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2 Mass. plans vie for savings on health care

By Liz Kowalczyk
Globe Staff / May 9, 2012
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Massachusetts Senate leaders’ plan to tame medical costs will call for less-aggressive spending limits on the health care industry than the House proposed last week, and fewer controls on high-priced hospitals and doctors, according to a summary provided to the Globe.

The Senate legislation is to be unveiled Wednesday, and in interviews yesterday, both House and Senate leaders stressed the similarities in their approaches.

But their plans contain key differences - particularly over how much the health care industry can be relied on to control costs on its own - that will be debated intensely in the coming months. The Senate bill appears to allow doctors and hospitals more leeway to find their own solutions, while the House appears to want more oversight.

Like the House, which released its cost-control legislation last Friday, the Senate would require the health care industry to reduce the growth in spending on medical care over time.

By 2016, the House calls for spending to shrink to half a percent less than the rate of growth of the gross state product, a measure of economic activity. The Senate believes the industry should not be forced to grow more slowly than the economy overall.

In an interview with the Globe, Senate President Therese Murray and Senator Richard Moore, a Democrat from Uxbridge who led the Senate bill-writing team, said they do not want to harm an important industry that provides one in seven jobs in the state.

While recognizing that Massachusetts spends 15 percent more on health care than the country, and that this difference must be narrowed, Murray said she is concerned about doing “something too drastic too fast.’’

“We wanted to move them in the right direction but we didn’t want to be so prescriptive that we cause unintended consequences down the road,’’ agreed Moore, warning against the risk of layoffs and accelerated consolidation of hospitals and doctors groups. “The economy is still fragile.’’

In one major difference, the Senate takes a softer approach to regulating high-priced providers including some of the major academic medical centers. The House is proposing a luxury tax on providers that charge prices deemed excessive and that they cannot prove are linked to above-average quality or unique services. That money would be redistributed to financially shaky hospitals.

The House wants to create an independent agency that would have the authority to ask providers and insurers to renegotiate expensive contracts. Representative Steven Walsh, a Democrat from Lynn and lead author of the House plan, described the proposal as “the gentle push of government,’’ in an interview with the Globe last week.

Alternatively, the Senate says providers and insurers who contribute to “excessive cost growth’’ must file confidential performance improvement plans with a new independent authority. The authority may not insist on any specific measures, and unspecified penalties could be imposed only if an insurer or provider does not file an improvement plan or does not implement the plan “in good faith.’’

Senate leaders also want to establish a special commission to determine acceptable and unacceptable reasons for price variation among providers.

Moore likened the Senate’s approach to that of a coach who works with the industry to reduce cost growth through a market-based approach. “If you’re a student in college and you’re failing, the professor lets you come back with a plan on how you are going to get yourself in line,’’ he said.

The Senate also wants to certify providers as accountable care organizations - large, connected groups of providers that coordinate all of a patient’s care - which would give them preference in contracting with Medicaid and other state-funded insurance programs.

Senate leaders would require state insurance programs to move toward global payments, which put providers on a budget to care for groups of patients, and other new ways of paying for medical care, but would not mandate this change for private health insurers.

The House would require an independent agency to set requirements and benchmarks for private insurers to adopt new payment methods that move away from the current fee for service system, which pays doctors and hospitals a separate fee for every office visit and procedure and is seen as promoting unnecessary care.

In other areas, the House and Senate agree. They both aim to expand primary care, the use of electronic health records, and information for consumers on the cost and quality of treatments, and to improve the medical malpractice system.

Walsh said that although he has not read the entire Senate bill, he is optimistic about the similarities. “We share a lot of the same themes and we give the market a lot of the same resources and tools to keep it moving.’’

While most industry executives said they want time to review the Senate bill before commenting on the details, it’s clear there will be challenges from all sides.

Michael Widmer, president of the Massachusetts Taxpayers Foundation, said the House bill goes too far. The Senate’s spending benchmark “strikes a better balance than the House between the need to squeeze cost out of the health care system without damaging the state’s world renowned health care sector,’’ he said.

He criticized the House’s luxury tax on expensive providers and the “vast powers’’ of an independent new agency “that is going to be inserting itself into the health care system in a major way.’’

Others, including the Greater Boston Interfaith Organization, a consumer group, and Associated Industries of Massachusetts will probably argue that both plans, but particularly the Senate plan, don’t go far enough in setting spending benchmarks.

The Massachusetts Association of Health Plans, while declining to comment Tuesday, has said it wants strong provisions to deal with the disparities in how much providers are paid.

Liz Kowalczyk can be reached at kowalczyk@globe.com.

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