Health Reform in Massachusetts: How Are We Doing?

Sarah Iselin, Division of Health Care Finance and Policy

State Coverage Initiatives Annual Meeting

July 30, 2009

Massachusetts Division of Health Care Finance and Policy - 2

Health Care Reform: Phase 1

• On April 12, 2006, Massachusetts enacted legislation that would provide nearly universal health care coverage to state residents

• Key Components of Chapter 58: An Act Providing Access to Affordable, Quality, Accountable Health Care– Individual Mandate

– MassHealth Expansions and Restorations

– Subsidized Health Insurance Program

– Preservation of the Safety Net

– Employer Responsibilities (with 11+ employees)

– Insurance Market Reforms

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428,000 Newly Insured

Private Group

+149,000 members

Commonwealth Care

+163,000 members

Individual Purchase

+41,000

Medicaid

+76,000

Source: Massachusetts Division of Health Care Finance and Policy, “Health Care in Massachusetts: Key Indicators,” May 2009. Available at [http://www.mass.gov/Eeohhs2/docs/dhcfp/r/pubs/09/Key_Indicators_May_09.ppt#256,1,Slide 1]

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Notes: Beginning in 2008, DHCFP contracted with a new vendor for the Massachusetts household survey on health insurance. The 2008 survey had a number of methodological changes from prior year surveys which may affect comparability of the results to prior years. Sources: DHCFP Household Surveys for 2000, 2002, 2004, 2006, and 2007; surveys from 2000 through 2006 were conducted February through June of the survey year; survey for 2007 was conducted January through July of 2007. 2008 data is from the Urban Institute tabulations on the 2008 Massachusetts Health Insurance Survey which was conducted June through August of 2008. For more information, please visit www.mass.gov/dhcfp. Click on “Publications and Analyses” then go to “Household Health Insurance Survey.”

Massachusetts Division of Health Care Finance and Policy

People without Health InsurancePercent of All Massachusetts Residents

2.6%

5.7%

6.4%

7.4%

6.7%

5.9%

2000 2002 2004 2006 2007 2008

55Massachusetts Division of Health Care Finance and Policy

Health Safety Net Total Volume and Payments

Notes: The Uncompensated Care Pool fiscal year (PFY) and the Health Safety Net fiscal year (HSN) run from October 1 through September 30 of the following year. Hospital volume is the sum of inpatient discharges and outpatient visits for which payments were made to hospital providers in the months shown. Community health center volume is the sum of visits for which payments were made to community health center providers in the months shown. Hospital and community health center volume excludes pharmacy claims. Volume numbers are rounded to the nearest thousand and may not sum due to rounding; percent changes are calculated prior to rounding. Hospital and community health center payments are reported in the month in which payment was made. Hospital and community health center payments include pharmacy payments. Payment numbers are rounded to the nearest million and may not sum due to rounding; percent changes are calculated prior to rounding.Source: DHCFP Health Safety Net Data Warehouse as of 04/09/09.

Health Safety Net (HSN) total volume for hospitals and community health centers increased by 2% in the first six months of Health Safety Net fiscal year 2009 (HSN09) compared to the same period in the prior year.

HSN payments for hospitals and community health centers increased by 0.4% in the first six months of HSN09 compared to the same period in the prior year.

588

347 361

195

140 133

PFY07 (Oct - Mar)

HSN08 (Oct - Mar)

HSN09 (Oct - Mar)

Community Health Centers

Hospitals I npatient and Outpatient

$310

$177 $176

$21

$18 $20

PFY07 (Oct - Mar)

HSN08 (Oct - Mar)

HSN09 (Oct - Mar)

Community Health Centers

Hospitals I npatient and Outpatient

783 K

486 K 494 K

$331 M

$195 M $196 M

-38%

+2%

-41%

+0.4%

Volume Payments

Massachusetts Division of Health Care Finance and Policy - 6

Health Care Quality and Cost Council

• Established by Chapter 58 of the Acts of 2006

– Develop statewide cost and quality goals and implement mechanisms to make such information more transparent, easily available, and understandable to the public

• Successful launch of MyHealthCareOptions in December 2008

– First of its kind in the nation to offer comparative cost and quality information about medical procedures performed at Massachusetts hospitals and outpatient facilities

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Challenges

• State budget

• Keeping employer coverage strong in a deep recession

• Ensuring access for the newly insured

• Getting coverage for those left out

• Sustaining public support

• And…..

HEALTH REFORM

THE MOUNTAIN OF HEALTH CARE COSTS

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With no intervention, per capita health care spending in Massachusetts is projected to nearly double by 2020 MA Per Capita Health Care Expenditures: 1991-2020

Note: The health expenditures are defined by residence location and as personal health expenditures by CMS, which exclude expenditures on administration, public health, and construction. Data for 2005 – 2020 are projected assuming 7.4% growth through 2010 and then 5.7% growth through 2020.

Source: Centers for Medicare & Medicaid Services (CMS), Office of the Actuary, National Health Statistics Group, 2007. Projections by the Division of Health Care Finance and Policy.

$6,683

$17,872

$3,249

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

$18,000

$20,000

CAGR: Compound Annual Growth Rate

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Health Care Reform: Phase 2

• “An Act To Promote Cost Containment, Transparency And Efficiency In The Delivery Of Quality Health Care” was signed in August 2008

– Special Commission on the Health Care Payment System to investigate reforming and restructuring the payment system to provide incentives for efficient and effective patient-centered care and to reduce variations in the quality and cost of care

– Annual study on health care system cost drivers to culminate in hearings in the fall and a final report, including action-oriented recommendations

– Study of the reserves, endowments, and surpluses of health insurers and hospitals to recommend options for regulation, oversight, and disposition

• RAND study on impact of various health care cost control options

• Health Care Quality and Cost Council’s “Roadmap to Cost Containment” will specify ways that sectors of the health care system can work together to contain costs

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Recommendations of the Special Commission on the Health Care Payment System

• Movement from predominantly fee-for-service payment must occur to promote safe, timely, efficient, effective, equitable, patient-centered care and reduce growth in per capita health care costs

• Transition to a payment system where global payments with adjustments to reward provision of accessible and high quality care become the predominant form of payment to providers in Massachusetts within a period of five years

– Government, payers and providers will be required to share responsibility for providing infrastructure, legal and technical support to providers in making this transition

• An oversight entity would:

– Define parameters for a standard global payment methodology—but the market will determine global payment amounts

– Establish transition milestones and monitor progress, with a focus on the progress to global payments, progress to greater payment equity, and per capita health care costs

– Make decisions in an open and transparent manner and seek broad stakeholder input from providers, health plans, government, employers, and consumers

– Have authority to assist and intervene, and make mid-course corrections if needed

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Other Chapter 305 Efforts

• Implementation of statewide interoperable health records by 2015

• New regulations regarding hospital acquired infections and serious reportable events

– Public hospital-specific reporting

– Prohibits health care facilities from charging for services provided as the result of the occurrence of a serious reportable event

• New regulations governing pharmaceutical and medical device industries

– Mandate reporting and public disclosure of certain fees, payments and other compensation provided by companies to physicians

– Gift prohibitions and restrictions on meals given by companies to health care providers

• Expert panel on end-of-life care for patients with serious chronic illnesses

• Statewide standard for uniform billing and coding among health care providers and payers to reduce administrative costs

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Political Lessons From Massachusetts

• Universal coverage possible/easier if only goal

• Don’t mess with existing coverage

• Savings from existing programs essential

• Employer requirements for coverage need to be modest

• Individual mandates must be accompanied by broad subsidies/affordability exemptions

• Stay away from any substantial middle-class tax increases