HEALTH REFORM IN MASSACHUSETTS: FROM COVERAGE TO COSTS Beyond Coverage: Building on CA’s Success Insure the Uninsured Project KATE NORDAHL February 17, 2015

BLUE CROSS BLUE SHIELD OF MASSACHUSETTS FOUNDATION Comparison of MA Coverage Reforms (“Chapter 58”) and ACA

BLUE CROSS BLUE SHIELD OF MASSACHUSETTS FOUNDATION Massachusetts has the lowest rate of uninsurance in the country… 2 PERCENT UNINSURED, ALL AGES U.S. AVERAGE MASS %–3.8% NOTE: The Massachusetts specific results are from a state-funded survey — the Massachusetts Health Insurance Survey (MHIS). Using a different methodology, researchers at the Urban Institute estimated that 507,000 Massachusetts residents were uninsured in 2005, or approximately 8.1 percent of the total population. Starting in 2008, the MHIS sampling methodology and survey questionnaire were enhanced. These changes may affect comparability of the 2008 and later results to prior years. The national comparison presented here utilizes a different survey methodology, the Current Population Survey, which is known to undercount Medicaid enrollment in some states. SOURCES: Urban Institute, Health Insurance Coverage and the Uninsured in Massachusetts: An Update Based on 2005 Current Population Survey Data In Massachusetts, 2007; Massachusetts Center for Health Information and Analysis (formerly the Division of Health Care Finance and Policy) Massachusetts Health Insurance Survey data for years 2000, 2002, 2004, 2006, 2007, 2008, 2009, 2010, 2011; Massachusetts Health Insurance Coverage 2012 Estimate, Massachusetts Center for Health Information and Analysis, December 2, 2013; U.S. Census Bureau, Current Population Survey, Health Insurance Historical Tables (HIB Series). Massachusetts Health Insurance Coverage 2012 Estimate

BLUE CROSS BLUE SHIELD OF MASSACHUSETTS FOUNDATION But the highest per person health care spending in the nation… 3 PER CAPITA PERSONAL HEALTH CARE EXPENDITURES, 2009 NOTE: District of Columbia is not included. SOURCE: Centers for Medicare & Medicaid Services, Health Expenditures by State of Residence, CMS, State NATIONAL AVERAGE

BLUE CROSS BLUE SHIELD OF MASSACHUSETTS FOUNDATION And while access to and use of care have increased, affordability is a persistent challenge for many 4 SOURCE: Massachusetts Health Reform Survey, 2015

BLUE CROSS BLUE SHIELD OF MASSACHUSETTS FOUNDATION … particularly for those with lower incomes and publicly subsidized coverage 5 SOURCE: Urban Institute, Massachusetts Health Reform Survey, Percent of non-elderly adults reporting that Health care costs were a problem in the past year Income 400% FPL and above Public Coverage Income % FPL Private Coverage

BLUE CROSS BLUE SHIELD OF MASSACHUSETTS FOUNDATION Developing an approach to addressing costs has involved a multi-year effort and multiple legislative actions  Health reform passes (Ch. 58 ) –Begins path to near universal coverage  Much of Chapter 58 enacted, e.g.: –MassHealth expansion –Commonwealth Care –Consumer affordability schedule –New health plan options for young adults –Employer Fair Share  Cost Containment Part 1 (Ch. 305) passes –Increased transparency about cost drivers –Reports on health insurer and hospital “reserves”  Special Commission on Payment Reform –Recommends move to global payment  Government reports and hearings on cost drivers  Governor rejects small group premiums  Cost Containment Part 2 (Ch. 288) passes –Aims to control premiums for small businesses, individuals  Governor Patrick files payment reform legislation  Special Commission on Provider Price Reform  Cost Containment Part 3 (Ch. 224) passes –Statewide cost growth targets and payment reforms –Continued focus on data transparency

BLUE CROSS BLUE SHIELD OF MASSACHUSETTS FOUNDATION Key Themes in Approach to Addressing Costs Little appetite for rate regulation or mandates Instead set up structure to establish system wide cost growth benchmark and public forum for accountability Consequences of not meeting benchmark are reputational rather than direct penalties Establish goals to move towards value-based market and efficient, high-quality delivery system via alternative payments and ACOs Significant new reporting and transparency around prices, spending, payment methods, mergers/acquisitions, etc… 7

BLUE CROSS BLUE SHIELD OF MASSACHUSETTS FOUNDATION The Health Policy Commission (HPC) Is Central to Overall Cost Containment Efforts A quasi-independent agency, governed by an 11-member board appointed by the Governor, Attorney General and State Auditor HPC sets the annual health care cost growth benchmark – the target rate for the average per capita growth in total medical spending in the state HPC can require health care providers and plans that exceed benchmark growth rates to implement performance improvement plans All provider organizations are required to register with HPC HPC reviews proposed mergers/acquisitions and refers cases likely to result in increase in costs to the Attorney General 8

BLUE CROSS BLUE SHIELD OF MASSACHUSETTS FOUNDATION Performance relative to cost growth benchmark 9 SOURCE: Health Policy Commission Annual per-capita percent growth (2012 – 2013)

BLUE CROSS BLUE SHIELD OF MASSACHUSETTS FOUNDATION The Center for Health Information and Analysis (CHIA) Serves as Data Engine for Monitoring Reform Manages the state’s all-payer claims database Collects data on alternative payment arrangements (APM) Compiles reports and analyses, e.g., Annual cost trends Rates of APM adoption Price variation Hospital financial performance Refers to HPC providers and plans whose health-status adjusted, per capita total medical spending growth exceeds benchmark 10

BLUE CROSS BLUE SHIELD OF MASSACHUSETTS FOUNDATION Chapter 224 Promotes Wide Adoption of Alternative Payment Methodologies Medicaid and the state employee health insurance purchasing program must transition to alternative payment methodologies — Medicaid must have 80% of enrollees under alternative payment contracts by 2015 Private payers must move away from fee-for-service to the “maximum extent feasible” All providers accepting contracts with down-side risk must get a Risk Certificate from the Division of Insurance HPC developing regulations to certify Accountable Care Organizations (ACOs) and Patient Centered Medical Homes (PCMHs) — Certification is voluntary — If ACOs prove successful, the state must give them priority for delivery of publicly purchased health care 11

BLUE CROSS BLUE SHIELD OF MASSACHUSETTS FOUNDATION Adoption of alternative payment methods 12 SOURCE: Center for Health Information and Analysis Proportion of members covered by APMs

BLUE CROSS BLUE SHIELD OF MASSACHUSETTS FOUNDATION Questions? Kate Nordahl