Payment Reform Commission

The MMS Perspective on Payment Reform

Posted in Payment Reform Commission on July 22nd, 2009 by MMS – Comments Off on The MMS Perspective on Payment Reform

The state Payment Reform Commission voted last week to recommend that Massachusetts move from its largely fee-for-service payment system to a "global payments" model. What does the Massachusetts Medical Society think about this? 

  • Preserving the status quo is not an option because, despite the miracles that happen every day, there are many things in health care that need remedies.
  • Greater collaboration among doctors and the entire spectrum of the health care system is definitely the right way to go, because health care is more of a team sport than ever. It’s time for our payment system to reflect that reality and promote it. This is a strength of the global payment model. If implemented well, this will be better for our patients, and I believe that physicians will like it better, too. This is a direction worth exploring – cautiously, carefully and deliberately.
  • We all have long memories. Physicians harbor well-earned skepticism about ambitious proposals to promote affordability and quality, because so many of them ended making matters worse. We all remember the disastrous experiment with capitation from the 1990s, when many physicians were left high and dry by a poorly conceived system, and many patients believed that they were denied the care they needed. We’re determined to see that those mistakes are not repeated.
  • Physicians need lots of time to get ready for a new payment model. It’s hard to overstate how deeply a new payment model changes how practices and hospitals deliver care. The commission report puts the transition period at five years, but more time could be required. We’ll be there to advocate for that extra time, if it’s needed.
  • Physicians will also need support – lots of it. They’ll need financial, legal and technical support, none of which comes cheaply or easily. This support is not an option; it is a necessity. Without it, we’ll lose more physicians, and patients’ access to care will be even further endangered.
  • Forward motion must be done cautiously. The results must be monitored closely and continuously. Everyone involved must be willing to make adjustments quickly, but carefully.

The commission report says all the right things about these issues. The will to do the right thing is there today, but will we see the same commitment when the going gets tough? It’s our job is to ensure that it does, so these good intentions become a reality. We will not rest until physicians have the tools and support they need, so patients have access to the best health care we can possibly provide.

We'll continue to provide updates as this process continues.

As always, your comments and thoughts are welcome.

Mario E. Motta, MD
President, Massachusetts Medical Society

Payment Commission Final Meeting: Summary of Proceedings

Posted in Payment Reform Commission on July 17th, 2009 by MMS – Comments Off on Payment Commission Final Meeting: Summary of Proceedings

Commission co-chairs Leslie Kirwan and Sarah Iselin opened the meeting noting the significance of what the commission was about to endorse. They briefly discussed the context of the commission's work, namely the unsustainable rise in health care costs. They also asserted, "the status quo is not an option." They were also the first to note that the vote was the first of many steps to payment reform.

Consultant Michael Bailit, whose firm did the bulk of the commission's research and fact-finding, spent the next 30 minutes outlining the work the commission did, and why it believed that global payments provide the best opportunity to moderate costs while also promoting high-quality care. Among his comments:

  • The chief entity under which providers would organize to accept global payments, accountable care organizations (ACOs), could be wither "real" or "virtual." That is, they can have a formal corporate structure, or operate as more loosely governed entities. Bailit said the commission's definition of ACOs is "broader" and "more flexible" than described by Dartmouth's Eliot Fisher, who has popularized the concept.
  • Advanced medical homes will be an important part of the new payment model, but by themselves are not sufficient to achieve the commission's cost-efficiency goals. Bailit said, however, that the success of ACOs is predicated on a robust and primary care infrastructure. He said primary care practices will have to redesign their operations, and should be compensated sufficiently to operate as medical homes.
  • Good risk-adjustment is critical to the success of this model. Bailit said there will be two kinds of risk in this system: insurance risk, and performance risk. Insurance risk will be carried by the health plans, and will address issues outside the control of providers. Providers will be carrying performance risk, which covers areas of care over which they do have control, such as clinical results. He said this distinction between these types of risk is "essential" to the success of this model, and is one of main differences between global payments and capitation as it was practiced in the 1990s.
  • "Global payments is no a symptom for capitation," he said. The key difference between global payments and capitation include: a careful and thoughtful transition period; robust monitoring of results; performance measures linked to patient-centered care; improved risk-adjustment tools; improved health IT tools. "There is much more data available to us today than even 10 years ago," he said.

After Bailit's presentation, each commission member was given about five minutes to comment. With apologies for the lack of completeness that follows, here is a summary of what they had to say.

Sen. Richard Moore, co-chair of the Legislature Committee on Health Care Financing: He would have preferred more detail in the report about the recommendations will be implemented. "This is just the beginning; there is much more to be done." He also wondered how this recommendation would be coordinated with any federal reform legislation. Later in comments to reporters, Moore said he hoped to start holding hearings on ways to implement the report later this year.

Rep. Harriet Stanley, co-chair of the Legislature Committee on Health Care Financing: She noted that this is the first step in the process, not the last.

Alice Coombs, MD, MMS President-Elect: Physicians want to be part of the effort to develop a better system. They will with other stakeholders to ensure that there is sufficient support for providers to succeed under global payments.

Lynn Nicholas, Mass. Hospital Association: She pointed out several "significant" issues that hospitals will be watching closely:

  • Whether ACOs will in fact be responsible only for the risk that is under their control;
  • Whether it's possible to give patients the right to move among ACOs and meet the goal of moderating costs;
  • Administrative simplification, malpractice reform, end of life care, consumer alignment, primary care development, supporting teaching in hospitals, and others, must be addressed. they are "critical" to the success of the program, not just "complementary strategies" as expressed in the report.
  • The significant initial cost of realignment practice structures "should not be underestimated."

Deborah Enos, representing the Mass. Association of Health Plans: There needs to be flexibility in the composition of ACOs. The design of benefit packages must align more closely with the goals of integrated global payment systems. Investments in health IT need to be shared by all.

Nancy Kane, Harvard School of Public Health: She doesn't think that federal reform will "blow us out of the water," but the added federal subsidies that Massachusetts has been enjoying under the Medicaid waivers will diminish.

Andrew Dreyfus, Blue Cross Blue Shield of Massachusetts: During the drafting of the first health reform law,  sponsors deliberately decided to focus on expanding access and deferred decisions on cost and quality until the future."The future is now," he said. He also said that if the sponsors of the original bill had tried to addressed every detail in the law, nearly a half million people still wouldn't have health insurance today. Fee-for-service incentives for volume and complexity don't serve us well today. Global payments can put physicians and patients back in the center of the health care system. 

Leslie Kirwan, state Secretary of Administration and Finance: She praised the MMS' work in collecting detailed feedback and insight from physicians throughout the state. "There's always going to be learning in this," and success will lie in responding to developments as the system is implemented.

The commission then unanimously voted to accept the report.

Payment Commission Recommends Global Payments; MMS Urges Cautious and Careful Transition

Posted in Payment Reform Commission on July 16th, 2009 by MMS – 2 Comments

The Special Commission on Health Care Payment Reform met for the final time today and voted unanimously to support a recommendation for the gradual implementation of a new payment model for health care providers in Massachusetts.

The new model – global payments – seeks to moderate the rising cost of health care, while simultaneously providing support and incentives for physicians and hospitals to provide high quality, patient-centered care.

MMS President-Elect Alice Coombs, MD, was the only physician member on the nine-member panel, which also had representatives from state government, the state legislature, health plans, hospitals.

The MMS supported the commission's goal of supporting a closer integration of care throughout the health care system, but cautioned that the transition to a new system must be "careful, deliberate and thoughtful," because "a big transition like this has never been done on such a broad scale."

MMS President Mario E. Motta, MD, said, "Physicians want to be part of the effort to build a health care system, but they will have many questions and concerns about this proposal. Past experience has shown that a high risk of unintended consequences exists with new programs."

He said that physicians will need many years and a great deal of support to make such a transition. Very "few physicians could succeed under this new system today, and their readiness to make such a transition is highly variable across the state," he noted.

The commission said the transition could take up to five years. Its report acknowledges that physicians and hospitals will require lots of support to develop the financial, technical and legal capabilities needed to succeed in a new model, and that government and health plans should be required to provide that support.

Dr. Coombs said, "There’s a lot at stake, and there’s a lot of work to do. This report outlines a strong vision of the future, but many details remain to be worked out. We will be working closely with government, payers and our colleagues in medicine to ensure that patients receive high-quality care that is affordable and accessible."

Read the MMS statement here.

Download the commission report here.   (.pdf, 77 pages)

Summary of Global Payments Model

(Excerpted from the commission report.)

Global payments 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. Usually estimated from past cost experience and an actuarial assessment of future risk related to patient demographics and known medical conditions, global payments reflect the expected costs of covered services. As with episode-based payments, providers hold performance risk in a global payment system. To protect providers from also holding insurance risk, global payments must be risk-adjusted so that they reflect the underlying health conditions and predictable probability of illness among each provider’s patients. Carriers might also develop stop loss or risk corridor arrangements with providers to further protect them from insurance risk. Insurance carriers retain insurance risk for unpredictable illness and also adjust the level of global payments to reflect expected cost of consumer incentives (such as cost sharing for particular services or providers) in their benefit designs.

Global payments may be combined with complementary payment-related strategies (including P4P) to encourage improvements in quality, care coordination, and patient-centered care. Global payments, as envisioned, are very compatible with the concept of a medical home, which focuses on patient-centered care and on care coordination for patients who may have one or multiple chronic conditions.

The Special Commission viewed global payment models as having important advantages. They offer strong incentives for the efficient delivery of the full range of services that most patients need. They emphasize primary care and reinforce the goals of patient-centered medical homes. Moreover, some Massachusetts providers already have operational experience with some form of global payment. An estimated 20 percent of commercial physician payments are currently made in Massachusetts under some form of global payment. This experience suggests that broader adoption is feasible (since many providers already are managing under it successfully) and provides a base for wider progress towards global payment.

Finally, the Special Commission noted that global payment is compatible with P4P, which was viewed as important in protecting consumer access and encouraging the high-quality, evidence-based, patient-centered care that is central to the Special Commission’s vision for payment reform. At the same time, the Special Commission recognized that there are challenges to replacing FFS with global payment—including adoption of appropriate risk adjustment methods and the widespread participation of providers, some of whom have little or no operational experience with global payments or integrated delivery systems.

Payment Reform Commission’s Final Meeting is Tomorrow

Posted in Payment Reform Commission on July 15th, 2009 by MMS – Comments Off on Payment Reform Commission’s Final Meeting is Tomorrow

The Special Commission on Health Care Payment Reform is scheduled to meet Thursday morning to vote on its final recommendations for a new provider payment model in Massachusetts.

It is widely expected that the report will recommend a gradual transition to a global payment system, in an effort to promote efficient, high-quality care, through greater coordination and collaboration among all areas of the health care system.

The Massachusetts Medical Society has consistently argued that any transition must be careful and methodical, to preserve patients’ access to care and avoid unintended negative consequences. To achieve this, physicians must be provided with a great deal of financial, technical, legal and structural support for any new model to succeed. We will continue to advocate for this support when the state and the Legislature begin the work of implementing the commission’s recommendations.

We will provide a detailed report on the meetings and the recommendations tomorrow afternoon.

Payment Reform Commission Posits Framework for Shift to Global Payment

Posted in Health Reform, Payment Reform Commission on May 8th, 2009 by MMS – Comments Off on Payment Reform Commission Posits Framework for Shift to Global Payment

A framework for making an effective and orderly transition to global payment was the main topic at today’s next-to-last meeting of the Special Commission on the Health Care Payment System.

The commission’s transition framework relies heavily on the creation of Accountable Care Organizations (ACOs), virtual or actual provider networks that integrate health care services and improve coordination of patient care.

The structure, scope, and function of ACOs was one of many parameters that an independent board to oversee the transition would be charged with, according to the framework. The board would also be responsible for identifying adjustment factors for global payments and tracking milestones, among other tasks. The framework calls for board intervention if certain milestones are not met, which sparked debate about state rate setting and the stick-or-carrot approach to incentives. Commission member Alice Coombs, M.D., MMS president-elect, called for a “nurturing” approach to help providers make the change rather than penalty-based incentives.

The timeframe set forth in the framework for a completed transition to global payment is five years or less, and it encourages providers who are in a higher state of readiness to move more quickly.

There was also debate about the so-called “complementary strategies” that many stakeholders say must be addressed in tandem with payment reform. These include malpractice reform, health plan benefit redesign, and administrative simplification. Some commission members, including Dr. Coombs, insisted that these strategies are inextricably linked to payment reform, while other commission members said such matters could distract the board from its primary purpose.

The commission’s final meeting, originally scheduled for May 26, has been postponed until late June. Between now and then, the commission will iteratively draft a final report of recommendations for the Legislature.

To view the slides from today’s meeting, visit the Payment Commission’s website.

Payment Commission Asks: How Do We Get There (Global Payments) From Here (Fee for Service)?

Posted in Payment Reform Commission on April 10th, 2009 by MMS – Comments Off on Payment Commission Asks: How Do We Get There (Global Payments) From Here (Fee for Service)?

A week after seeming to reach consensus that a global payment system is the ultimate payment model of choice, the state Payment Reform Commission today turned to transitional issues. The key question was how should the state move from a system based largely on fee for service, to one that builds upon on capitation, without its well-documented shortcomings.

The commission focused on three transitional issues:

  •     A transition timeline
  •     How to support providers during the transition
  •     Whether a carrot or stick approach will work best

There was general agreement that a three- to five-year timeline to have most or all providers aligned under a global payment system would be feasible, but there was no consensus as to when the countdown would or should begin.

The commission unanimously agreed that providers will need support to make the transition. The necessary forms of support identified included:

  •     Common performance metrics
  •     Help implementing information technology
  •     Data transparency (especially with health plans), plus analytical tools
  •     Help for small practices to integrate into larger provider networks

The level of necessary support will depend on a provider’s state of readiness and familiarity with managing global payment.

The most vigorous discussion revolved around whether to encourage the transition with carrots or sticks. Commission member Alice Coombs, M.D., MMS vice president, suggested that practices needing the most transitional support might be positively reinforced by receiving several months’ worth of global payments up front. She also cautioned that a purely punitive approach would likely not garner physician support.

Some commission members suggested making fee-for-service payments unpalatable as a method to drive providers toward accepting global payment, while others suggested setting a firm target date for providers to be fully involved in global payment. The commission reached no consensus about what the implied “or else” would be under the latter plan for providers who did not conform.

Amid the carrot-or-stick debate ran differences of opinion about the appropriate role of government in facilitating the transition. Rate-setting and government-mandated milestones toward global payment were discussed, as was a more voluntary approach with limited government intervention. No consensus was reached.

The commission meets next on May 8, with its final meeting scheduled for May 26. Between now and May 8, commission representatives will reconvene with stakeholders to get input on the commission’s work so far.

Payment Reform Commission Tackles Global Payments

Posted in Payment Reform Commission on April 6th, 2009 by MMS – Comments Off on Payment Reform Commission Tackles Global Payments

Under strong prodding from Co-Chair Leslie Kirwan to act with urgency, members of the state Payment Reform Commission last week started leaning to global payments as its preferred, long-term solution to controlling health care costs.

Kirwan’s position offered little comfort to those who want to proceed carefully and slowly with alternative payment models. The state’s big budget deficit is clearly weighing heavily on her mind, and this is not helped by the Group Insurance Commission’s projected $60 million deficit for this fiscal year (as reported by its executive director, Dolores Mitchell.) This suggests that any new system will have to work with existing funds, not new funds.

At Friday’s meeting, commission consultant Michael Bailit put three payment models on the table: fee for service, episodes of care systems, and global budget. Fee for service was quickly labeled as the wrong solution. Episode of care systems were dismissed as unrealistic because the infrastructure needed won’t be available soon enough.

So the conversation moved quickly to global payments. Most of the discussion focused on how to get there. According to commission research, 57% of health care payments in Massachusetts go to the seven largest systems: Partners, Beth Israel Deaconess, Children’s Hospital, Caritas Christi, University of Massachusetts, Baycare (Springfield) and Atrius (the parent company of several large physician practices in Eastern Massachusetts). These systems already have significant financial, legal and technical infrastructure in place, which is a prerequisite for succeeding in any global or capitated system.

But what about 43% of payments that don’t go to these systems? Commission members, especially MMS Vice President Alice Coombs, MD, cautioned against taking actions that could put the small, unaffiliated practices out of business. Coombs and others also said that significant physician input is critical to any payment model transition. This would be especially true for a global budgeting system, which requires a level of management expertise that only some hospitals and the largest practice groups have at their disposal.

What would be needed to facilitate a transition? Commission members mentioned a number of things:

  • Common performance measures across all payers (this attracted the most agreement)
  • Strong IT infrastructure, with interoperability among IT systems
  • Significant technical support
  • Good analytical tools
  • Transparent data reports

Importantly, commission members discussed incentives more in terms of carrots rather than sticks – providing incentives for adopting rather than penalties for failure to do so.

Nothing was decided definitively, but the sentiment is clearly for something decisive and “bold.”  The commission meets next on April 10, from 11 a.m. to 2 p.m.

Payment Reform Commission Meets Today

Posted in Payment Reform Commission on April 3rd, 2009 by MMS – Comments Off on Payment Reform Commission Meets Today

The state Payment Reform Commission is scheduled to meet today into the early evening to begin its deliberations over alternative models to pay health care providers.

The commission has been meeting since January to learn about many of the new approaches. MMS Vice President Alice T. Coombs, M.D., is one of nine commission members.

Check back here for updates on this and other commission meetings.

Payment Reform Commission Meets; Still Weighing Principles

Posted in Payment Reform Commission on March 13th, 2009 by MMS – Comments Off on Payment Reform Commission Meets; Still Weighing Principles

The state Payment Reform Commission met for the fifth time today to listen to several presentations on global budgets, another alternative payment model.

At the start of the meeting, commission consultant Michael Bailit said he is preparing another amended version of commission operating principles, based on further comments from stakeholder groups. He did not provide a new draft, and he did not provide any hints on how they will change from the latest version. He said the newest version will be posted on the commission’s website in the near future.

The commission heard two presentations on global budgeting models. Two senior leaders of Blue Cross Blue Shield of Massachusetts discussed the insurer’s new Alternative Quality Contract, while Ann Robinow of a Minnesota employer health care purchasing coalition discussed “Patient Choice,” a global payment model that uses market forces to force providers to compete for patients. (More details on these presentations will be provided on the MMS blog by March 16.)

This meeting concluded the education phase of the commission's work. Co-chair Sarah Iselin said the next meetings, starting April 3, will focus on bringing everything together and starting to develop recommendations for the State Legislature.

Payment Reform Commission Provides Interim Report on Draft Principles

Posted in Payment Reform Commission on February 13th, 2009 by MMS – Comments Off on Payment Reform Commission Provides Interim Report on Draft Principles

The nine members of the state Payment Reform Commission spent most of their third public meeting today learning about more two alternative physician and hospital payment models.

But for many observers (including the MMS), there was more interest in the commission's brief update on its draft operating principles.

The first round of draft principles were unveiled a month ago at the commission's first meeting, and were fairly well picked apart by members and other attendees. Since then, the commission has been systematically collecting feedback from hospital officials, physicians and consumer advocates. (Business leaders are next week.)

Commission consultant Michael Bailit quickly ran through seven new concepts that the commission heard at these feedback sessions. He didn't offer any opinions on these concepts, but said they should be considered by the commission in its discussions.

The seven concepts are:

  • No single payment model will work for all providers
  • Payment reform should address the shortage of primary care physicians
  • Payment reform should address the balance of payments between interventional and non-interventional care. (No further explanation was offered.)
  • The commission should continue to evaluate payment models and identify unintended consequences from changes in payment methodology
  • Payment methodologies should be transparent to all, including patients
  • Payment reform needs to have interaction between payment models and health care delivery systems. (No further explanation was offered.)
  • Risk adjustments should include consideration of patient socioeconomic status, as well as for health status.

Bailit said there would be discussion of the principles at the commission's next meeting on Feb. 24.

The commission then heard detailed presentations about two kinds of payment models: medical homes and pay for performance.

There was a shorter conversation about the idea of aligning payment models with benefit design – namely, consumer-directed networks and tiered networks. Commission member Dolores Mitchell, head of the Group Insurance Commission, quietly left the meeting before this part of the discussion. (The MMS has sued the GIC and two health plans to "correct the wrongs" of the GIC's physician tiering program.)

On Feb. 24, the commission is also expected to get presentations on two more payment models, episode-of-care payments and evidence-based purchasing.

The MMS has posted a suggested reading list on payment methodologies, as well as links to white papers distributed by the commission at today's meeting.

They are available at

Written by Frank Fortin
Reported by Rick Gulla