The Health Care Quality and Cost Council’s Roadmap to Cost Containment 

Presented to the HDC by
Katherine Shea Barrett, Administrative Director, HCQCC
October 26, 2009
The Health Care Quality and Cost 
Council’s Goals
•	Reduce the annual rise in the cost of health care to no more than GDP by 2010
•	Ensure patient safety and effectiveness of care
•	Improve screen for and management of chronic illnesses in the community
•	Develop and provide useful measurement of or approaches to quality in areas of health care for which current data are inadequate
•	Eliminate racial and ethnic disparities in health and in access to and utilization of the health care systems; health indicators will be consistent across all racial and ethnic groups.

Process Used to Develop Roadmap
•	Engaged Bailit Health Purchasing as a consultant to produce the Roadmap
•	Began in December 2008 with list of 21 strategies being utilized by RAND in its work for the DHCFP
•	Developed briefs on each potential strategy and presented to Cost Containment Committee
•	Relied on work of Special Commission for payment reform strategy background work and recommendations
•	Refined strategies based on feedback from Committee members, HCQCC Advisory Group, and stakeholder meetings
Roadmap Strategies: 
Eleven Key Integrated System-wide Efforts
•	Adopt comprehensive payment reform
•	Adopt and use health information technology
•	Implement evidence-based coverage informed by comparative effectiveness information
•	Develop health resource planning
•	Support system redesign	
•	Implement health plan design innovation to promote use of high-value care
•	Enact malpractice reform and peer review protections
•	Implement administrative simplification
•	Engage consumers
•	Encourage healthy behaviors
•	Further promote transparency

The Strategy: Adoption of Comprehensive Payment Reform
•	Special Commission on the Health Care Payment System recommended reforming the payment system from the current, predominantly fee-for-service system to a global payment model.  
•	What is a global payment?
–	A method of prospective payment that bundles services at the patient-level over a defined period of time
–	Payment is made based on past cost experience and actuarial assessment of future risk related to patient demographics and known medical conditions.
–	Places providers at financial risk for their clinical performance and coordination of care
–	Payments are risk-adjusted so that providers are not put at risk for occurrence of health problems out of the provider’s control.
The Strategy: Adoption of Comprehensive Payment Reform
•	What is an Accountable Care Organization (ACO) as defined by the Special Commission?
–	Composed of hospitals, physicians and/or other clinician and non-clinician providers working as a team to manage provision and coordination of full range of services.
–	Can be incorporated organizations or contracted networks of providers.
–	Accepts global payment for all or most care to be provided to an enrollee with a primary care physician within an ACO’s network.
–	Responsible for determining how payments are made to providers within its network.
•	Could potentially have ACO accept payment and distribute, or have payer distribute directly to service providers and then make adjustments based on performance against the aggregate ACO global payments and performance access and quality incentives.
Adoption of Comprehensive Payment Reform: How to Implement
•	Given length of time needed to transition to global payments, recommend four components of payment reform.
–	Public and private payers should increase use of payment methodologies that will support health care delivery redesign, including:
•	Increased use of pay-for-performance and alignment of P4P across providers
•	Implementation of bundled or episode-based payments
–	This methodology bundles services for a specific episode of care (e.g., hip replacement) or for a fixed time period for a chronic condition (e.g., coronary artery disease). A grouping of providers agrees to a rate and receives payment either as a bundle or as fee-for-service with a reconciliation.
•	Support for patient-centered medical homes
•	Reduced payments for avoidable hospitalizations and preventable readmissions
Adoption of Comprehensive Payment Reform: How to Implement
2. State should encourage global payments as major model for health care payments.  As suggested by the Special Commission, an independent Board should be established to guide and monitor the implementation of global payments.  The implementation timeline should recognize complexities and address specific challenges.
	Specifically, the Council recommends that the Board:
•	Implement strategies to ensure that global payments bring cost savings to employers and consumers, including setting set parameters on the size of ACOs and utilizing rate setting if sufficient progress is not made;
•	Provide clear guidance and support to for integrated provider organizations, including a clear definition of accountable care organizations and a licensing or certification process for ACOs.;
•	Emphasize and incentivize system redesign that emphasizes preventive and primary care, improved integration of care and care coordination, and improved access and quality, with the substitution of less expensive care where quality is not compromised; 
•	Develop a standard global payment methodology, which includes a standard risk adjustment methodology;
•	Balance maintenance of appropriate patient choice with goals of providing high quality health care in the most efficient manner, and
•	Resolve anti-trust and other legal and regulatory issues that may impede implementation of payment reform.  

Adoption of Comprehensive Payment Reform: How to Implement
3. Council should monitor cost growth and explore potential impact of government rate regulation options if cost control targets not met.
4. The state should continue efforts to work with CMS on system redesign initiatives, including implementation of medical homes and efforts to efficiently provide coverage to Massachusetts’ residents that are dually eligible for Medicare and Medicaid.  Further, the state should work with CMS to utilize its Center for Innovation to include Medicare’s participation in payment reform efforts in Massachusetts.
Potential Short Term Strategies
•	The long-term nature of the strategies in this Roadmap should not be misconstrued as a lack of commitment to cost containment or the urgency in which it is needed
•	Short term strategies before implementation of rate/premium regulation:
–	Increased scrutiny by DOI of insurer premiums
–	Implementation of Medical Home
–	Efforts to reduce dramatic premium growth for individuals and small businesses

Timeline for Roadmap Strategies
and Potential Long-Term Savings Ranges*
Monitoring and Measuring Outcomes of Roadmap
•	Council to continue to take an active role in monitoring progress toward containing costs and improving quality
•	Recommend Council develop a scorecard  of Commonwealth’s progress in containing health care costs, for public release, no less than annually
•	Purpose of scorecard is to provide a high-level view of the aggregate success of Roadmap strategies.
–	Indicator of whether strategies are working as intended, 
–	If closer monitoring is needed, or
–	If course-corrections are necessary
Monitoring and Measuring Outcomes 
of the Roadmap
•	Monitoring should focus on aggregate measures of cost, quality and efficiency, such as:
–	Reduction in emergency room usage
–	Reduction in hospital readmission rates
–	Reduction in preventable hospitalizations
–	Reduction in hospital-acquired infections
–	Reduction in Serious Reportable Events
–	Increase in amount of provider payments being made as global payments
–	Increase in provider rates of meaningful use of HIT
–	Increase in consumer engagement
–	Increase in use of hospice and home health care
–	Decrease in per capita health care spending
–	Decrease in annual growth in health insurance premiums
–	Change in out of pocket spending by consumers

Monitoring and Measuring Disparities
•	A key component of the Council’s monitoring and measuring role is disparities measurement
•	The Council also collects member race, ethnicity and language data on the claims that it receives from commercial, fully-insured carrier. 
•	The data sample size is not yet sufficient to do even aggregate level reporting on disparities in quality and cost, but will be soon.
•	Need to integrate Council’s work on a statewide scorecard for health system performance with the Disparities Index/Scorecard. 

Questions?