Eyes on Massachusetts’ Efforts To Cut Rising Health Care Costs

Massachusetts will soon begin the second phase of its state health overhaul -- seeking strategies to control rising costs -- with observers around the nation watching in an effort to see what works, the Boston Globe reports.

In 2006, the state passed a universal health care law to extend coverage to virtually all state residents. Now, the state must develop strategies to curb rising costs and the entire country will observe the process as federal lawmakers determine the fate of national health reform.

According to the Globe, medical spending in the state has increased by about 7.5% annually over the previous few years, which is higher than the rate of inflation. The increase has been driven in part by a large share of care that is being provided in academic medical centers in the Boston area rather than in less expensive community hospitals, the Globe reports. The rising costs have strained businesses and individuals struggling against the economic downturn.

To address costs, officials in Gov. Deval Patrick's (D) administration are drafting legislation on a payment overhaul for the state legislature to consider in January 2011. Patrick has supported a "global payment" plan, which would encourage physicians and hospitals to form accountable care organizations to coordinate care and distribute payments and would move the state away from the traditional fee-for-service system.

According to the Globe, most of the state's health care companies have agreed in principle to the plan, but have yet to reach a consensus on its elements. Meanwhile, representatives from medical care providers, insurers, employers and consumers met on Thursday to generate a functional cost-control plan.

JudyAnn Bigby, state secretary of health and human services, said the group has not yet reached a consensus on whether an advisory board is needed to manage the new payment system, what authority the board would have and what outcomes it would oversee. The group also is examining a regulatory framework for how health care providers can form accountable care organizations under the new system. Bigby said the biggest area of disagreement on the committee is "between those who don't want the price of health care to be regulated and those who say you can't make sure health costs are controlled unless you regulate the price."

Federal Officials Will Once Again Use Massachusetts as a Model

U.S. health officials observed Massachusetts' expansion of care as a model for a national expansion, and experts expect federal officials to do the same with how the state addresses rising costs.

John Sullivan, research director for health care investment bank Leerink Swann, said, "Just as Massachusetts has been several years ahead of the country in health care reform, we are several years ahead in the problems of health care reform" (Weisman, Boston Globe, 11/5).