Reforming Health Care Delivery Through Payment Change and
Transparency: Innovations in Minnesota and Massachusetts
Anne K. Gauthier
Kristin Sims-Kastelein
Academy Health Annual Conference
State Health Policy Research Interest Group
June 26, 2010
This project is supported by The Commonwealth Fund.
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Overview &
Objectives
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Project Methodology
Minnesota’s Legislation
„ Findings: Progress to date and
implementation challenges
Massachusetts’s Legislation and
Major Recommendations
„ Findings: Current status and
implementation challenges
Key Lessons from Each State
Concluding Analysis: Cross
Cutting Themes
Study Design &
Project Methodology
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Extensive document review of the two states’
initiatives
‡ Legislation,
key workgroup reports, news articles,
literature review
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34 semi-structured telephone interviews with high
level state officials and private sector executives
‡ Interview
lasted roughly 60 minutes
‡ Recorded, transcribed, and analyzed to identify key
themes, issues, and lessons
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Separate case studies written; analysis of crosscutting themes
Minnesota’s Landmark Legislation,
2008: Price and Quality Transparency
Statewide Measures and All-Payer Database
What it is: Standardized set of quality measures for health
care providers across the state.
‡ Collection and use of all-payer encounter data and
contracted prices
Provider Peer Grouping
What it is: A method of for comparing health care
providers based on a combination of risk-adjusted cost
and quality.
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Transparent ranking of providers based on a
combination of risk-adjusted cost and quality
Minnesota’s Landmark Legislation,
2008: Delivery and Payment Redesign
Baskets of Care
What it is: A collection of services, paid separately
under fee-for-service, but combined by a provider in
delivery of a full diagnostic or treatment procedure.
‡ Uniform definitions and quality measurements for 7
baskets
Quality Incentive Payments
What it is: A statewide system of quality-based incentive
payment to health care providers.
‡ Initial focus on diabetes, vascular care, depression,
AMI, heart attack, pneumonia care
Health Care Homes
What it is: A primary care approach where providers,
families, and patients work in partnership to improve
health outcomes and quality of life.
‡ Voluntary certification. Certification tied to
incentive payment for coordinated care.
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Minnesota Findings:
Standardized Quality Measures
and All-Payer Database
Progress to date
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olle
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ta
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Sept. 2009: Uniform definitions and
measure have been developed
Registration of medical groups underway
January 2010: providers began submitting
data on the measures
July 2010: data on the measures will
publically reported
So
ftw
are
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Implementation Challenges
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100% physician participation
Lack of enforcement mechanism
Technical issues in exactly what is
reported and how
Analysis
Minnesota Findings:
Provider Peer Grouping
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Progress to Date
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July 2009: Collection of third-party administrators
and health plans encounter data
June 2010: Data distributed to providers
Implementation Challenges
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Technical details
‡ How do you score high cost/ high quality
versus low cost/low quality? How do you weigh
process measures versus outcome measures?
Program design
‡ How should like organizations be grouped?
How is location being taken into account?
Impact on access
‡ Are rural providers to be unfairly penalized?
Minnesota Findings:
Baskets of Care
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Progress to Date
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Dec. 2009 MDH finalized
Baskets
Jan 2010: Providers can offer
baskets. Price cannot vary by
payer.
Implementation
Challenges
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Definitions – balance breadth
with simplicity
Operational – payment,
combining different systems,
and more
Voluntary – will they be used?
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7 (+ 1) baskets of care
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Total Knee Replacement
Low Back Pain
Obstetric Care
Preventative Care (Adults & Children)
Diabetes and Pre-Diabetes
Asthma
Minnesota Findings:
Quality Incentive Based Payments
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Progress to Date
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July 2009: Rules for implementation
January 2010: Health plans use standard
quality measures. Providers submit
measures electronically
July 2010: First public quality reports
published. Public programs use quality
incentive payment system
Implementation Challenges
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Risk adjustment
Applies only to state programs
Alignment with existing pay for
performance programs
Minnesota Findings:
Health Care Homes (HCH)
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Progress to Date/Next Steps
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HCH certification criteria
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Access and communication
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Use of registries
Care coordination
Care planning
Practice level quality improvement
November 2009: HCH criteria
finalized
January 2010: Care coordination
methodology finalized
July 2010: Care coordination payment
begin for public programs and health
plans. Health plans have HCH
available in network.
Implementation Challenges
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Conceptual definition varies
Debate over coordination payments
Massachusetts’ 2008
Legislation : Chapter 305
Payment and Delivery Redesign
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Established the Special Commission on the Health Care Payment System
Strengthened role of the Health Care Quality and Cost Council to "promote
public transparency of the quality and cost of health care in the
commonwealth“
Other Key Legislative Provisions
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Creation the Massachusetts e-Health Institute
Charging DPH to develop, implement, and promotion of an evidence-based
outreach about cost-effective utilization of prescription drugs
Uniform reporting
Establishment of a Medicaid medical home demonstration
Annual public hearings from providers and hospitals on cost containment and
quality
Recommendations of the Special
Commission on the Health Care
Payment System
All payers move to a global payment system within 5 years
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Development of Accountable Care
Organizations (ACOs)
Focus on patient-centered primary care
Preservation of patient choice
Cost and quality reporting
Risk-sharing between ACOs and payers
Development of risk adjustment models
Widespread adoption of medical homes
Creation of an independent entity to
oversee implementation and transition
strategy
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Health Care Quality & Cost Council’s
Roadmap to Cost Containment
Comprehensive reform phased in over 10 years
1.
All payers increase use of payment
methodologies that support health care
delivery redesign:
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Statewide adoption of global payments
HCQCC should set cost control targets
and monitor cost growth.
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P4P, episode-based payments, medical homes, and
reduced payments for avoidable hospitalization
and preventable readmissions
Explore rate regulation if cost targets are not
met.
Continue state efforts to work with CMS
on alternative payment models and system
redesign.
Massachusetts Findings:
Bold Consensus: Wow! How?
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Special Payment Commission’s unanimous endorsement of
global payment signaled understanding that transparency will
not control costs alone
Ambitious recommendations still quite conceptual; many
details still to come
Stakeholders (especially hospitals and physicians) given
political cover through Commission process
Media spotlight provided additional support: national leader
on access, Boston Globe series on Partners’ prices, and
overall cost trends
All the way to global payment? What about episodes?
Massachusetts Findings:
Technical and Environmental Issues
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Further legislation needed? Yes, say most observers
Independent entity to oversee implementation will be critical
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Significant activity led by the private sector helping to prepare market
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Composition is contentious
Numerous specific decisions to come identified by Special Payment
Commission and many more by stakeholders
Moderately strong support for transition strategy recommendations
Blue Cross’s Alternative Quality Contract helpful in changing provider
payment “mindset”
Reorganization and alignment of hospitals & physicians
Rate regulation “stick” recommendation by HCQCC does not have
wide support, but limits on insurer administrative costs appears to
have “legs”
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Current Status of Massachusetts’
Payment Reform
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April 2010: Attorney General
denied insurance rate increases
March 2010: Cost Hearings
May 2010: Senate passed legislation
to control health care premiums;
payment reform NOT included
State leaders plan, private leaders
continue discussions and pilots
Minnesota’s Lessons
Passing Major Reform
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Leadership, leadership and leadership
System reform is bipartisan issue
Articulation of clear goals motivates
action – Triple Aim resonated
Good data on variation and cost coupled
with personal stories instrumental in
building shared sense that status quo
unacceptable
Mutually valued public-private
partnerships to gain critical mass and buyin for the process
Major reform element: “total cost of
care” introduced too late to gain
stakeholder support, was poorly written,
and misunderstood
Minnesota’s Lessons
Payment and Transparency Reforms:
A Solid Base Hit
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Care coordination, episodes of care and value based payments are
essential building blocks for future reform
Alignment with other existing reporting and payment pilots bolsters
work already done
An imperfect package is far preferable to a “do nothing” alternative but
will it work as a package?
Ambitious timetable fueled action and promoted efficiency but didn’t
allow time to simplify package
Despite the significant collaboration already underway in Minnesota,
the legislation has potential to accelerate efforts and improve impact
Will enough stakeholders be affected? (and what about Medicare?)
Massachusetts’ Lessons
Culture of Reform Provides Momentum,
Recommendations to Actions Still Tough
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Political landscape and active reform culture have no doubt
shaped the current discussion
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Unique and expensive health care environment and role of provider
as major employer makes controlling costs imperative and difficult
Consensus that MA needed to tackle access before costs
(“Reform I” did not produce individual winners & losers)
Leadership, leadership, and leadership
Major bill with infrastructure steps and a high profile
Commission and a short timeframe creates momentum
Stakeholders signed on to bold recommendations of
Commission; later, they supported slower and voluntary
adoption and other reforms, along lines of Roadmap report
Massachusetts’ Lessons
Global Payment in 5 Years? Made Sense
But Not the Whole Answer
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A significant first step in payment reform is deep
understanding of FFS payment problems – restating the
problem is critical
Why go right to global payment? Building a system of
episode-based payment would take just as long and is seen
only as an interim step
The devil is always in the details: What will the ACO’s look
like? Can they be virtual? How can gains be shared?
The stakeholder tensions: which reforms are most critical for
controlling costs? Relative impact of administrative
simplification, malpractice reform, consumer incentives – and
rate regulation (HCQCC) versus payment reform
Cross-Cutting Themes (1)
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Both states provide models for replication –
what they passed or recommended and in
how they’ve brought stakeholders along
Payment change and transparency reforms:
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Require an upfront financial investment
Critical decisions in implementation – that
will reflect local culture and
Should start with a core set of measures,
add over time – selection process is as
important as the measures selected.
Payment reform legislated or not? May
depend on the culture of the state. But the
building blocks -- quality and cost measure
and reports on providers and plans need to
span system.
Cross-Cutting Themes (2)
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Leadership, leadership, and leadership
Timing is everything: In MN, “level 3, total
cost of care payment” was ahead of its time
in early 2008; MA had another year of
national conversation to assist
Role of payment reform and transparency in
delivery system reform – and need for
delivery reform – now more understood
than ever. But winners & losers make the
road tough.
Multiple opportunities in national health
reform to propel these states’ efforts on a
multi-payer basis!
Contact Information and Sources
•
Anne Gauthier
Senior Fellow
National Academy for State Health Policy
202-903-0101
agauthier@nashp.org
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Kristin Sims-Kastelein
207-874-6524
ksimskastelein@gmail.com
www.nashp.org
Gauthier, Anne and Cullen, Ann, “Reforming Health Care Delivery Through payment Change and
Transparency: Minnesota’s Innovations, “ The Commonwealth Fund #1375, April 2010.
Gauthier, Anne and Sims-Kastelein, Kristin, “Health Care Reform Phase Two in Massachusetts: The Road to
Payment Reform and Restructured Health Care Delivery,” The Commonwealth Fund, forthcoming.