Special Commission on the Health Care Payment System

1. Special Commission on the Health Care Payment System January 16, 2009 1:00 p.m. – 3:00 p.m. McCormack Building: Ashburton Café

2. Special Commission on the Health Care Payment System Statute Overview

3. Overview • The Special Commission on the Health Care Payment System was created under Section 44 of Chapter 305 of the Acts of 2008. • Goal: 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.

4. Membership of Commission Ten-member Commission consisting of: Ex-Officio Members: • Secretary of Administration and Finance (co-chair) • Commissioner of the Division of Health Care Finance and Policy (co-chair) • Executive Director of the Group Insurance Commission Legislative Appointments: • 1 person to be appointed by the Senate President • 1 person to be appointed by the Speaker of the House Gubernatorial Appointments: • Massachusetts Association of Health Plans, Inc. • Blue Cross and Blue Shield of Massachusetts, Inc. • Massachusetts Hospital Association, Inc. • Massachusetts Medical Society • a health economist or expert in the area of payment methodology

5. Responsibilities • Examine payment methodologies and purchasing strategies, including, but not limited to alternatives to fee-for-service models; • Recommend a common transparent payment methodology; and • Recommend a plan for the implementation of the common payment methodology across all public and private payers in the Commonwealth, including a plan for MA to seek a waiver from federal Medicare rules to facilitate implementation.

6. Required Consultations • In making its investigation, the Commission is required to consult with: • Health Care Quality and Cost Council; • Health care economists; and • Other individuals or organizations with expertise in state and federal health care payment methodologies and reforms. • Before a final vote on any recommendations, the Commission is required to consult with “a reasonable variety of parties likely to be affected by its recommendations, including, but not limited to”: • The Office of Medicaid; • The Commonwealth Health Insurance Connector; • The Massachusetts Council of Community Hospitals, Inc.; • The Massachusetts League of Community Health Centers, Inc.; • 1 or more academic medical centers; • 1 or more hospitals with a high proportion of public payors; • 1 or more Taft-Hartley plans; • 1 or more self-insured plans with membership of more than 500; • The Massachusetts Municipal Association, Inc.; and • Organizations representing health care consumers

7. Other Considerations • A majority vote of the Commission is required before any action is considered “official.” • Commission meetings are subject to the Open Meeting Law. • Ethics Laws Nancy Savoie – (617) 988-3210 or nancy.savoie@state.ma.us

8. Special Commission on the Health Care Payment System

9. Draft Principles for Health Care Payment Reform Base assumption: Significant reform of the provider health care payment system is required to significantly slow the high rate of health care cost growth. • Fee-for-service payment rewards overuse of services and therefore is not a preferred model for most provider payments. • Payments should be adequate to cover the costs of efficient providers and ensure adequate access to care for consumers. • Provider payment systems should reward the delivery of efficient, high quality health care that aligns with evidence-based guidelines. • The health care payment system should reinforce provision of the optimal level of care and care coordination across the spectrum of health care providers. • Payments should minimize the risk to providers for events largely outside of their control and should neither reward nor penalize a provider for accepting one patient rather than another (no incentives to “cherry pick”). • Health care payments should be uniform for specific services, on a risk adjusted basis, regardless of payer, to the extent that this is financially feasible for government payers. • The health care payment system should be organized in such a way as to minimize provider and payer administrative costs that do not add value.

10. Special Commission on the Health Care Payment System

11. Payment Models Referenced in Statute • Blended capitation rates • Episodes-of-care payments • Medical home models • Global budgets • Pay-for-performance programs • Tiering of providers • Evidence-based purchasing strategies