Commonwealth of Massachusetts
Executive Office for Administration and Finance
Leslie A. Kirwan, Secretary
Press Release Contact:
Cyndi Roy - 617-725-4025; Jennifer Kritz - 617-573-1612

Payment Reform Commission Unanimously Supports Move to Global Payment System to Improve Patient Care and Contain Health Care Costs

Report released today suggests eliminating costly fee-for-service system over five years

BOSTON - Thursday, July 16, 2009 - The Special Commission on the Health Care Payment System today unanimously endorsed recommendations for improving the quality of patient care in Massachusetts by dramatically changing the way patients pay for health care.

Rising health care costs - both in Massachusetts and nationwide - threaten individuals, families, businesses, and the state's successful health care reforms, without necessarily supporting the highest quality of care. Patrick Administration officials, legislators, providers, insurers and others worked collaboratively to recommend reforms to move away from the current fee-for-service payment system, which encourages the overuse and misuse of services and establishes incentives to provide more care without assuring the highest quality care.

The Special Commission on the Health Care Payment System today offered a bold vision for payment reform in Massachusetts, endorsing a global payment system that encourages comprehensive patient care with significant incentives for high-quality care. A global payment system will encourage more careful coordination and collaboration between a patient's physicians, nurses, hospitals and other care providers.

"Massachusetts has led the nation in expanding health insurance coverage to virtually all of its residents. With these recommendations, it is now poised to lead the nation in tackling the challenge of containing health care costs and improving the quality of care," said Administration and Finance Secretary Leslie Kirwan, who co-chaired the Special Commission. "These payment reforms chart a bold but achievable path to a better health care system."

"These recommendations represent a vital first step in reforming how we pay for health care in Massachusetts. There is broad agreement that payment reform is the cornerstone strategy for improving health care quality and moderating health care costs," said Division of Health Care Finance and Policy Commissioner Sarah Iselin, who co-chaired the Special Commission. "While there is still much work to be done, I am confident that our strong health care community has the expertise and commitment to achieve the vision we have outlined today."

The mission of the Special Commission on the Health Care Payment System, which was established by the Legislature in 2008, was to identify effective ways of restructuring the health care payment system to promote efficient, patient-centered care and to reduce cost growth in the Commonwealth, as the state works to maintain successful health care reform delivering coverage to more than 97 percent of residents.

Massachusetts has among the highest health care costs in the United States, and while we rank among the best in health care quality, we could do better. Insurance premiums have increased almost every year for the past two decades at a pace that well exceeds the annual increase in wages and the cost of living.

"Massachusetts is again leading the way on how to reform the Health care system of the state and the nation" said Stuart Altman, a national health policy expert and professor at Brandeis University. "The recommendations of the Special Commission on the Health Care Payment System, if approved by the legislature and Governor will help move our health system away from its reliance on the outdated and wasteful fee-for-service approach to paying for medical services and to facilitate the restructuring of the delivery of care towards providing those services that provide true value to patients."

The Commission recommended phasing in a global payment system statewide over five years and anticipates that, when fully implemented, global payments in Massachusetts would include the following key features:


  • A global payment system in which providers would receive a payment per person, adjusted for patients' health status and other factors to ensure that they are compensated fairly for their patients' health care needs. Payments would also be based on meeting common core performance measures to ensure high quality care.


  • An emphasis on patient-centered medicine, with doctors and other providers providing coordinated, evidence-based, high-quality care for patients. In addition to providing more effective care for patients, this approach will also help to reduce health care costs in the longer term.


  • A careful transition to global payment within five years, during which "shared savings" would serve as an interim payment model to help some providers become more familiar with global payment with no or reduced exposure to risk. There would also be infrastructure support for providers to facilitate the transition to global payments, including technical assistance and training and information technology.

The Commission also identified a number of additional strategies to complement payment reform, including administrative simplification, examining health plan benefit design and coverage policies, and consumer engagement. While the Commission did not make specific policy recommendations in these areas, its report highlights ongoing or contemplated work in these areas that will be critical to the long-term success of efforts to control costs.

The full commission report can be viewed at