The Massachusetts Hospital Association 
Payment Reform Report Series &
White Papers on Hospital Costs

Last July, the Massachusetts Special Commission on the Healthcare Payment System issued broad and wide-ranging recommendations on how to improve the way healthcare is provided and paid for in the Commonwealth. The Massachusetts Hospital Association (MHA) is taking a leading role in the state's healthcare payment reform and cost containment efforts with a six-part report series and white papers outlining a number of key issues that must be addressed before plunging in to implementing reforms. 

On Friday, October 9, the association released  "Massachusetts Payment Reform: An Overview of Critical Foundational Issues" and an executive summary providing an overview of the main issues the in-depth MHA reports will cover: ACOs, the transfer of risk to providers, benefit design, oversight requirements, and how a new payment system will affect societal needs, such as medical education, uncompensated care and behavioral health.

On Friday, November 20, 2009 MHA released "Creating Accountable Care Organizations in Massachusetts: Key Issues for the Commonwealth to Address" and an executive summary which outlines goals and recommends strategies the state can adopt to facilitate successful formation and operation of ACOs.

MHA’s strategic recommendations for ACOs include:

1. Providing adequate and appropriate payment for services
2. Aligning payment methods across payers
3. Ensuring appropriate and efficient quality measurement
4. Facilitating the formation of successful Accountable Care Organizations
5. Addressing key transition issues

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On Thursday, February 4, 2010, MHA released the third paper "Support for Societal Needs: A Critical Issue to Address in Payment Reform" and an executive summary which examines five societal needs that hospitals and health systems fulfill and the importance of these efforts to the community and economy, and the potential impact of a global payment system on hospitals' ability to continue to meet the needs. The paper also contains appendices that delve in depth into hospital financial issues relating to the Safety Net, Bad Debt and more, as well as a thorough discussion of Graduate Medical Education

MHA identified the following five societal needs:

1. A safety-net for low income patients: An adequate supplemental payment mechanism for providers will be needed to address unpaid care for low-income uninsured and underinsured patients, as well as bad debt.
2. Essential hospital operations in each community around the clock: The provision of healthcare services must be guaranteed for every community 24-hours a day, seven days a week, 365 days a year including disaster readiness and response.
3. Medical education capacity for physicians, nurses and allied medical professionals: Our supply of nurses and physi¬cians is aging and replacement is critical to maintain healthcare access and quality. Professional medical personnel shortages are a fact our nation and Commonwealth must face, and Massachusetts hospitals play a significant role in training those personnel.
4. A robust research capacity for the continued development of improved treatments for disease and injury: Massachusetts teaching hospitals form the nucleus of a vital and thriving medical research complex that has spawned many advances in medical care and both directly and indirectly supports the Commonwealth’s biotechnology industry. Care must be taken that health care payment reform does not kill this “golden goose.”
5. Caring for patients with significant behavioral health and chronic rehabilitative needs: Special attention needs to be given to patients who receive services in a specialized unit of a general hospital or in a specialty hospital.

 
On Friday, March 12, 2010, MHA released the fourth white paper “Benefit Design and Beyond: Consumer Choice and the Role of Employers in Payment Reform” and an executive summary stating that the goals of improving affordability, efficiency and quality of care in the Commonwealth cannot be achieved without careful consideration of health insurance products and the benefit designs employers select, along with active consumer (patient) engagement. The report also makes specific recommenda¬tions to help guide employer decisions on health benefit design.

MHA calls upon employers and insurers to:

1. Negotiate and adopt insurance benefits that manage care to improve outcomes and affordability; 
2. Involve providers in the benefit design process and build in the capability for modifications to benefits as the process moves from theory to practice;
3. Implement greater standardization of health benefit design across payers and consumer groups;
4. Provide some flexibility for future Accountable Care Organizations (ACOs) to determine which services are covered under global payment and what services, if any, should be paid for using a bundled, fee-for- service or other model.

In April, 2010, MHA released a white paper "Hospital Costs in Context: A Transparent View of the Cost of Care" describing the cost of Massachusetts Acute Care Hospitals (FY 2004-2008) from the perspective of the resources hospitals need to provide the high quality care that the people of the Commonwealth expect and depend on. The focus of this paper is on “cost” as experienced by hospitals because this is a part of the cost equation that is little understood and needs to be examined closely along with other factors such as benefit design, administrative simplification, addressing societal needs such as a health care safety net for successful and sustainable reform of the healthcare system.

This paper is intended to inform policy development and advance transparency as all stakeholders in the Massachusetts healthcare system work together to achieve sustainable balance between cost and value over the long-term.

In July, 2010, MHA released an update to the hospital costs in context report entitled "Bending the Curve: Hospital Cost Cutting Efforts Begin to Pay Off" that shows substantial lowering of hospital cost increases during 2009 and continuing into this year. At the same time, payments to hospitals for services in those two years have been over $2.4 billion lower than they would have been had the FY 2004 – FY 2008 trend continued.

“As the FY 2009 figures show, Massachusetts hospitals have responded to the call for cost reduction by health plans, government, and employers,” said Lynn Nicholas, President & CEO of MHA. “Some of these changes were sparked by the economic downturn, but all the changes were driven by hospital initiative, and hospitals will strive to sustain this progress as part of our contribution to lasting reform and bending the cost curve. With real healthcare reform, the future will not replicate the past.

As Massachusetts undertakes the sweeping transition to a dramatically revamped healthcare payment system, thoughtful consideration must be given to the composition and scope-of-authority of any entity overseeing the transition given that its actions will affect not only the healthcare system, but the entire state economy, according to the new Massachusetts Hospital Association (MHA) paper "Payment Reform: Overseeing the Transition" released in September 2010 along with an executive summary. Key among MHA’s recommendations is that the oversight entity should be predominately