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The future of the American healthcare system may be in limbo, but in Massachusetts, political leaders are facing a stark certainty: The state Medicaid budget is unsustainable and reform is imperative.
With health insurance for the state's low-income and disabled populations accounting for 40 percent of the fiscal 2017 state budget, Gov. Charlie Baker has taken on the formidable task of Medicaid reform.
In January, Baker announced a multipronged approach to curbing MassHealth costs. An insurance industry veteran who has had a hand in Massachusetts healthcare policy on the public and private side for decades, Baker is as good a person as any to lead the charge, but he won't be without his critics.
The business community is already on guard against one element of Baker's proposed reforms, an assessment on companies with 11 or more employees who have less than 80-percent participation in employer-sponsored health plans. Baker's proposal, which is part of his fiscal 2018 budget, would charge those employers $2,000 per full-time employee not buying coverage under those plans. The money would be used to fund MassHealth, which in fiscal 2018 is expected to cost $16.2 billion, according to the Baker Administration.
The idea is to stem the flow of people who have, under federal healthcare reform, opted to seek coverage through the MassHealth program if they meet income guidelines. The federal Affordable Care Act gave people that option and a steep spike in enrollment followed.
But the $2,000 assessment, according to Chris Geehern, executive vice president of marketing and communication at the Associated Industries of Massachusetts (AIM), penalizes companies for a problem they didn't create.
AIM, the largest employer association in the state, is still analyzing the real impact of Baker's proposal, but Geehern said initial estimates show some midsize companies could face assessments in the area of $100,000.
The sticking point for AIM, Geehern said, is the 80-percent takeup rate required by Baker's proposal. He noted under 2006 state healthcare reform, or RomneyCare, a similar proposal was made for companies but the required takeup rate was just 25 percent, and that reform feature was eventually dropped.
Geehern said two-income families are now the norm, and that dilutes demand for employer-sponsored plans.
“If you want to target employers that don't offer insurance at all and talk about an assessment, we're willing to talk about it; but the proposal will also affect a significant percentage of companies that do offer health insurance,” Geehern said.
Baker's MassHealth reform strategy goes deeper than raising revenue on the backs of Bay State employers. After securing a five-year, $52.5-billion Medicaid waiver deal late last year under the Obama Administration, giving the state more control and flexibility in managing Medicaid dollars, Baker began pursuing important structural changes to curb cost growth for MassHealth as well as the commercial health insurance market.
Those include cost control measures such as caps on price growth for certain healthcare providers, a five-year moratorium on new health insurance mandates, and administrative changes and restructuring how MassHealth is managed to reduce fraud and waste in the system.
On that front, local providers are in the midst of finalizing proposals to participate in a pilot Accountable Care Organization (ACO) program under the state Medicaid waiver deal, which would allow providers to contract with the state to manage the care of Medicaid patients under risk-based contracts. Plans must be in place by January and proposals were due this month.
Patrick Muldoon, CEO of UMass Memorial Medical Center in Worcester, said the Medicaid waiver is believed to be on solid ground despite potential changes to federal health insurance policy, so providers are reasonably assured that those contracts can move forward.
Muldoon said forming ACOs for MassHealth patients will align different types of providers – from acute care hospitals to community-based practices and specialty providers – to reduce duplication of services, which drives up costs. Muldoon said Medicaid patients tend to be costlier to care for than the commercially insured population, so the potential for savings is significant.
“What it will do is it will coordinate care in a much better way, in a much more prudent way,” Muldoon said, adding UMass Memorial Health Care's plans to submit an application for the pilot were imminent.
The managed care model was tested in the 1980s and 1990s and eventually failed. There was an overall feeling of distrust of the system by consumers, with a lack of provider choice and a fear the health management organizations would skimp on needed services to save money. Proponents of the ACO model have pointed to its emphasis on quality outcomes being tied to payment as a safeguard.
Managed care contracts still exist on a smaller scale in today's health insurance market, and with government incentives encouraging the adoption of ACO models, they are poised to once again become more popular under the ongoing shift away from fee-for-service insurance reimbursement, and toward risk-based contracts.
Thomas Ebert, chief medical officer at Worcester-based Fallon Health, said moving MassHealth patients to ACO contracts may limit their choices somewhat, but organizing the population within networks is necessary.
Like UMass Memorial, Fallon is also planning to participate in the MassHealth ACO pilot.
“At the end of the day, having providers and plans working together … will help manage the care for higher quality care, for less money,” Ebert said.
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