“My hospitalists will manage the patient through their episode of care, regardless of whether they are an inpatient or outpatient, until their PCP is available,” Dr. Li says. “I would love to see our hospitalist-run, post-discharge clinic made obsolete by PCPs with available appointments.”
Fundamental Payment Reform
Access and cost problems like these have serious national implications, as Medicaid eligibility under the ACA is expected to grow by 16 million people by 2019, or roughly 25%. The Massachusetts experience suggests that decreasing financial barriers to care can raise other barriers, such as inadequate physician availability, and does nothing to address the 800-pound gorilla of spiraling costs.
Critics who dismiss the Massachusetts experiment as “doing nothing to control costs” miss the larger picture of innovation occurring in the state, however. Insurance reform was never intended to be the end of the story.
In response to a mandate to investigate reforming and restructuring the payment system as the next step in statewide healthcare reform, a Special Commission on the Health Care Payment System released recommendations in July 2009 (www.mass.gov/eohhs/docs/dhcfp/pc/final-report/final-report.pdf) that proposed that Massachusetts phase out fee-for-service reimbursement and replace it with an accountable-care approach that incorporated a global payment model combining elements of risk-adjusted capitation, pay-for-performance, evidence-based guidelines, and medical-home-style care coordination. Although a bill to accelerate statewide implementation of the model awaits a vote in the state legislature, the private health insurance market is well into the game.
Blue Cross Blue Shield of Massachusetts has been using a version of the model (known as the “alternative quality contract”) since 2009, with the goal of reducing healthcare cost growth by half over five years by holding providers accountable for cost and quality, and encouraging the most appropriate treatments by the right kind of providers in the most appropriate settings. Participating hospital and physician groups receive a monthly global fee for each patient (adjusted annually for patient health status and inflation) in return for providing them with all the preventive, primary, specialty, hospital, and follow-up care they need. Providers have the incentive to reduce inefficiencies, and they can earn additional incentive payments for meeting or exceeding clinical performance measures tied to process, outcomes, and patient care experience.
More than a third of the insurer’s provider network is participating in this alternative quality contract program, and early results are promising. A recent Harvard Medical School study found that medical spending at the end of the first year was nearly 2% lower among physicians and hospitals participating in the program compared with those working under traditional fee-for-service contracts, largely the result of physicians changing referral patterns and shifting care to lower-cost facilities.2 Quality of care among participants was significantly higher than that of non-participants in the insurer’s network, especially for adults with chronic illness and for children.
Several major healthcare delivery systems in Massachusetts are taking the accountable-care model to the next level this year by participating in the Pioneer Accountable Care Organizations (ACO) initiative, which also replaces fee-for-service with global revenue sharing plus quality and care-coordination incentives.
Part of the reason that providers in Massachusetts and around the country have a genuine interest in testing global payments and other value-based models is that they fear the day when the government and private sectors say “We just don’t have the money” and exert draconian fee-for-service rate control, Altman maintains.
Hospitalists could find their referral patterns shifted slightly under global payment arrangements—potentially seeing fewer consults for low-risk patients and seeing greater demand for their services for more medically complex patients, Dr. Whitcomb says. HM likely will be the most heavily involved in ACOs that cover the Medicare population, whose patients are of higher acuity and more frequently hospitalized.