House files bill to curb health costs

The House unveiled an ambitious payment reform plan that would cap health care cost increases while giving consumers more information about their own health and control over how their money is spent.

House Speaker Robert DeLeo said six years ago the state became a national leader on health care by requiring everyone to obtain health insurance. Now, DeLeo said, is the time to lead the nation again. “We will lead the nation in finding a responsible way to curb health care costs,” he said, noting the job can be done without harming the state’s sprawling health care industry, which employs one of every seven people.

The key to the House measure is moving away from a fee for service system. Unlike Gov. Deval Patrick’s cost control proposal, which was filed more than 14 months ago and called for health providers to be paid lump sums for caring for patients, often referred to as global payments. The House bill offers four possible alternative payment approaches, including global payments, to move the state away from the current fee-for-service system.

The bill would cap spending increases through a formula pegged to the Gross State Product, potentially saving $160 billion over the next 15 years compared to expected increases without reform. While the spending cap is not a mandate, the bill includes incentives and penalties to ensure providers meet the goals. 

“You may not like everything but you will like something,” said state Rep. Steven Walsh, House chairman of the Committee on Health Care Financing, at an unusual Friday afternoon announcement in the State House’s Nurses Hall.

The target for the growth in health care expenses is initially the same as the rise in gross state product, but by year three it would fall to gross state product minus .5 percent. Walsh said costs have been growing at the pace of gross state product plus 2 percent. He said he wouldn’t favor a bigger reduction. “You can’t move an ocean liner that quickly,” he said.

Walsh says the changes could save the average family $2,000 in annual premium costs below current projected increases.

Like Patrick’s bill, the House measure would revamp the state’s medical malpractice approach and model it after a successful University of Michigan program that encourages doctors to disclose mistakes, apologize to patients, and enter into out-of-court settlement talks.

In addition, costs and fees for services, currently hard or impossible to find, would be available online so consumers can determine the best use of their money, especially if there are out-of-pocket expenses that they could incur. The current tiering system ranks providers based on cost and requires consumers to pay more for going to high-cost facilities. Under the House bill, a new tiering system would be set up that does not rate hospitals as a single entity but rather by departments and individual providers and services so it doesn’t penalize patients who choose a cost-effective program in the hospital or can only receive specific treatment at a certain facility.

The measure also mandates the use of electronic medical records so a patient’s records are uniform and available to all providers instantaneously.

“There is no reason in this day and age you can’t walk into an office and have access to your medical records,” Walsh said.

The House bill would set standards for costs at a median level and if a provider exceeds that level by 20 percent or more the provider would have to justify the costs or pay a penalty that would go to smaller providers who did meet the goals.

The proposal also would create a new Division of Health Care Cost and quality, a quasi-public agency that would oversee implementation of the cost controls and consolidate some of the current state health agencies. The new agency would also have the power to renegotiate fees if they are set too high.

Harvard economist David Cutler, a health care expert who has been working with the Legislature on the bill, said the bill empowers consumers to take control of their care and their wallets. “What disclosure and transparency is fundamental for is putting consumers in the driver’s seat,” said Cutler.

The bill comes after the House released Patrick’s proposal untouched and several days before the Senate is set to unveil its plan and begin debate in that chamber. Walsh said he does not know what to expect from the Senate but said much has changed since Patrick introduced his bill.

“If the governor was going to write a bill now, it would look much different,” he said.

Lori Pellegrini, president of the Massachusetts Association of Health Plans, said the measure would force cost increases to be cut in half under the proposed formula and she was encouraged by the emphasis on incentives for quality and meeting certain marks. But beyond that, she said her group would have to pour over the bill over the weekend to determine what exactly the House is mandating.

“It’s really going to focus the entire industry on getting waste out of the system,” Pellegrini said. “It’s very thoughtful what [Walsh] is expecting to do but the devil’s in the details.”