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Hospitals, poor patients face new costs

By Kay Lazar and Stephen Smith
Globe Staff / January 27, 2011

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Payments to hospitals and other health care providers would be slashed and low-income patients served by Medicaid would have to pay higher copayments under the spending plan Governor Deval Patrick proposed yesterday for the next budget year.

But the biggest savings in the $10 billion program that serves 1.2 million residents would come from revising and rebidding Medicaid contracts to encourage health care providers to work together to drive down costs.

With health care spending, including Medicaid, now making up 39 percent of the state budget, Patrick said it was time to take aggressive action to halt the relentless trend upward.

“Through innovations in the way we pay for and manage health care, we expect to save nearly $1 billion next year alone and to put an end to years of double-digit growth,’’ Patrick said at a press conference.

The new contracting would save $350 million in the first year, according to state figures.

But Patrick said the revamping of Medicaid contracts was not part of the more sweeping legislative proposal he expects to unveil this spring that would transform the way all hospitals and doctors are paid, by giving them a predetermined, per-patient annual fee that would cover all of a patient’s care.

But greater coordination of care through new contracts could help lay the groundwork for this new “global payment’’ system. State health secretary Dr. JudyAnn Bigby said the new Medicaid contracting would focus on better controlling costs; she noted that about 60 percent of Medicaid spending ends up going to about 10 percent of the population, patients with chronic health needs. She declined to provide details of how the contracts might be structured.

Savings would also come from increasing what Medicaid patients spend for their medicines. Bigby said that copayments for the poorest patients will increase from $3 to $4 and to $5 for those with somewhat higher incomes. The increases would not apply to medicines needed to control chronic health problems, such as hypertension, high cholesterol, and diabetes.

Health Care for All, a health care advocacy group, said it would push for patients to be involved in any substantial changes in the program.

“If people are going to have to change how they access care . . . it’s important to ask consumers before they roll this out,’’ said Amy Whitcomb Slemmer, the group’s executive director.

The Massachusetts Hospital Association released a statement that described the $150 million in rate cuts for hospitals and other providers as a “troubling’’ trend. “This cost shift helps the state budget, but it is devastating to hospital budgets and is a contributing factor to rising commercial insurance premiums,’’ the association said.

Public health advocates and a leading Senate Democrat decried proposed cuts to services for developmentally disabled children and low-income women contained in the governor’s budget.

An analysis by the Massachusetts Public Health Association, an alliance of leaders from social service agencies, showed that the single biggest reduction proposed for the Department of Public Health is in early intervention services that support families with developmentally disabled children.

“It is a lifeline for those families, and they are very passionate about it,’’ said Valerie Bassett, executive director of the public health advocacy group. The early intervention program, which connects families with services that enhance the health and learning of children from birth to age 3, faces a $7.9 million cut.

Overall, the public health budget would decrease from almost $498 million to $472 million. A range of programs designed to prevent disease and promote health face cuts, including one that helps 15,000 women with insufficient or no insurance get access to cancer screening, nutrition counseling, and transportation to medical appointments. By eliminating $6 million in funds for that program, the Women’s Health Network, Massachusetts would forfeit $6 million in matching federal money.

“What is surprising in this budget proposal . . . is the ‘penny-wise, pound foolish’ cuts in public health prevention and other health accounts that save money and, most importantly, save lives,’’ said state Senator Richard T. Moore, the Uxbridge Democrat who is chairman of the Senate Committee on Health Care Financing.

The proposed budget also cuts $2 million from the public health agency’s HIV/AIDS office and would also eliminate grants to cities and towns that were part of Patrick’s Mass in Motion campaign to reduce obesity, which was unveiled with great fanfare two years ago.

But funding was kept level for tobacco control, as well as for services that help substance abusers, programs that have faced cuts in previous years.

“While some preventative programs were cut . . . many other preventative services and intervention programs were preserved, such as substance abuse services, youth violence prevention grants, suicide prevention, and sexual assault and domestic violence services,’’ state Public Health Commissioner John Auerbach said.

Kay Lazar can be reached at klazar@globe.com; Stephen Smith at stsmith@globe.com.