Finding Value: The Right Care, at the Right Time, in the Right Place, for the Right Cost

Remarks by Sen. Richard T. Moore

June 27, 2011 ... Thank you for the opportunity to offer remarks this morning, particularly as we, in the Legislature, and more specifically in the Health Care Financing Committee, continue to forge ahead with further comprehensive reform of our delivery system. Along with my able co-chairman, Representative Steven Walsh and our colleagues on the committee, I am currently engaged in statewide hearings on House Bill No. 1849, an act improving the quality of health care and controlling costs by reforming health systems and payments. This important legislation, filed by the Governor, aims to promote movement toward global payments and away from fee-for-service provider payment based on a unanimous recommendation of the Special Commission on Payment Reform (established pursuant to Section 44 of Chapter 305 of the Acts of 2008).

These Health Care Financing Committee legislative hearings, combined with recent reports by your Division (Health Care Finance and Policy) and the Attorney General, as well as the ongoing work of the Special Commission on Provider Price Reform (established pursuant to Section 67 of the Acts of 2010), will serve as important resources for us as we begin refining what promises to be one of the most complex reforms we’ve seen since undertaking the effort to expand access to safe, affordable, high quality health care with the passage of Chapter 58 of the Acts of 2006. 

Concerns about the rising cost of health care and the essential need for all care to be the right care, delivered at the right time, and in the right place arose long before the passage of our landmark health reform. Chapter 58 of the Acts of 2006, Chapter 305 of the Acts of 2008, and Chapter 288 of the Acts of 2010 all included major provisions aimed at bending the rising curve of health care costs, while simultaneously promoting the safety and quality of care, and, of course, ensuring access to care for nearly every resident of the Commonwealth. The next chapter must deliver this care at the right cost!

Medical breakthroughs are occurring at a more rapid pace than ever before, and many of them are happening right here in the Bay State. While it is gratifying to be on the cutting edge of health care advancements, those who pay for health care – especially employers, consumers and taxpayers – often suffer from sticker shock when we see the bill. Our concern turns to outrage when we learn that there is no direct correlation between the cost of health care and the quality of care received. In fact, sometimes, the most expensive health care turns out to be sub-standard, and even dangerous!

As those in state government, stakeholders, and the public discuss the need for the very reform we’re considering right now in the Committee on Health Care Financing, that discussion has focused on containing the rising cost or trying to keep the cost increases below the level of medical inflation!

We’ve all heard the pleas; whether it was a young couple trying to find their infant appropriate treatment, or a senior citizen struggling to prioritize needed medication or heating her home. We’ve heard the calls from business – especially small business – and their workers to keep premium increases to single digits. We’ve heard the demands of angry taxpayers to put an end to budget-busting health costs.

I’ve heard the pleas loud and clear! People are mad as hell, and they want us to do more than contain health costs or bend the cost curve – they want us to BREAK the curve! They want us to cut health costs, while maintaining safe, high quality care for every resident of Massachusetts!

Frankly, for many, our success in passing health reform legislation in this session will depend solely upon whether or not residents will see the difference in their wallets rather than in the custody of providers, payers or the government, and I believe that should be our goal! I am confident that this is an achievable goal, if we invest in quality improvement for care delivered to patients and promotion of wellness for the general population.

Clearly, there can be no real value in only seeking cost efficiencies, if by making cuts, we’re going to jeopardize the quality of our care. America tried that in the 1990’s and, while largely arbitrary limits on care delivery kept costs from growing as fast, those limits could not be sustained. We can do better! The people of Massachusetts deserve better! And to the degree that Massachusetts may be seen as a national model, every American deserves better!

Any reform – let me repeat – any reform that the Legislature ultimately makes to our delivery system must, in my opinion, strive for better quality care, which should be a combination of improved clinical outcomes for patients, better coordination of care across payers and providers, recognition of the impact of behavioral health in patient compliance, reduction of the tendency to practice defensive medicine, and the implementation of an overall wellness strategy to get, and keep, our population healthy. If this is to be our objective, there is no doubt in my mind that significant cost savings will, in time, be the result.

Many who have followed our past reform efforts closely will know that addressing quality and cost are far from new concepts, but ones that have woven common threads throughout each chapter. Whether it was the establishment of the Quality and Cost Council or the creation of a statewide infection prevention program in Chapter 58, or the formation of the eHealth Institute and the prohibition of payments for “Never Events” or hospital readmissions in Chapter 305, improving the quality of health care has consistently been our primary objective. Our efforts continued last year with the passage of Chapter 288, which included standardized transparency measures for provider pricing, and an annual open enrollment period for Commonwealth Choice. The success of many of these programs is, I believe, due in large part to leadership of strongly committed and knowledgeable partners like Senate President Therese Murray, who is keenly aware of the fact that mere cost cutting is not a means to a quality end. The provisions for shrinking costs, or at the very least, controlling them that were key parts of earlier reforms, have been proven to work – but, they must be nurtured and expanded. Health care cost reduction strategies such as the work of the Quality and Cost Council, the Physician Tuition Assistance Program, screening to prevent more serious health consequences, academic detailing of prescription drugs, expansion of health information technology, deployment of telehealth systems, a strong, effective pharmaceutical marketing ethics law, the ground-breaking best practice reports of the Betsy Lehman Center, the publicly available reporting of the infection prevention program, humane and sensitive end-of-life care reforms, real determination of need reforms, standardized bill coding and administrative simplification – these, and others all need to be fully implemented and consistently adequately funded over many years. They cannot work, if we eliminate them, cut their funding, or provide only limited, half-hearted budgetary, legislative, and administrative support! 

Last year, I spoke at this very hearing and asked about the cost of inaction when considering proposals aimed at helping our small businesses. We could not afford, I said last year, not to take action to move toward more affordable health care,. The Governor and Legislature took some important steps in that direction. However, there is much more to do! We must not settle for those initial steps nor undermine our efforts by losing our resolve or failing to provide necessary resources!

Today, however, I come bearing a different question. Are we prepared to invest in quality improvement to achieve payment and provider price reform and reduction?
First, what is the cost to Government? The bill filed by the Governor that is now before the Committee on Health Care Financing contains no specific appropriation. We pointed out to the Administration that current state resources are not sufficient to implement such a massive shift in our delivery model. Last week, the Administration agreed that there will be a need to increase budget support for the Division of Health Care Finance and Policy, the Department of Public Health, and the Division of Insurance by up to $6.7 million and between 53 and 75 additional staff among these agencies. Past experience with such estimates suggests that these will be baseline estimates and are likely to grow with more detailed analysis.

Any reform must have meaningful oversight to ensure the integrity of implementation, one that includes individuals nominated not for their allegiance to the appointing authority, but for their expertise. People who are specifically qualified to assume this significant responsibility must implement the effort. These experts should be afforded appropriate flexibility to ensure that reforms are free of politics, and in the best interest of the taxpayers, and our valuable system. Their work, especially during the five or more transition years needed for implementing payment and price reform, must not be distracted by other administrative responsibilities in state government or their work undermined by budget cuts. Transition to a new payment and pricing model is not only important to improvement of our health care system, but to our entire economy, in view of the leading role that health care plays in our state’s economy.

We cannot expect to achieve such a significant reform of our payment model and health care pricing at a bargain rate. Such reform will require careful diagnosis, skillful surgery, perhaps a transplant, and extensive rehabilitation – not band-aids and placebos! There will be a need to invest in areas of government that provide oversight of the health care system if they are to do more than impose, largely arbitrary, cost controls such as setting limits on premium increases or rate-setting of provider prices. It will take concerted effort and the best qualified personnel to develop, measure, and evaluate quality health outcomes, to establish fair methodologies by which to evaluate the appropriate level of medical loss ratio of insurers or the proper components of total medical expense among a wide ranging variety of health providers, and to find ways that promote competition that leads to reduced prices rather than ever-increasing costs.

What is the cost to the health care system? The motivation for payment and price reform is to make sure that patients receive better care that seeks to maintain or improve health, thus resulting in lower systemic costs. As many of us suspected, and the Attorney General has now confirmed, global payments or the establishment of Accountable Care Organizations, will not realize their potential savings if we do not first, or simultaneously, confront the issue of market influence.

Of equal concern must be the costs associated with the establishment of ACOs, especially considering that risk is to be shifted from payer to provider. ACOs will require infrastructure costs, which hopefully include the expanded use of electronic medical records, but will also include reinsurance costs and data warehouses to manage claims.

The Administration, in its filing for the next 1115 Medicaid Waiver, has suggested that there is a significant cost to establishing an ACO. They state that one large urban public health provider, which is well-positioned to become an ACO will need hundreds of millions of dollars in supplemental Medicaid payments to become a successful ACO pilot. What will it cost to transition the rest of the providers into the ACO model and who will pay for this new world? Will it be necessary to offer incentives in the form of higher reimbursements for those moving to global payments in order to offset the transition costs and assumption of greater risk? Will we ask payers to share in that effort as their own risk declines? How quickly can we expect any savings from fee-for-service to be enjoyed by those now paying for health care?

What will these new ACO entities look like? Can the small group practice survive in this refined environment? Is the ACO model the “holy grail” of payment reform, or will we also value and support other payment methodologies? Must only larger entities have the resources to manage the risk they’ll be assuming? If the entities will indeed be larger, either through mergers or contractual agreements, how does that contrast with our current model where it seems price variation relies more upon the market power and reputation of the entity as opposed to its quality? Is bigger, necessarily better, in creating ACOs? Must all health care be provided through ACOs or will some delivery models still utilize fee-for-service, and how should quality and outcomes be evaluated and compensated in any model of care? Any thoughtful reform must incorporate these important considerations, and make strides to accommodating appropriate flexibility.

Furthermore, I think many would agree that we currently reward volume over quality, and sadly, our system spends far more on care than on health. That dynamic must change, and success will likely only be achieved if the entire system makes sacrifices for the good of the whole. For too long, health care, despite its not-for-profit players, has run like a for profit business, which often forfeits quality for larger margins, rarely viewing customers as stakeholders. Should excess revenue, above what is appropriate for a not-for-profit entity be used for excessive salaries or major capital facilities, or for promoting “first-kid-on-the-block” bragging rights for the latest technology even when it does nothing to advance patient care or meet patient need?

What reforms should be considered?

Well, for starters, our system is too territorial. This resistance to competition often limits the infusion of creativity and ingenuity, potentially limiting a patient’s access, and most certainly preventing our ability to lower costs. Some are resistant to change because it might represent a smaller market share, weaken clout for a certain sector, or force costs to diminish. That stubborn mindset is no longer acceptable, and I’m hopeful that the stakeholders will agree.

Secondly, insurance premiums are intended to pay for high quality health care when it is needed, not golden parachutes for administrators whose responsibility seems to be denying claims to reduce costs and care while increasing revenues. Insurance companies, especially those who enjoy the public benefit of non-profit status, must continue making strides toward tighter medical loss ratios. Administrative expenses should not rise proportionally to health care spending, and billing and coding mechanisms cannot remain overly burdensome so as to force doctors into spending more time and resources filling out forms than they do seeing patients. Our system is complex enough! I honestly don’t believe that we need to artificially and unnecessarily make it any worse.

Furthermore, we know that when we can keep people healthy, the cost of providing health care can be very affordable. Instead of consistently cutting funding for public health initiatives – those proven to save lives and dollars, whether in state and local public health agencies or in private insurance programs need investment, not elimination or fiscal strangulation.

If our goal is to keep people healthy as opposed to treating illness when it arises, what better way than to prioritize prevention and public health? Unfortunately, we’ve seen a retreat from these priorities in recent years, primarily because of tightening budgets and, sometimes, the lack convincing evidence of any “return on investment,” so to speak. It is often difficult to quantify which illnesses have been prevented, and thus how much money you’ve saved, with better nutrition and regular tests and screenings. However, there are success stories, including such simple programs as tobacco cessation and various cancer screenings. It is quite apparent that a healthier population most certainly equals a less costly one, but it takes an investment to promote healthy living and to convince people to live healthier lives rather than hoping for a cure-all pill or expecting the rest of society to pay for the care that will be needed to offset the consequences of unhealthy life-styles.

We must also continue our progress toward implementing electronic health records and the creation of an electronic health network, but small providers need help to implement and maintain this technology. This is a proven method of improving quality and safety, and will serve as a tool for newly-minted ACOs in the coordination of care. In fact, a recent report from the New England Healthcare Institute has shown that using remotely monitored ICU’s in community hospitals can save the Commonwealth as much as $122 million a year, and most importantly, up to 350 lives. Computerized provider order entry has also proved to save at least $170 million a year if implemented in our hospitals.

If the payment reforms transfer a certain amount of risk to providers, then, medical malpractice reform certainly has an appropriate place in this legislation. The more we know about mistakes when they’re made, the more we can do to prevent them from occurring again. Today’s adversarial system too often fractures a patient’s faith in the system, and rarely leads to justice. If we are to ask physicians to assume greater responsibilities for care, we must provide them with flexible protections. Similarly, if we are to ask patients to maintain a stake in their overall well-being, don’t they, at the very least, deserve a dialogue with their physician as to what happened and what steps are being taken to remedy it?

As I said at the outset of my remarks, we’re still in the process of conducting statewide hearings on this comprehensive proposal, and have received an abundance of valuable input from a whole host of stakeholders. Thus far, some conclusions are becoming more apparent, aside from the fact that we must revise our system to restore the patient to its very center, with qualified physicians taking a stake in our overall well-being. This will absolutely mean that the powerful dynamics currently at play must change, and change dramatically. We must promote real primary care, which cannot be boiled down to a single doctor, but a carefully constructed team of highly skilled professionals, including nurses, our allied health fields, and when appropriate, specialties and other ancillary components to our system. Reforming the payment methodologies must also include a re-examination of the scope of practice of each type of health professional and the creation of patient care teams that include the patient, themselves.

We cannot afford the status quo in payment and pricing methodologies. We also cannot simply overlay new payment and pricing methodologies on top of the current system. Payment and price reform has to be robust, and it has to be meaningful. We also need to establish a timetable for the steps that must lead to quality improvement and cost cutting as the goals of payment and price reform. It cannot be left “Insha'Allah” – as our friends in the Middle East might say, meaning “some day in the future.” We must have a reasonable transition schedule with some flexibility, however, since once again, the Commonwealth will lead the nation in tackling payment and price reform, continuing to lay the foundation for yet another piece of innovative landmark legislation. We will need to be able to make course corrections along the way of implementation.

Price increases based solely upon market power are no longer acceptable, and mere cost cutting or price-setting without measurable quality improvements is not the answer. We, as patients, deserve a better system, my constituents deserve a better system, and our professionals deserve a better system. It is my intention, this session, to seek value from our health care sector, and find the best methods to allocate the appropriate balance between improved quality outcomes and lower costs through payment and provider price reforms. My committee and I look forward to the results of your hearings as we draft the next chapter in Massachusetts health reform.

Finding Value: The Right Care, at the Right Time, in the Right Place, for the Right Cost

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