Payment Reform

The President’s Podium: Getting Closer to a Medicare Payment Fix

Posted in Health Policy, Medicare, Payment Reform on September 18th, 2013 by MMS Communications – Comments Off on The President’s Podium: Getting Closer to a Medicare Payment Fix

by Ronald Dunlap, M.D., President, Massachusetts Medical Society

Mention “SGR” to physicians and you can almost see and feel the tension and level of frustration.

For nearly a dozen years, this Sustained Growth Rate formula has called for massive cuts in Medicare reimbursements to physicians.  For each of those years, Congress has stepped in at the eleventh hour to avoid the cuts and provide a modest increase. Yet, for all those years, physicians worried about the viability of their practices and their patients.  And patients, having read and heard media reports about the possibility of physicians abandoning Medicare because of potential cuts in payments, may have wondered if they would continue to have a doctor.

We’re now closer to a permanent fix than ever before. On the last day in July, the House Committee on Energy and Commerce reported the “Medicare Patient Access and Quality Improvement Act” by a unanimous vote of 51-0. That bill repeals the SGR and replaces it with annual updates and new quality incentive measures.  Adding to the hope of a fix is a report from the Congressional Budget Office that estimated the cost to eliminate the SGR formula at about half the price of repeal last year.

However, two additional committees, House Ways and Means and Senate Finance, are scheduled to produce their own versions of the legislation, which will likely be combined and then brought to a vote in both the House and Senate.

While the 51-0 vote and CBO report raise hope, the work is far from done. Many key issues remain to be resolved, among them the adequacy of the proposed increases, the complexity of the new quality reporting system, and provisions for small practices that will allow them to maintain their viability and keep their doors open for their patients.

The AMA, in an effort to keep the momentum going, has launched Fix a website with three distinct channels: one each for physicians, patients, and policymakers, allowing each a voice on the subject and the ability to participate in the discussion.

The Massachusetts Medical Society, with the participation of many of our district presidents who have written letters to the editor to newspapers and media outlets across the state, has encouraged our Senators and Congressional representatives to make these changes a priority for Congress and finally reach a reasonable “fix” for a problem that has long plagued physicians and patients alike.

A new and better payment formula and better quality measures will help to stabilize Medicare for years to come. It will ease the minds of Medicare and Tricare patients in knowing their doctors will be there for them.  We’ve never been closer to fixing a broken system. It is imperative that physicians and patients alike maintain the momentum by urging Congress to capture the opportunity before them.

The President’s Podium appears regularly on the MMS Blog and offers Dr. Dunlap’s commentary on a range of issues in health and medicine.


Interim 2012 President’s Report: “Honor Traditions, Continue as Leaders”

Posted in Interim Meeting 2012, Leadership, Payment Reform on November 30th, 2012 by MMS Communications – Comments Off on Interim 2012 President’s Report: “Honor Traditions, Continue as Leaders”

Addressing the Medical Society’s House of Delegates at its 2012 Interim Meeting on November 30, MMS President Richard Aghababian, M.D., provided members with a quick perspective of the major events in health care that have taken place over the last six months – from the Supreme Court’s affirmation of the Affordable Care Act to Massachusetts’ payment reform bill to ballot questions on medical marijuana and physician-assisted suicide.  Here are some highlights from his President’s Report.

State Payment Reform Bill
“The state payment reform and cost control legislation is complex…and it’s already apparent that some sections will need technical corrections and amendments. We will put special focus on the sections that impose substantial administrative burdens on practices, especially those involving public reporting and provider registration. We also believe the bill may have taken the concept of transparency too far, and we will work to make these requirements more reasonable. The state is also beginning to implement one of the sections of the legislation that we favor the most – the introduction of the Disclosure, Apology and Offer system for medical liability claims.”

Physician Assisted Suicide and Medical Marijuana Ballot Questions
“We implemented a comprehensive education campaign on both issues…Almost every news story on either Question 2 or Question 3 mentioned the position of the Massachusetts Medical Society …We are grateful that the assisted-suicide question did not prevail, but we still must take action by offering our members and colleagues training in compassionate, end-of-life care. CME programs are being planned.”

“The question on medical marijuana did pass…and the most important question for physicians is this: What exactly must physicians do when the law takes effect on January 1? What are our rights and responsibilities and what are the risks, both clinically and legally? ….There is more confusion than clarity, but physicians are getting questions about this from their patients every day, and they needed some answers….our legal staff quickly produced a detailed commentary about the law posted on our website.  We will watch this matter closely during the regulatory process.”

Affordable Care Act and Impending Medicare Cuts
“The future of the ACA is all but assured, but the future of Medicare and other federal programs is anything but certain…The AMA continues to fight for a permanent repeal of the SGR, to stabilize both Medicare and the Federal deficit….The only sensible answer is to end the SGR and move forward with a new payment model for Medicare. The AMA hopes to address the immediate cuts during this coming month, while setting the stage for a more permanent solution next year. We completely support the AMA’s approach and stand ready to assist with outreach to our congressional delegation as needed.”

Changes in the practice environment
“Over the last few years, we’ve seen many physicians leave independent practices and become employed….The transition to employed status is just one of the changes we’re seeing. We have entered a period of continuous evolution in health care. There is no end point to this process…so this environment calls for a continuous improvement approach…surveying the environment, identifying the challenges and opportunities, developing a plan to adjust, implementing the plan, and assessing the results and making adjustments as needed.”

Honor Traditions and Values, Continue as Leaders
In closing his remarks, Dr. Aghababian urged members to “maintain our collegiality and cohesiveness as physicians, even when certain issues threaten to divide us. We must recognize diversity of opinion, but not allow those disagreements to define us….Let us take this opportunity, at this meeting, to honor our traditions and values, while continued to serve as leaders in health care reform.”

Dr. Aghababian’s complete remarks may be read here.


The Legislature’s Ambitious Health Care Bill: Steps Forward, and Concerns

Posted in Accountable Care Organizations, Global Payments, Health Reform, Mass. Legislature, Payment Reform on July 31st, 2012 by MMS – 5 Comments

By Richard V. Aghababian, MD
MMS President

(Update: The House and Senate passed the legislation today by overwhelming margins. Gov. Patrick is expected to sign the bill.)

The Legislature has produced an ambitious health care roadmap for our Commonwealth. It seeks to make health care affordable for the residents, businesses and government of Massachusetts, while fostering quality, access and innovation.

In many cases, the legislation strikes a responsible balance between the role of government as oversight entity, with the rights of private sector entities to operate responsibly. However, there are several areas where we have concerns.

Steps Forward

  • We are pleased that providers will be free to decide whether they want to participate in alternative payment methodologies. Global payments aren’t for everyone, and fee for service still has a vital role to play in our system.
  • The cost benchmarks locate a middle ground between the House and Senate proposals. We have advocated for higher benchmarks than the bill provides, and we have our doubts about sustainability of these benchmarks. We are pleased, however, that the legislation provides the opportunity for adjustments and corrections in future years.
  • We support the legislation’s decision to use a corrective action plan as the mechanism to hold providers accountable for their costs – as opposed to the more punitive measures outlined in previous proposals. In addressing payment disparities among providers, the bill fairly recognizes the real progress that the private sector has achieved over the last two years.
  • We are extremely pleased that the bill includes the Disclosure, Apology and Offer model of medical liability reform that we have championed for many years. We believe that implementing this alternative to traditional litigation will foster a climate of safety and openness in all health care settings, especially when a patient is harmed by an adverse medical outcome.
  • The commitment to full parity of mental health and behavioral health with other areas of medicine is most welcome.
  • We strongly support the proposals to address shortages in the health care workforce.
  • The initiatives to foster transparency of reliable cost and quality information will not only benefit patients, but will also assist providers in recommending the most effective and affordable tests, drugs and procedures for their patients.
  • We are pleased to support the wellness programs that are outlined in the legislation; prevention is the best medicine of all.


  • We are concerned about the impact of the bill’s very stringent reporting requirements on the smaller medical practices in the Commonwealth.  We will look to clarify how small practices will be impacted by the costs and burdens associated with reporting to new entities established by the legislation. The state must ensure that such efforts avoid duplication and provide a true net benefit to our Commonwealth.
  • We are concerned that the bill goes too far expanding the practice prerogatives of some groups of providers. In particular, we find that the favored status granted to limited service clinics to be unwarranted, and thinly supported by research or facts.  The classification of physician assistants as primary care providers also raises questions. We will monitor these developments closely and will be prepared to advocate for corrective measures if there are unintended consequences.

Clearly, the transformation of health care is only beginning. There is still much more work to be done.  The Massachusetts Medical Society remains committed to working with all stakeholders, as we strive for a health care system that is effective, affordable and accessible to all.

First Look at Payment Reform Legislation

Posted in Accountable Care Organizations, Global Payments, Health Policy, Health Reform, Mass. Legislature, Payment Reform on July 31st, 2012 by MMS – Comments Off on First Look at Payment Reform Legislation

349 pages.

7,489 lines.

The Legislature’s House-Senate conference committee finally released its consensus payment reform bill last night. The House and Senate are scheduled to vote on it today – just in time for the end of formal sessions at midnight tonight.

If you want to take a look at it yourself, here’s the full text and the Legislature’s own summary of the bill.

We’re analyzing the fine print and will comment later.

Legislature Names Conference Committee for Health Care Bill

Posted in Mass. Legislature, Payment Reform on June 14th, 2012 by MMS – Comments Off on Legislature Names Conference Committee for Health Care Bill

According to the State House News Service, the House and Senate have named the six people who will negotiate the differences between the two chambers’ health care payment reform and cost containment legislation. In accordance with the Legislature’s  rules, each chamber named two Democrats and one Republican each.

House conferees:

  • House Majority Leader Ronald Mariano (D)
  • Rep. Stephen Walsh, co-chair of the Health Care Financing Committee (D)
  • Rep. Jay Barrows (R)

Senate conferees:

  • Sen. Richard Moore, co-chair of the Health Care Financing Committee (D)
  • Sen. Anthony Petruccelli, co-chair of the Financial Services Committee (D)
  • Senate Minority Leader Bruce Tarr (R)

According to the Legislature’s rules, the committee is generally restricted to negotiating on points where the bills differ. Where the bills are alike, there is usually no negotiation permitted. The committee has until midnight July 31 to produce consensus legislation and get it passed by each chamber.

The MMS plans to advocate to the conference committee on the health care spending benchmarks, the House’s proposed “luxury tax” on high-spending hospitals and physician organizations, the registration and reporting duties of small practices, the composition of the state oversight agency, and other issues.


Key Similarities and Differences Between the House and Senate Payment Reform Bills

Posted in Accountable Care Organizations, Defensive medicine, Electronic health records, Electronic Medical Records, Health IT, Health Reform, Malpractice, Mass. Legislature, medical liability reform, Payment Reform on June 8th, 2012 by MMS – 1 Comment

After two years of discussion and debate, the Massachusetts Legislature must now deal with two huge pieces of payment reform and cost control legislation.

Earlier this week, the House passed its legislation by a wide margin, following eight hours of deciding which of 275 amendments it would accept. The Senate passed a separate bill on May 17.

During the House debate this week, the MMS sought to protect most small and medium physician groups from the House’s very rigorous reporting requirements. The original House bill exempted groups with fewer than 10 physicians. Due to MMS advocacy, the House agreed to increase the exemption to 25, which we will try to increase further during the conference committee’s deliberations.

When the members of the conference committee are appointed, they will have until adjournment on July 31 to agree on a single bill and get it passed by both chambers.

Despite their many similarities, reconciliation and consolidation of the bills is not expected to be an easy task.

Key Similarities

  • Cost containment: Each bill states that overall health care costs should rise in concert with the growth in the state’s economy. (Differences noted below.)
  • State oversight: Each creates a new state agency to certify provider groups, and collect volumes of information on quality measures and costs. The House agency is placed inside the executive branch, under the Executive Office of Health and Human Services. The Senate agency is an independent entity.
  • Market power: Both bills require payers to negotiate separate contracts for each hospital facility, with some exceptions.
  • Alternative payment models: The bills define ACOs and their requirements. They provide a 2 percent bonus in Medicaid payments to providers starting in July 2013, if they move to alternative payment methodologies.
  • Electronic Health Records: Each requires physicians to be proficient in the use of electronic medical records. (Differences noted below.)
  • Medical liability: Both mandate waiting periods for civil suits brought against health care providers. They require disclosure of case information to patients and providers; protect statements of apology from being admissible as evidence; provide for early payments to patients without prejudice. They reduce the prejudgment interest rate in malpractice cases from 4 percent to 2 percent. No contract may prohibit a physician from serving as an expert witness.
  • Determination of Need: They expand the Determination of Need process to include more new technologies, transfers of ownership and site expansions.
  • Administrative simplification: Both bills require standards forms for utilization review.
  • Peer review: Both bills expand the peer review statute. The House specifically provides ACOs with peer review protection; the Senate provides such protections to any provider group that conducts peer review activities.
  • Charitable immunity: They raise the charitable immunity cap from $20,000 to $100,000 (affects most hospitals in Massachusetts).
  • Physician assistants and nurse practitioners: Each bill provides more independence to physician assistants and nurse practitioners.
  • Limited service clinics: Both bills eliminate some existing regulations for the operation limited service clinics, such as those located in pharmacies; however their approaches differ.

Key Differences

Cost Containment

  • The House’s benchmark is 3.6 percent for 2012 and 2013. In 2014 and 2015, it would be equal to the growth rate projected in the Governor’s budget submissions. From 2016 to 2026, it would be equal to a half percentage point below the Gross State Product (GSP) from 2016 to 2026, and equal to one point above GSP after 2027.
  • The Senate’s cost benchmark is a half point above GSP through 2015, and equal to GSP from 2016 to 2026.
  • The House imposes a penalty on providers who costs are 20 percent higher than the benchmark. It establishes rate setting for governmental units. The House gives the state the ability to force providers to reopen contracts that it considers contributing to excessive spending. The House gives the attorney general to block unreasonable increases in rates, and block changes that adversely affect patient access and the quality of care. In the Senate bill, groups that exceed the benchmark must file improvement plans.

Market power

  • The House subjects provider groups of 10 or more physicians to a market impact review.
  •  The Senate gives the attorney general the power to prevent excess consolidation and collusion.


  • The House requires any physician group with 25 or more physicians to be certified by the Department of Public Health.
  • The Senate requires certification for all providers entering into alternative contracts. It exempts groups with less than $500,000 in annual net patient service revenue and fewer than five affiliated physicians, if the group does not accept risk.

Electronic Health Records

  • The House requires providers to adopt EHRs that are fully interoperable and connect to the statewide health information exchange.
  • The Senate updates existing the requirement for EHR proficiency by 2015 by requiring physicians must demonstrate the skills to comply with the federal government’s meaningful use requirements. It creates an institute to facilitate the implementation of interoperable records statewide, and promote the use of other health information technologies.

Three Newspapers Call for Balanced Approach to Cost Control

Posted in Payment Reform on May 14th, 2012 by MMS – Comments Off on Three Newspapers Call for Balanced Approach to Cost Control

Editorials in three local newspapers are calling for a balanced approach to  cost control on the eve of the Senate’s debate over Bill 2070, its health care bill.


Boston Globe: On Beacon Hill, Some Good Ideas, Some Overreach on Health Care
“The best course forward would be for the House to jettison its heavier-handed approach …  to focus on reinforcing the market-driven cost-cutting trends already underway.” (May 14)

Boston Herald: Healthier Approach
“Where the House leaders say their bill strikes the proper balance between government intervention and respect for market-based forces, the Senate bill seems to actually do so.” (May 14)

Boston Business Journal: Risking Jobs at the Expense of Payment Reform
“Here’s one way Beacon Hill could help contain costs. Liberate the market so insurers could offer a more dynamic mix of products. Massachusetts’ one-size-fits-all approach forces many consumers to buy far more than what they want or need.” (May 11)

MMS Statement on the Release of Senate Payment Reform Legislation

Posted in Accountable Care Organizations, Global Payments, Payment Reform on May 9th, 2012 by MMS – Comments Off on MMS Statement on the Release of Senate Payment Reform Legislation

By Lynda M. Young, MD
MMS President

With the release of the Senate bill today, we now have two detailed legislative approaches to payment reform, along with the Governor’s legislation from last year.

We recognize the need to bend the cost curve in Massachusetts, and we will continue to work with the House, the Senate and the Governor for the remainder of the session to ensure that the final legislation aligns with the following principles.

We assert that the market is working, and has already been doing an effective job controlling the growth in the cost of health care over the last two years. The most responsible approach to continuing this trend would be to empower this market-led approach.

A market approach would afford us the best chance of ensuring that patients’ access to care is preserved; the delivery of quality health care is supported; that we continue to foster innovation; that we maintain the viability of physician practices, and protect the jobs of the many thousands of people who work in health care –without disruption or interruption.

We support an approach that establishes a reasonable cost control goal over a reasonable period of time. If these reasonable goals are not met, then a detailed review would be initiated, which would inform a set of targeted actions to fairly address the causes of the problem. Any benchmark below the annual growth in the state’s economy is too aggressive.

This is a very complex system. Massachusetts is already among the nation’s leaders in designing new models for the delivery of health care. State legislation should foster the innovations that are currently underway. It should allow us the opportunity to learn what works, and provide the flexibility to make corrections when needed. This is an imprecise science, and no one has done anything like this before. This must be a gradual learning process, conducted in a non-punitive environment.

We also need to be mindful of the risk that a new statutory framework could add administrative burdens on providers and payers who are already staggering under the weight of administrative mandates, many of which add no value to health care. We must simplify, not complicate the administration of health care.

We are pleased to see language modeled on the University of Michigan’s Disclosure, Apology and Offer approach to resolving patients’ claim of medical malpractice. This would lead to the faster resolution of cases, increase openness and honesty between patient and provider, allow for provider apologies, reduce the incidence of defensive medicine, and help control and reduce costs. We believe this model would vastly improve the experience of patients with an unanticipated medical outcome, and better foster a culture of safety in our health care system.

House Releases Payment Reform Legislation

Posted in Accountable Care Organizations, Defensive medicine, Global Payments, Payment Reform on May 4th, 2012 by MMS – Comments Off on House Releases Payment Reform Legislation

The Massachusetts House Friday released a comprehensive payment reform bill that seeks the cut $160 billion in health care spending in Massachusetts over the next 15 years.

House Speaker Robert DeLeo characterized the bill as an effort to balance the need to cut health care costs for employers and families with a desire to keep health care “a healthy part of our economy.”

Rep. Stephen Walsh, co-chair of the Joint Committee on Health Care Financing, said health care stakeholders “may not like everything [in the legislation], but you certainly will like something.”

The bill spans 178 pages and more than 3700 lines of text. Its provisions include:

  • There are firm targets to encourage health care providers to limit increases in health care costs. In Year 1, annual spending growth may not exceed the growth in the Gross State Product. In Year 3, that target is reduced to a half percentage point below the growth in the Gross State Product. If providers exceed these targets, the state is empowered to change payment methodologies, propose new legislation, require corrective action plans, or reopen providers’ contracts with insurers.
  • Providers whose costs exceed 120 percent of the comparable state median would be fined at 110 percent of their spending that exceeds that 120 percent level.
  • A comprehensive adoption of the so-called Michigan model of “disclosure, apology and offer” to resolve patients’ claim of medical malpractice. This includes the establishment of a 182-day waiting period upon the filing of a notice of a claim. It prohibits the introduction into evidence of a provider’s expression of apology or regret.
  • A powerful new independent agency, the Division of Health Care Cost and Quality, would consolidate the role of many existing agencies and oversee the implementation of the bill.
  • To improve transparency of prices and costs, there are new requirements on providers and insurers to publicly report costs and quality information, and patient cost-sharing.
  • It provides for loan forgiveness for primary care providers practicing in underserved or rural areas.
  • It seeks to simplify certain administrative procedures, and includes a requirement that all health plans must use the same two-page form for all prior authorization requests.
  • It requires that all patients have access to an interoperable electronic health record by 2017. The bill promises an unspecified amount of financial support to help providers develop their EHR systems.

MMS President Lynda M. Young, MD, applauded the inclusion of the Disclosure, Apology and Offer language in the legislation. “We’re very supportive of the approach outlined in the legislation, which we believe will vastly improve the experience of patients who experience an unanticipated medical outcome,” she said.

Dr. Young expressed concerns about the legislation’s cost control mechanisms. “While we certainly appreciate the need to make health care more affordable, we’re worried that the bill’s goal and timetables are too aggressive. We look forward to working with the House and Senate to develop mechanisms that address patients’ affordability concerns, without reducing their access to care, unduly restricting physicians’ ability to practice medicine, or putting a damper on our state’s culture of medical innovation.”

Dr. Young added, “We appreciate Rep. Walsh’s openness and diligence during this long process. He met with us many times, and listened carefully to everything he had to say. We look forward to working with him, and members of the state Senate, during the coming weeks and months.”

The full text of legislation is available here. We’re continuing to analyze its details and will publish the product of that analysis next week.

According to Speaker DeLeo, the House bill will remain in the Ways and Means Committee for further analysis. The Senate, for its part, is expected to release its version of payment reform next week.

Global Payments: Ready. Or Not?

Posted in Health Policy, Health Reform, Payment Reform on March 20th, 2012 by MMS Communications – Comments Off on Global Payments: Ready. Or Not?

As Massachusetts moves quickly toward a new system of paying for health care, a key question that remains is this:  Are physicians ready for global payments?

It’s a critical one for doctors, because within such contracts, they bear the clinical responsibility for and the financial risk associated with managing the medical care of their patients.

To get some answers, the MMS surveyed both primary care and specialty physicians last year on their preparedness for global payment contracts.  The final report on the study has just been issued.

The study had three goals: (1) to find out the current range of payment structures among physicians; (2) to understand their perceptions and attitudes toward global payments; and (3) to assess their perception of their readiness to enter into such contracts.

Survey respondents included 572 physicians, 290 who work in solo or small single-specialty practices, and 282 who work in larger, multi-specialty groups or groups connected to hospitals.  Here are some of the principal findings:

  • While 67 percent of respondents reported having access to computer systems for managing some types of clinical information, only 7 percent said they had computer-based systems that permit clinical information exchange, communication, and management both inside their group and with physicians and hospitals outside of their group.
  • Only 29 percent reported that their group is ready to enter global payments contracts, and only 21 percent said their group is both ready to enter such contracts and large enough to provide comprehensive care , negotiate with health plans, and attract skilled managers to oversee these processes.
  • Those practicing in large groups with experience with financial performance incentives were more likely to say they were ready for global payments.
  • Physicians also questioned the presumed benefits of global payments:  Only 44 percent believe that medical spending will decrease with global payments, only 19 percent think quality will improve, and 76 percent think that a global payment system will reduce the number of physicians willing to work in Massachusetts.

One important conclusion the authors draw from this study is this:  physicians report “having few or limited structures that could support population management of medical care,  such as electronic clinical information exchange systems across providers.”

Simply stated, while much attention, energy, and money are now being devoted to health information technology from many sources, physicians say there still isn’t enough information technology infrastructure to accommodate the change at this time.  The authors did note, however, that the survey responses varied considerably by practice size, geography, and specialty.

The complete report, The Massachusetts Medical Society’s Physician Survey on Global Payments, is available on the MMS website.