Landmark health care payment reform signed

After hundreds of public hearings and meetings and months of deliberation by a legislative conference committee, the governor on Aug. 8 signed landmark health care payment reform legislation aimed at saving $200 billion over the next 15 years.

The legislation, billed as the next phase of reform six years after Massachusetts became the first and only state to mandate universal health care coverage, is intended to slow the dramatic pace of health care cost growth.

According to the Legislature’s Joint Committee on Health Care Financing, if nothing is done to reign in health spending from 2009 to 2020, it would double, outpacing both inflation and growth in the overall economy.

The new law, passed by the House and Senate on July 31, intends to hold down costs, increase efficiency and transparency, and enhance quality through a series of measures and incentives. These include administrative procedures, such as the use of standard prior authorization forms and the streamlining of data collection and reporting, as well as investments such as $60 million over the next four years to reduce the rates of costly preventable diseases such as obesity, diabetes and asthma and $135 million over the next four years targeted for financially distressed hospitals.

A centerpiece of the legislation focuses on different models for providing care, most notably the use of accountable care organizations. An accountable care organization is a group of health care providers who use coordinated care and chronic disease management to improve the quality of care patients receive. Payments are tied to achieving health care quality goals and outcomes that result in cost savings.

Under the accountable care model, doctors receive incentives for keeping patients well and working as part of a team to coordinate patient care.

Accountable care organizations are not mandated under the new law, but government programs such as Medicaid are required to implement new cost savings models and private hospitals are strongly encouraged to do the same.

The legislation also reorganizes existing state entities to create a new Health Policy Commission and Center for Health Information and Analysis to oversee the key objectives.