1. 1 Health Cost Control Payment Reform and Health Cost Control in Massachusetts Fall 2009

2. Why Now? Fee For Service isn’t working 2

3. 3 Fee-For-Service = broken Pays providers for individual services performed Not all services are paid for; fees not aligned with actual costs Rewards service volume and complexity rather than outcomes, quality and efficiency

4. What’s Happening State Initiatives: Quality and Cost Council (chapter 58) Chapter 305: Special Commission on the Health Care Payment System RAND Report Quality and Cost Council’s Roadmap DHCFP Cost Driver Report and Hearings Hospital and Insurer Reserves Report 4

5. Where do we want to go? Higher quality Equity Coordinated Care Bend the curve In other words: A Functional Health Care Delivery System 5

6. 6 Special Commission Common transparent payment methodology All-payer Global Payment for the implementation Payments made by insurers to Accountable Care Organizations to providers “Oversight Entity”

7. 7 Global Payment Fixed payment per patient for a set time period Incentive to contain costs Through coordination and health promotion? Example: BCBS AQC or Atrius Health

8. Isn’t this Capitation? Incentive to avoid high-cost patients? Incentive to not provide needed care? To avoid, payments should be coupled with risk adjustment performance measurement reporting (we add – patient empowerment) 8

9. 9 Of special concern Medical Homes Workforce Social and Economic Structures Consumer empowerment Public Health

10. 10 Medical Homes Focus on primary care, disease management and care coordination Goal to provide proactive, accessible and comprehensive patient-centered care Intended to improve value, not necessarily reduce costs Financially rewards providers for coordinating care according to the medical home model

11. 11 Workforce Dwindling supply of primary care docs Ancillaries Cultural competency

12. 12 Infrastructure Urban Planning Transportation Schools

13. 13 Consumer Empowerment Design a system to support patients: Consumers are the heart of the care system and must have a strong voice in the governance of the payment reform structures Chronic disease focus Grants & pilots (ie. HealthyMass)

14. 14 Next Steps Cost Driver Report and Hearings later in the fall Legislation – bill will be payment reform+ HCFA Network and overall Community