The law will also establish a new primary care residency program, supported by the state’s Department of Public Health, to increase the number of such physicians.
In addition, in June, Gov. Patrick signed into law a $32.5 billion budget for fiscal 2013 that mandates some $700 million in savings in health care.
Gov. Patrick estimated in a recent speech that the state spends $67 billion a year on health care and that it would account for 54% of the state’s budget in the fiscal year that ended June 30, with most of it going to the state’s Medicaid program, and to subsidies for Commonwealth Care.
Health costs have been and still are higher in Massachusetts than almost anywhere else in America. The average total medical expenditure in the commercial market was $414 per member per month in 2010, which was a 3% increase over 2009 expenditures, according to the commonwealth’s division of health care finance and policy. Not huge, but a growing burden.
The state’s Division of Health Care Finance and Policy said that premium increases slowed from 2008 to 2010, but still grew 7.5% in the commercial market. But that slowdown likely merely reflects cost shifting, said the agency, adding that employers are providing fewer benefits and charging higher copays. And that is potentially translating to reduced care, Dr. Kuchnir said.
State residents with private insurance "seem to be getting less and paying more, which is of course a negative for good medical care and for access," said Dr. Kuchnir.
Costs are partly being driven by an overreliance on tertiary medical centers, said Dr. Gravel. The majority of inpatient care is given at tertiary – not community – hospitals, he said.
Indeed, the state’s Division of Health Care Finance and Policy determined that inpatient hospital expenses grew 9% in 2010, more than any other spending category.
Transitioning From Fee for Service
Dr. Gravel also blamed the continued dominance of the fee-for-service system for continued rising costs.
Physician expenses grew only 2% in 2010, according to the Division of Health Care Finance and Policy. But expenses varied significantly, depending on location and size of the physician group, according to data collected by the agency.
Gov. Patrick has encouraged the development of ACOs (Accountable Care Organizations) and new payment models to address variation and to create higher quality, more-efficient care. One model that seems to be making a difference is the Alternative Quality Contract, developed by Blue Cross Blue Shield of Massachusetts. In 2009, BCBSMA struck global payment agreements under the AQC with seven organizations; four more joined in 2010, and in March, Boston Medical Center joined. At that time, the Blues said that two-thirds of the physicians in its in-state HMO network, who provided care to 76% of its members, were covered under an AQC. The contract is for 5 years and is similar to a patient-centered medical home, where patients are assigned primary care physicians.
The AQC physicians "now significantly outperform the rest of BCBSMA’s fee-for-service network on a comprehensive set of quality and outcome measures," said a Blues release.
A recent study in Health Affairs seemed to back that assertion (2012 July [doi:10.1377/hlthaff.2012.0327]). The biggest gains so far were in the second year of the contracts; the same was true for savings, which were 1.9% in the first year and 3.3% in the second year, when compared with nonparticipating physicians. The results suggest that global payments work to reduce costs, but that that providers needed time to adjust to the global budgeting, according to the study.
Harvard Pilgrim Health Care, the second-largest insurer with 733,000 enrollees, and Tufts Health Plan have also recently negotiated global payment contracts with their provider networks.
Dr. Dupee, who is chief of the geriatrics service at Tufts Medical Center, Boston, said that the AQC model can work only for physicians who are part of an ACO. "You have to have the data," he said, adding that without an electronic health record, it’s not easy to determine who’s due for a mammogram or whose hemoglobin A1C level is controlled.
The shift to global payment will likely hasten the demise of solo and small private practices, he said.
How Does It Work in Massachusetts?
Most Massachusetts residents now have some kind of health insurance. As of the end of 2010 (the latest figures available), 411,000 residents had gained coverage under the health care reform law, according to the commonwealth’s Division of Health Care Finance and Policy. About 5.4 million of the state’s 6.5 million residents were covered.