Thursday, March 18, 2010

At the Cost Trend Hearings




I just returned from testifying at the Health Care Cost Trend Hearings. (Prepared statements are posted here.) Commissioner David Morales of the Division of Health Care Finance and Policy presided. In addition, Attorney General Martha Coakley attended, seen here with Thomas O'Brien, Assistant Attorney General of her Health Care Division.

The day started with an excellent presentation by Stephen Schoenbaum, EVP for Programs at the Commonwealth Fund. It covered a lot of topics, as you can see if you flip through his charts.

A pertinent one for the topic we have been discussing here was that a likely downside of creating Accountable Care Organizations would be an increase in market leverage of such organizations in negotiating payment levels. This will require, he suggests, some level of state action (a point I have made earlier.) "At a minimum," there would be a need for transparency of prices. Beyond that, we will "probably need" a system of all-payer prices and maybe a move to rate-setting (perhaps akin to that employed in Maryland or West Virginia.) "I don't think private payers on their own can do this," he noted, arguing for government supervision of some sort.

This theme came up later during our panel discussion when people were talking about the potential advantages of moving from a fee-for-service to a capitated reimbursement system. Jim Roosevelt, CEO of Tufts Health Plan, wisely noted, "Before going to global budgets, we need to deal with the variation in unit prices" that exists in the Massachusetts market. (See the chart above.) As noted earlier, I agree.

5 comments:

Anonymous said...

I am curious about the banner "Higher rates are not tied to teaching status." Of course, teaching hospitals receive additional Medicare payments (and presumably, private payments?) to acknowledge the extra costs conferred by their teaching function. So one would expect them to have higher rates - ? Is the data skewed by the fact that the community hospitals owned by Partners receive higher rates, thus making community hospitals in general look higher than they are, or what? Can that affect the entire state??!! On the face of it,I do not understand this lack of correlation.

nonlocal

Paul Levy said...

Yes, I believe that is why.

Paul Levy said...

But the AG has also pointed out that some community hospitals benefit from geographic isolation and have negotiating leverage with insurers in that way.

Janice McCallum said...

Paul,
The link to Stephen's presentation didn't work for me. However, I found his testimony & links to the PPT on the Commonwealth Fund site:
http://www.commonwealthfund.org/Content/Publications/Testimonies/2010/Mar/Creating-the-Framework-for-High-Performing-Health-Care-Organizations.aspx

Paul Levy said...

Thanks, Janice. I embedded that link.