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Senate Approves First-In-Nation Payment Reform Bill

May 17, 2012

BOSTON – Crunching through 265 amendments during two full days of public debate, the Senate on Thursday capped a framework of nation-leading health care reforms with landmark cost-control legislation that will save the Commonwealth $150 billion in the next 15 years while improving the quality of care and increasing the transparency and accountability of the state’s entire health care system, announced Senator Karen Spilka.

Health spending is projected to double from 2009 to 2020, outpacing both inflation and growth in the overall economy. Massachusetts residents, businesses, and state and local government continue to struggle with increasing premiums and other health care cost sharing.

“We took direct action on behalf of our constituents and the Commonwealth as a whole to address one of the biggest issues facing our residents and businesses,” said Spilka. “Building upon past health care reforms championed in the Senate, this comprehensive bill will bring about tremendous savings to help consumers and businesses across the state and will ensure that our residents have access to affordable and high quality care.”
“The most important goal of this legislation is to reduce the cost of health care while providing access and quality outcomes,” Senate President Therese Murray (D-Plymouth) said. “Massachusetts spends 15 percent more per person on health care than the rest of the nation and 40 percent of our state budget is spent on health care. This bill will reel in health care costs, without harming our number one industry or patient care, and remove a major roadblock to long-term job growth and essential investments in education and transportation.”

The approved bill, for the first time in the nation, establishes a statewide health care cost growth goal for the health care industry equal to the projected growth of the state’s gross state product (GSP) plus .5 percent from 2012 to 2015 and equal to the state’s GSP beginning in 2016.

This change will result in an estimated $150 billion in savings over the next 15 years which will be passed on to businesses, municipalities and residents of the Commonwealth who are struggling with increasing premiums and other health care costs.

In an effort to carefully balance the need to transform the health care industry without harming the number one employment sector in Massachusetts, the bill supports health care professionals in developing innovative payment and care delivery models and establishes tools to help providers meet the targets in the bill through market-based solutions.

The bill also requires the state’s Medicaid program, the state’s employee health care program and all other state-funded health care programs to transition to new health care payment methodologies by 2014. These payment models incentivize the delivery of high-quality, coordinated, efficient and effective health care.

To support the development of “best practices” for care delivery and payment reform models, the legislation establishes a certification process for health care provider systems dedicated to cost growth reduction, quality improvement and patient protection. These “Beacon ACOs” will receive a contracting preference in state-funded health care programs.

Additionally, the bill also establishes independent oversight of the health care industry by reorganizing the existing Division of Health Care Finance and Policy to become an independent state agency and serve as the designated health care data collection, dissemination and analysis agency of the Commonwealth.

The bill includes an amendment filed by Spilka to increase participation of all key industries to ensure they have a seat at the table when making future actions to reform and analyze the health care industry. Specifically, the amendment adds medical device manufacturers, representatives from the biotechnology industry, and pharmaceutical manufacturers to the list of healthcare industry perspectives and representatives required on the Institute of Health Care Finance and Policy Council. All three of these industries serve as important economic engines for the state.

“These three industries are crucial to improved patient outcomes and improved efficiency in health care delivery and their participation ensures that as they evolve, the state’s healthcare system can evolve with them,” said Spilka. “In addition, these industries serve as important economic development engines and job creators in Massachusetts and their inclusion in important decisions going forward will keep Massachusetts in the forefront of these cutting-edge sectors.”

To aid consumers in making health care purchasing decisions based on comparative cost, the bill requires health care payers to disclose up-front, through a toll-free number or a website, the total cost sharing a member will be liable for in receiving a specific service from a specific provider.

Current trends indicate the cost from preventable forms of chronic disease will reach $62 billion by the year 2023 which must be addressed in order to meet the long-term health care cost growth goals. The bill includes several wellness initiatives including $100 million over the next five years in community-based prevention, public health and wellness efforts, expanding an existing wellness incentive program for small businesses to provide a subsidy of up to 15 percent of premium costs and requiring the Department of Public Health to develop a “model” guide for wellness programs for businesses.

In addition, to improve the state of women’s health care and services, the Senate adopted Spilka’s amendment which requires the Department of Public Health to add obstetrics and gynecology to the list of programs to be inventoried in their 4-year health resource plan. This important long-term plan makes recommendations for supply and distribution of resources, programs, capacities, technologies, and services based on need.

Additional provisions Spilka advocated for to improve women’s health care included in the bill:

  • Requiring Beacon ACO carriers to provide access to obstetrics and gynecology services for certification;
  • Adding the ability to stratify data by sex and sex-race groups to the list of requirements carriers must meet for Beacon ACO certification;
  • Requiring proposals for Prevention and Wellness Trust Fund grants to display a commitment to include women, racial and ethnic minorities, and low income individuals in preventative community health programs; and
  • Requiring biological difference in diseases between the sexes and the resulting differences in diagnosis for the same disease in different sexes to be investigated and reported on by the Massachusetts Diagnostic Accuracy Task Force.

“Massachusetts is number one in the nation for health insurance coverage for women and we are lucky to have access to some of the best medical care facilities in the world. The provisions adopted today ensure that we take into account the different ways men and women respond to treatment, care, and disease going forward to guarantee quality care for all patients in the Commonwealth,” said Spilka.

The Health Care Quality and Cost Containment bill of 2008 established Massachusetts as a national leader in the statewide adoption of electronic medical records. The bill passed today builds upon that legislation by dedicating $100 million in the next five years to accelerate and facilitate the ongoing statewide adoption of the interoperable electronic health records by the year 2015. It also establishes a Health Care Workforce Transformation Fund to invest in the training, education and skill development programs necessary to help workers succeed and flourish in the health care system of the future.

The bill reforms medical malpractice laws to reduce unnecessary litigation and malpractice claims costs. It creates a 180-day cooling off period while both sides try to negotiate a settlement, and it allows for providers to offer an apology to the patient.

The bill also does the following:

  • Expands the role of physician assistants and nurse practitioners to act as primary care providers in order to expand access to cost-effective care;
  • Expands an existing workforce loan forgiveness program to include behavior and mental health providers;
  • Requires the development of standard prior authorization forms, which would be available electronically, so that providers would use only one form for all payers;
  • Streamlines data reporting requirement by designating a single agency as the secure data repository for all health care information reported to and collected by the state;
  • Charges the Attorney General to monitor trends in the health care market including consolidation in the provider market in order to protect patient access and quality; and,
  • Develops a process to track price variation among different health care providers over time and establishes a Special Commission to determine and quantify the acceptable and unacceptable factors contributing to price variation among providers.

The bill will now go to the House of Representatives for further action.

Since passing the omnibus Health Care Reform Act of 2006, used as the model for national health care reform, the Senate has led reforms in 2008 enhancing primary care access and e-health initiatives and in 2010 helping individuals and small businesses reduce the costs of health insurance plans.



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