The Massachusetts health care reform experience: What you need to know
The Massachusetts universal health care system has been an unqualified success in providing universal coverage to the commonwealth’s citizens. Over 97% of Massachusetts residents are insured, more than any other state in the United States, rivaling coverage levels in the Netherlands and Switzerland — where universal health care coverage is the law. Also, Massachusetts employers are far more likely to offer their employees insurance than their national counterparts. More than 430,000 residents have been enrolled in the new health care programs since the law was enacted in 2006 by the then-Governor Mitt Romney, and a liberal Democratic state house.
Initially, because of the program’s success, patients could not find a doctor for health care when the numbers of new enrollees overwhelmed the system. But finally by 2008, 92% of these patients had found a primary care physician.
A recent poll in the New England Journal of Medicine (NEJM) noted that 75% of Massachusetts physicians, both primary care and specialists, recommend that the Massachusetts health insurance reform law continue; 29% as is and 46% recommend continuing, but to proceed with changes.
But health care reform has not been a “Massachusetts Miracle.” Health care cost control has remained elusive. It is easy to mandate health care, but far more difficult to fund the program. “Cost containment” is the issue at the state house as Massachusetts health care premiums continue to rise by 10% to 12% or more every year, nearly doubling the national rate. These requirements, coupled with the recession and subsequent decreased revenues, have led to significant tension at the state house.
This resounding success impacts the many participants differently. The goal of this Round Table discussion is to get input from these different players: an administrator of the universal health plan, the secretary of health and human services for the commonwealth of Massachusetts; practice administrators; and practicing physicians in both the academic and private arena. I address cost containment as it will affect all parties, and the plans to change the current reimbursement system and how that will that impact the participants. In reading their replies, consider whether this state system might be a model for other states, or is the Massachusetts experience a microcosm of the direction of the recently passed federal plan?
Barry P. Simmons, MD
Barry P. Simmons, MD: How has the new Massachusetts health care plan impacted your ability to care for your patients and run your office as you desire?
R. Scott Oliver, MD: The orthopedic surgeon in Massachusetts is responsible for the orthopedic patient in the emergency situation, regardless of the ability to pay. However, some payments can be obtained for almost all emergent treatment.
The health care programs, enrolling over 400,000 residents, can be divided into three groups:
- Commonwealth Care: a subsidized state program for adults who are not offered employer-sponsored insurance and have a certain income above the “federal poverty level.” All children of adults covered by Commonwealth Care are covered by MassHealth (the state Medicaid program): 132,000 adults, or 35% of the new enrollees, have qualified for this program.
- Commonwealth Choice is a nonsubsidized offering of six private health care plans. It is sponsored by the “Health Connector,” a state program that assists Massachusetts residents in obtaining a health care plan. There have been 151,000 enrollees to date, 40% of the newly insured.
- MassHealth has provided healthcare to an additional 99,000 residents, another 25%.As many physicians know, it is impossible to cover overhead costs with a practice with solely Medicaid patients; the rates are simply too low. Currently private healthcare premiums subsidize the physician’s practice. Medicaid and Commonwealth Care rates of reimbursement are consistently 60% of standard premium health care rates. Yet, according to the recent NEJM poll of 2,135 doctors in Massachusetts, surprisingly 43% had noted that the new healthcare reform had “not much of an impact” on the administrative burden of running their practice, while 35% of physicians noted health care reform had a negative impact.
P. Jonathan Beauchesne: I’d have to say that generally speaking, the Massachusetts health reform rules passed in 2006 have had virtually no impact on our ability to care for patients.
In terms of running our offices, we are always very conscious of our administrative costs. However, we really haven’t seen any additional overhead costs directly attributable to the new health system in the Commonwealth.
Christopher P. Chiodo, MD: It didn’t. My department and I treat patients based on their need for care, regardless of their insurance or ability to pay.
Simmons: Is there decreased reimbursement for the same care given to patients covered by the new health care system vs. private insurers, Medicare or Medicaid?
Oliver: As a specialist, there is no requirement to become a provider to these new subsidized programs of Commonwealth Care with payment at Medicaid rates. It has been helpful that another 151,000 residents with Commonwealth Choice now have premium health care insurance providing standard payment for treatment.
Beauchesne: The fee schedule for the new health care system falls roughly between Medicare and Medicaid rates. Historically, the patients were always considered “free-care” and there was zero reimbursement to the physicians for the care they provided. With the new health care system, physicians are now being reimbursed for the care that they provide to individuals who were previously uninsured.
Chiodo: While physicians and hospitals are now paid for their services under the Commonwealth Care Plans, reimbursements are often slightly lower than Medicare rates, which do not fully cover physician and institutional expenses and overhead. Given the state of the current economy, more people also qualify for full Medicaid coverage, which clearly does not cover our costs.
When compared with payments from private insurers, the difference in reimbursement under the new reform is even more pronounced. In a certain sense, this means that payments from private insurers subsidize care provided to those patients enrolled in state plans. Private insurers may in turn cite this fact during future contract negotiations, and use it to argue against rate increases.
Ned Hochmuth: For our practice, the reimbursement is the same for patients who are covered by the new health care system vs. private insurers, Medicare or Medicaid.
For the population of Massachusetts, the new health care system attempts to provide universal coverage through two primary plans: Commonwealth Care or Commonwealth Choice.
The difference between them is that the Commonwealth Choice plan offers many options from brand-name health insurance plans. Commonwealth Care provides low-cost or no-cost health insurance to people who qualify.
There is a difference in reimbursement between the two plans. Physician practices are reimbursed approximately 40% higher for services provided to patients enrolled in the Commonwealth Choice plan vs. patients that are enrolled in the Commonwealth Care plan.
Simmons: What future restrictions and mandates do you see coming to balance the costs of the program and how will it affect the participation of your group?
Oliver: From an economic standpoint, health care reform has proven to be an unsustainable financial burden that poses a long-term risk to the state’s fiscal health. According to the state information statement released in August 2008, the cost of the subsidized Commonwealth Care program has more than doubled since its inception, increasing from $630 million in 2007 to $1.1 billion in FY08 and more than $1.3 billion in FY09. This trend will continue, as state estimates reported by the Boston Globe indicate that the commonwealth’s subsidized insurance plan will top $1.35 billion in annual expenses by the beginning of FY12. These increased costs, coupled with significant decrease in revenues because of the economic situation, places the state is at financial risk.
To counter these dire predictions, the Massachusetts legislature established the Special Committee on Healthcare Payment Reform in 2009. This committee, consisting of bureaucrats, insurance and hospital representatives and one physician, released a series of recommendations in July 2009, including that the fee-for-service system to be replaced by a global payment system. But the legislature has yet to act on any of the committee’s recommendations.
The chair of the Massachusetts House Healthcare Financing Committee, Rep. Harriett Stanley, said, “We are looking at 5, 10, 15, or 20 years. It will take that long to turn this entire culture around to be looking at health care and health care costs very differently.”
The Massachusetts Senate Budget Chief, Sen. Steven Panagiotakos, said attempts to save money on the state’s ballooning health care costs would require “foundational transformation.”
Some maintain that health reform has not been the source of escalating expenses but that it is rooted in the fundamentals of how we deliver and pay for health care. It has been stated that the current delivery and payment systems are outdated and inefficient; leading to higher costs — caused, for example, by unnecessary hospitalizations and emergency room visits — that often don’t result in better care. There is a need for a fee-for-results payment system, a system that rewards quality, not quantity.
The special commission will require the development of accountable care organizations (ACOs) that will accept all or most of all the responsibility of care that the patients need. ACOs will be composed of hospitals, physicians, and/or other clinician and nonclinician providers, working as a team to manage both the provision and coordination of care for the full range of services that patients are expected to need. The system requires patient-centered care and a strong dependency on primary care. All payments to specialist physicians will pass through the primary care physician and the ACO. Some degree of financial risk will be mandated for the ACO and the physicians involved in the patient’s care. The special commission recommends that global payments with adjustments to reward provision of accessible and high-quality care become the predominant form of payment to providers within 5 years.
Certainly there are many unanswered questions. It is alarming that state bureaucrats, who rarely enter a hospital, are planning to proceed with legislation that would completely alter the structure of medicine strictly based on theory. There has been some reasonable discussion about pilot programs that would be initiated by the state working through current primary care-based systems. Nonetheless, there is appropriate concern by specialists relative to the impact of the future healthcare systems in Massachusetts on their financial future.
Beauchesne: There has been talk of potential price controls, ie cuts in reimbursements, on providers. Additionally, the potential for new regulations regarding coverage limitations or exclusions could make it difficult for Commonwealth Connector patients to continue to receive the care they have been receiving.
Lastly, the idea of a state global budget on health care would all but spell the hallmark of a government-run health care system.
Chiodo: No one is really certain at this point. Some have speculated that the commonwealth may have to limit its contributions to Commonwealth Care subsidies and scale back the tax incentives offered to remain insured. We hope that any financial burdens are evenly distributed and shared not only across institutions and providers but also across the community as a whole.
Hochmuth: Currently, two Massachusetts insurance companies require our physicians to provide detailed documentation and reasoning for certain surgical procedures prior to providing authorization. Medical necessity criteria are now required for certain procedures to be covered. I believe that more insurance companies will be imposing tighter restrictions and requiring more documentation from physicians.
These documentation guidelines that physicians are asked to complete are time consuming. I believe that the more restrictions and mandates that are put on the physicians, the less time they have to provide quality care to their patients. These restrictions and mandates may become too cost prohibitive for our practice and may negate their participation in our group.
Simmons: Has the Massachusetts universal health care system been a success?
Judy A. Bigby, MD: Massachusetts health reform, Chapter 58 of the Acts of 2006, has been an unparalleled success. Over 97% of Massachusetts residents now have health insurance — the highest rate in the country. More than 408,000 people in Massachusetts are newly insured since the implementation of Chapter 58. Private group and individual purchase make up more than 32% of the newly insured, with enrollment in group insurance increasing by 83,000 lives and individual purchase more than doubling. The percentage of employers offering health insurance in Massachusetts has remained steady at 72%, while the percentage of offering employers has been dropping nationwide. The need for hospital payments for uninsured people has significantly declined with volume and payments decreasing about 40% between hospital fiscal years 2007 and 2008, according to a 2009 report released by the Massachusetts Division of Health Care Finance and Policy (DHCFP).
Public support for the reform continues to be strong. The 2009 DHCFP report notes that nearly three-quarters of those recently surveyed said they support health reform in Massachusetts. Also, 70% of practicing physicians in Massachusetts back the reforms and three out of four surveyed doctors expressed an interest in continuing the changes, according to a 2009 poll by the Urban Institute.
The success is due to the shared responsibility under the law among individuals, who are mandated to purchase insurance deemed affordable to them; employers, with new responsibilities to offer coverage to their employees or pay an assessment; and government which provides premium subsidies for low-income individuals.
Chiodo: I would say it has been a success, but still has room for improvement. We saw an approximately 30% decrease in patients either without insurance or covered by the commonwealth’s Free Care program. Access to care for this patient population has indeed increased, and physicians and hospitals are now reimbursed for services that would have otherwise gone unpaid. Most importantly, fewer patients face the frightening uncertainty of not being able to obtain care.
There are some drawbacks, however. Medicaid enrollment has increased under the program. While this is certainly a step forward in terms of the number of patients with coverage, Medicaid covers only about 50% of our costs and results in a net loss for providers. This is compounded by the fact that the distribution of Medicaid patients across provider groups and hospitals is not always equal. I would also liked to have seen liability reform incorporated into the package, especially since the potential savings could have been used to offset the costs of increasing coverage.
As for runaway costs and whether or not the price tag of the program was initially underestimated, this is a complex issue. After implementation of the new laws, the State was faced with a budget deficit and, among other steps, had to cut subsidies for coverage of legal immigrants as well as eliminate planned increases in provider payments for Medicaid patients. However, it must be realized that simultaneously the economic downturn had resulted in a major collapse of state tax revenue. Further, while initial enrollment in the newly created programs was brisk, concerns about continued growth in enrollment did not pan out.
Jonathan Kingsdale: Our law to provide near-universal coverage has been a remarkable success.
The more than 400,000 newly insured residents of Massachusetts include those who have been diagnosed early and treated promptly for cancer, heart disease, diabetes and many other chronic conditions which constitute the vast majority of medical need and simply do not get adequate attention under emergency or safety-net charity care. It is literally saving and improving lives. Reform is also saving the previously uninsured from financial ruin. One young woman in her 20s is newly enrolled and is taking 17 medications a day. Another woman in her 20s told us that her cancer surgery and follow-up treatments had cost well over $100,000. If she had not had access to health insurance, it is possible her parents would have re-mortgaged the family home to cover these expenses, but it would have left them destitute.
In summary, more people now have access to preventive and routine care so that conditions can be treated before they worsen, and to expensive therapeutic intervention, so that serious illness can be treated without catastrophic financial consequences.
Primary care and emergency visits
Simmons: Has the universal access made the use of primary care physician (PCP) visits more common and reduced the number of emergency department (ED) visits?
Bigby: The vast majority of Massachusetts residents recently surveyed reported having a personal health care provider, according to the DHCFP key indicators of 2009, and the Behavioral Risk factor Surveillance System reports that Massachusetts ranks second in the nation for residents with a usual source of care.
In the fall of 2008, 91% of adults reported they had a usual source of care, compared to 86% in the fall of 2006, just after the reform law was enacted. In the fall of 2008, 69% reported multiple doctor visits, compared to 66% in the fall of 2006, and 84% reported any doctor visit, compared to 80% in the fall of 2006. Adults are also more likely to have had preventive care visits, dental visits and prescription drugs, according to Long in 2009 and the DHCFP 2008 health insurance and access to care report.
Nearly universal coverage has not had a significant impact on ED use. National data for 2007 from Kaiser indicated that Massachusetts residents relied more heavily on emergency care than the national average. Adult ED users in the state were found to be more disabled and more chronically ill and to report more unmet need for care, despite having insurance and a doctor’s office as their usual source of care.
A 2009 Robert Wood Johnson report found a primary reason for ED use was lack of access to care outside regular business hours. The state has embarked on several initiatives to expand the capacity of community health centers to reduce the reliance on EDs.
Kingsdale: None of the statistics I have seen indicate that near-universal coverage has reduced reliance on ED visits. And while I am unaware of it ever being one of the stated goals of reform, I understand how many would assume it to be a natural result. It may, in fact, occur over time, but that will require patients and clinicians to change behavior, and that won’t happen overnight. It never does. But there are some hopeful signs of delivery system reform. One is the of community health centers, which serve as the largest source of primary care for most of the newly insured.
The recent entry into the market and rapid proliferation of so-called “minute clinics” at pharmacies should also relieve some of the strain on EDs. It certainly is symptomatic of the need for expanding evening and weekend hours at traditional primary care settings and improving timely access for minor illness.
As anticipated, the expanded coverage has had a significant impact on the use of free care. Now known as the Health Safety Net, its use has declined by 36% payments are down 38%.
Simmons: Is the commonwealth losing physicians, and is it related to the universal health care program?
Bigby: According to the Massachusetts Department of Public Health, the commonwealth is actually repeatedly ranked among the top 10 nationally in numbers of nurses and dentists and first in numbers of physicians for the population served. Upon further examination, however, a stark contrast between available resources and health professional accessibility emerges. For example, while Massachusetts may have the highest number of physicians per capita, studies show a declining rate of a patient’s ability to seek primary care services within a week. In 2008, Bruce Auberbach, MD, of the Massachusetts Medical Society testified that hospitals and physician practices likewise report problems in recruiting and retaining primary care physicians. Massachusetts’ recent health reform only exacerbates the lack of primary care resources further by increasing the demand for these services.
In 2008, the Massachusetts General Court outlined a strategy to address these concerns with the creation of the Massachusetts Health Care Workforce Center, housed in the Department of Public Health. Two years earlier, the Massachusetts Department of Public Health’s Primary Care Office and the MassAHEC Network, a program of the University of Massachusetts Medical School’s Commonwealth Medicine division, and Massachusetts Department of Public Health’s Primary Care Office sought to identify promising practices and practical recommendations for addressing health workforce shortages.
According to The Massachusetts Medical Society, there is a shortage of PCPs in the state but that is a national problem which predates the health reform law. They report however, that even with the shortage, 60% of family practitioners and 44% of internal medicine physicians are accepting new patients.
Kingsdale: The shortage of PCPs in Massachusetts is certainly not unique — nor is there any evidence that is worse than elsewhere in the United States, so I think it is a stretch to blame health reform for that. There is a shortage of PCPs throughout the entire country. When one considers the time and expense it takes to go through medical school and a residency, it is little wonder that many prefer to go into higher-paying specialties.
If anything, better coverage relieves this problem by reducing bad debt for private practitioners and relieving them of the need to waste valuable time searching for free care for their uninsured patients. Several doctors have told me that this is a real time-saver and relief for their offices.
Also, Massachusetts’ insurance reform catalyzed additional reforms aimed specifically at improving access to primary care. A loan forgiveness program announced several years ago by Governor Patrick, the Bank of America, Partners HealthCare and the Massachusetts League of Community Health Centers is already paying dividends. It has helped repay loans for 103 doctors and nurse practitioners who provide care to an estimated 182,000 patients at community health centers.
There is much more to be done in this area, but Massachusetts is ahead of the curve and programs such as the one I mentioned are a direct result of health care reform here in the Bay State.
Simmons: The impression is that the program has been so successful that the cost has far exceeded what was anticipated. If this is so, how does the commonwealth plan to fund the deficit going forward?
Bigby: Opponents of federal health reform, in expressing skepticism for the Massachusetts model, have claimed that health reform here has resulted in uncontrolled costs. This is not true. As the Massachusetts Taxpayer Foundation, a business-supported think tank in Massachusetts, found in its 2009 report, “The cost of this achievement has been relatively modest and well within initial projections of how much the state would have to spend to implement reform.” The report credits the high percentage of privately insured as one of the reasons for health reform’s success within reasonable costs. As the Center for Health Law and Economics found in their report Shared Responsibility, individuals, employers and government have shared the costs of health reform proportionately. They found that because government costs for uncovered services declined sharply, government’s share of total payments was similar to its share before reform. As the authors of that report articulate and people working in Massachusetts health policy knew, the largest factor contributing to increased spending for health care coverage is health care cost inflation, which affects all payers.
Massachusetts, like states around the country, the federal government, the private sector and individuals, is burdened by health care cost inflation and a payment system that does not reward efficiency. A recent study by the DHCFP found that Massachusetts rewards those who provide a higher number of individual services, rather than those that are best at coordinating care or delivering good quality services in less expensive settings. The report also found the health care system in Massachusetts dominated by a high number of specialty doctors — rather than primary care doctors who specialize in disease prevention and management of chronic diseases — and by academic medical centers, both of which tend to provide costlier care.
The commonwealth is actively engaged in remedying these problems. The Massachusetts General Court enacted cost-control legislation in Chapter 305 of the Acts of 2008, creating a special commission on payment reform that has recommended that all payers in the commonwealth move to a system of global payments. The Patrick Administration, the legislature and a comprehensive and robust group of health care business partners and consumer advocates are jointly committed to the continued success of Massachusetts health reform and the cost containment and payment reform strategies necessary to make the entire system more efficient, while ensuring access and quality.
Kingsdale: That is false. Compared with either the total of $60 billion a year spent on health care in Massachusetts, or the commonwealth’s $28 billion budget, the net incremental cost on the state budget of covering over 400,000 uninsured is just $350 million in 2010 compared to 2006, the last year before reform. This is about one-half of 1% of total health care spending in Massachusetts and just over 1% of the state’s budget. While total spending on medical care in Massachusetts — $60 billion a year — is excessive and unreasonable by any measure, this is not the result or a reflection of health reform.
Ironically, the perception that the commonwealth’s health reform is too costly was driven by our “success” in covering far more people than we budgeted for earlier than we expected.
Establishing budget projections for a new health insurance program is challenging due to a number of variables that have a direct impact on the cost of the program, most notably the total number of enrollees that will sign up, the demographic mix of those enrollees, and the pace of that enrollment.
The number of uninsured Massachusetts residents was underestimated in 2006 and the pace of enrollment was also quicker than expected, which is why initial costs were much higher than expected. We were also very aggressive and successful with our public education and outreach campaign to get the word out to everyone about the availability of new plans.
In the first full year of operation, our subsidized program, Commonwealth Care, came in $156 million over budget. In the most recently completed year, that same program came in $69 million under budget. At the same time, we have been able to keep annual trend under 5% since the inception of the program. That’s about half the average premium increase in the private market.
Having made a moral commitment to near-universal coverage, Massachusetts is now taking the lead in cost containment. There is no denying that this phase of reform will be more difficult than access. But it is a campaign we must win because reform is not sustainable in the long run without cost containment.
- NEJM 361:e39 number 19: “Physicians’ Views of the Massachusetts Health Care Reform Law — A Poll” , SteelFisher et al).
- Health Care in Massachusetts: Key Indicators, a report released by the Massachusetts Division of Health Care Finance and Policy (DHCFP), November 2009. (Available on line at www.mass.gov/dhcfp)
- Poll results by the Urban Institute, as published by Blue Cross Blue Shield of Massachusetts Foundation, 2009.
- DHCFP, Key Indicators, 2009
- Behavioral Risk Factor Surveillance System (BRFSS), MA Department of Public Health, Health Survey Program, 2008
- Sharon Long, Urban Institute, May 28, 2009
- DHCFP, Health Insurance Coverage and Access to Care in Massachusetts: Detailed Tabulations Based on the 2008 Massachusetts Health Insurance Survey
- Kaiser, State Health Facts website
- Robert Wood Johnson Report on Emergency Department Visits in Massachusetts, September, 2009
- Testimony “Health care Workforce Shortages for the Future and Title VII Reauthorization”. Senate Health Education Welfare and Pensions Committee. Bruce Auberbach, MD. Massachusetts Medical Society. February 12, 2008
- Massachusetts Medical Society. 2009 Physician Workforce Study, published September 14, 2009
- Massachusetts Health Reform: The Myth of Uncontrolled Costs, Massachusetts Taxpayers Foundation, May 2009, pg 2. (Available on line at www.masstaxpayers.org)
- Sharing the Cost of Health Care Reform by Robert Seifert and Paul Swoboda, April 6, 2009, prepared by the Center for Health, Law and Economics at UMASS Medical School for the Blue Cross Blue Shield Foundation of Massachusetts. (Available on line at www.bluecrossfoundation.org)
- Health Care Cost Trends, a report released in February 2010 by the Massachusetts Division of Health Care Finance and Policy. (Available on line at www.mass/gov/dhcfp/costtrends)
- Jonathan Beauchesne can be reached at the Department of Orthopedic Surgery & Arthritis Center Brigham & Women’s Hospital, 75 Francis St., Boston, MA 02115; 617-732-5747; e-mail: email@example.com.
- Christopher P. Chiodo, MD, can be reached at Brigham & Women’s Hospital; e-mail: firstname.lastname@example.org.
- Ned Hochmuth can be reached at Plymouth Bay Orthopedic Associates, Inc., 95 Tremont St., Suite 1, Duxbury, MA 02332; 781-934-2400; e-mail: email@example.com.
- R. Scott Oliver, MD, can be reached at Plymouth Bay Orthopedic Associates; e-mail firstname.lastname@example.org.
- Barry P. Simmons, MD, can be reached at Brigham & Women’s Hospital; e-mail: email@example.com.