems of care.”

“The healthcare system really has to improve,” asserts Dr. Lee. “In our organization, we say that we need both an industrial revolution and a cultural revolution, where we develop and use systems that reduce errors. There are electronic records and other industrial systems, and then there are human-ware systems, like hospitalists and disease management programs.”

Like the community organizations that must increase outreach efforts to formerly disenfranchised healthcare consumers, the administrators who fulfill the law’s mandates, and citizens who will be comparing new health plans, hospitalists may find themselves working harder once the law is implemented. The April legislation “elevates the stakes for delivering effective, quality inpatient care,” says Dr. Allison. “I don’t want to over-inflate our importance, but I do think in a system where so many of our healthcare dollars are expended on the inpatient side, we’ve got to be extremely conscious of what we do.” This may mean shifting hospitalists’ implicit skills into the explicit realm, he says: “For instance, everyone talks about guidelines and how helpful they are, but we don’t do a good enough job when it comes to using them. We need to do better with vaccination, with discharge instructions, and with communicating and coordinating care.

“I think the care coordination piece is going to be the key to success,” concludes Dr. Allison. “I think we need to take what we do now, but do more of it, and do a better job of it. That is something that will make a tough job even tougher. But I think if we fail in this, the whole effort may collapse.” TH

Gretchen Henkel is coauthor of Marketing Your Clinical Practice—Ethically, Effectively, Economically.


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