FOR IMMEDIATE RELEASE:   CONTACT:  Catherine Bromberg
July 16, 2009                                                    781-262-6027

Massachusetts Hospitals Support General Direction of Special Commission on Healthcare Payment System Recommendations,
 Express Ongoing Concerns

Massachusetts hospitals overwhelmingly support reforming the state’s healthcare payment system and the general thrust of recommendations made by the Special Commission tasked with making such an overhaul a reality; but a number of serious questions need to be addressed very early in the process in order for payment reform to be successful, the President & CEO of the state’s hospital association said today.

Massachusetts Hospital Association (MHA) President & CEO Lynn Nicholas, FACHE brought both the hospital community’s support and concerns to the Special Commission on Healthcare Payment System today, voting in favor of the Commission’s final recommendations while expressing a number of concerns healthcare providers feel could be barriers to the effort’s success. Nicholas is a member of the Commission.

“MHA’s members agree that a more integrated and coordinated system of care should have positive results in terms of the access to, and quality of, care,” Nicholas said in a statement preceding the vote.  “The general direction of payment reform away from fee-for-service towards a more integrated form of delivery and payment – such as global payment – could be successful. But the ultimate success or failure of payment reform in our commonwealth, and the productive engagement of hospitals to this end, will depend on thoughtful and responsive answers to certain key issues as we make more concrete plans and contemplate the process of implementation.”

There are serious and significant issues that must be addressed early on, and how those issues are resolved must inform how all healthcare stakeholders proceed down the path to payment reform, said Nicholas.  Hospitals’ questions and concerns are outlined in detail in an association document entitled 'Preliminary MHA Perspective on Key Payment Reform Issues,' which was provided earlier to the Chairs of the Commission.

The most critical concerns MHA's board expressed include:

•     Risk adjustment. Under a global payment system, healthcare providers will take on a greater degree of risk than they do currently. The nature and level of this risk should be clearly within the providers’ scope of control, clearly defined and not subject to interpretation. Hospitals and providers remain concerned that inadequate risk adjustment could doom the proposed global payment system to failure. The current system must be enhanced or a new system developed before widespread implementation begins.

•        Consumers and employers must be educated and engaged in the process.  Consumer and employer involvement is vital to ensure that insurance benefit designs are aligned with payment reform goals. Currently they are not, and the report’s premise that health plan enrollees will not be restricted to providers in the Accountable Care Organization's (ACOs') network could make the prospect of truly reducing costs a hollow promise.

 •        The “complementary strategies” listed at the end of the report are vital to the cost reduction effort and must be addressed simultaneously to payment issues. The basic building blocks for any future payment system must include health plan design, consumer engagement, payments for provider teaching and standby capacity, and primary care workforce development. Meanwhile, administrative simplification, medical malpractice reform, better practices around end of life care and evidence-based coverage could take costs out of the system before new payment strategies will have an impact. They should be escalated as a priority while stakeholders figure out the payment piece.

•        Cost savings. There is still much that is unknown about the impacts of global payments in various settings. But the cost of realigning markets, as well as implementation and infrastructure costs associated with putting a global payment system in place, will be substantial and a blueprint for adequate funding to make the transition successful needs to be addressed early on.

“As the Commission ends its official work, MHA and its members commit to working collaboratively and creatively to find reasonable answers to our questions and we pledge to seek ways to remove the barriers to success that stand in the way on the path to a more effective healthcare payment system,” Nicholas said. “In the end, we want a system where hospitals are an integral and stable part of a high quality and cost effective healthcare environment for those who need care, those who provide care, and those who pay for care in Massachusetts.”

###