Regulators Now Driving Mass. Health Reform
Fisher
Massachusetts Health Care Reform 2.0, also called Chapter 224, was signed into law last August. But actual implementation and compliance with the law is unclear and uncertain.
Chapter 224 sets a broad goal of containing and controlling health care costs. The key to controlling cost growth is the “health care cost growth benchmark.” The benchmark appears to set a cap on how high costs can grow from year to year and is tied to the commonwealth's projected gross state product. For 2013, Chapter 224 sets the benchmark at 3.6 percent. It's not clear how the growth benchmark is applied. So to proceed with implementation, regulations will be needed to promote and enable understanding.
To understand how Chapter 224 tries to control the growth of health care costs, it's necessary to know the particular expenses the statute tries to limit. It seeks to control “total health care expenditures,” a very broad term consisting of the annual sum of all private and public health care expenditures in Massachusetts. The expenditures are defined broadly and include costs to and from providers, insurers and consumers. Examples from Chapter 224 include all payments to providers, all patient cost-sharing amounts and the net cost of private health insurance.
The uncertainty in the definition of health care expenditures highlights the difficulty in complying with Chapter 224. Do all expenditures need to fall below the benchmark, or can they be aggregated to fall below it? This is a question regulators should ultimately decide. So, until regulations come out, the full scope of total health care expenditures is not clear.
Another difficulty with Chapter 224 is implementing cost-control measures. Alternative payment methodologies and coordination of care will be at the top of the list. Alternative payments will likely translate into reduced revenue for providers —both physicians and hospitals — to provide care. The adoption of different methodologies can already be seen as many insurance companies and providers shift toward global payment agreements under which providers are not paid per service, but receive one large payment against which all services provided within a year are charged. Coordinating care will probably be necessary to succeed with the new payment methods. Providers and insurers will track patients and try to offer only necessary services as any additional services come out of previous payments.
The impact of forces outside Massachusetts will also play a role in Chapter 224. It's worth asking whether federal health care reform will follow because, as Massachusetts experienced, the first round of reform from 2006 did not address costs.
The cost-containment legislation sets ambitious goals that will radically change the delivery of health care. While it lays out specifics, the bulk of the details are left to regulators, whose work is not finished. To introduce clarity and assist these efforts, regulators should clearly set forth how the costs that are to be controlled will be calculated and whether every participant in health care will need to meet the annual growth containment number.
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Matthew Fisher is chair of the Health Law Group at Mirick O'Connell, a law firm based in Worcester.
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