Despite all his efforts to insure everyone and control health care costs, things are getting worse in Massachusetts

Guest message from:

Jeffrey Hogan

Northeast Regional Director

Rogers Benefit Group

Few states have done as much as Massachusetts (MA) in the past 30 years to reduce healthcare costs, improve quality and outcomes, and, in general, innovate.

Last week the MA Health Policy Commission released its Healthcare Cost Trends Annual Report for 2019 documenting wins, losses and opportunities for change. Romney Care was approved in 2006, and in 2012, the state approved a broad initiative to focus on a health care growth goal and transparent metrics for statewide health performance assessment.
Despite significant initiatives, the state reports slippage in many metrics, including costly cost increases for employers and their employees.

The report points to issues that now anger health policy makers in every state, including the burden of medical debt, unsustainable premiums, and shifting costs for employees through plan design and premium share.

In addition, the report asks employers to abandon the guidelines and “work collaboratively towards” [making the
marketplace] a higher value system. “Massachusetts provides some of the best healthcare services at near-highest cost in the nation.

In MA, six hospital systems dominate the market. The quality and cost of care are the biggest challenges in Alzheimer’s, as they are nationwide. Some fascinating statistics:

The volume of commercial admissions decreased 9.3% between 2014-18, but hospital stay spending grew 5.2% annually between 2013 and 2018, from $ 14,500 to $ 18,700. Hospitals have become adept at upcoding or increasing patient acuity and risk scores. In the same period they increased by 11.7%.

“The hospital readmission rate in MA is higher than almost all states in the United States.”

“Payments per episode of major outpatient surgery were nearly double at Mass General Hospital and Brigham than at the lowest paid high volume hospital.”

Despite falling volumes, hospitals charge more and use technology to leverage risk scores for greater compensation opportunities.

Larger hospital systems are winning as community hospitals continue to get less volume.

Who pays for all this? Employers and their employees bear much of the burden of these increased costs. Other key findings from the report:

“The growth in health care spending in MA between 2016-18 absorbed nearly 40 cents of each additional [dollar] earned for families with coverage through employers, more than they brought home in after-tax pay ”.

“Between 2000 and 2018 in MA, the consumer price index (CPI) grew by 50%, while the average cost for a family premium nearly tripled, from $ 7,341 to $ 21,801. Contributions to direct premiums of employees increased even faster – by a factor of nearly four – as employees paid an ever-increasing share of bonuses over this period of time from their paychecks (increasing from 21 percent of the bonus paid by employees to 26 percent).

“In 2017, one in four Alzheimer’s residents reported running out of necessary medical or dental care due to costs, and 17 percent reported having family medical debts. In 2019, one in four Alzheimer’s residents reported having gave up on prescription drugs needed by the doctor …

Employees bear the burden of rising costs and are increasingly unable to pay for necessary medical services. This is not a promising trajectory.

The report covers many issues most of us see on a daily basis, including inadequate primary care and behavioral health attribution, lack of adequate access and guidance to outpatient care, runaway pharmaceutical spending and opaque pricing, facility fees, care low value, varying supplier pricing and offline billing.

Perhaps one of the most puzzling findings from the report relates to alternative payment methods (APMs) and vendor risk arrangements. The report has an excellent pack of accompanying graphs looking at them. In areas where there are many contract suppliers using upside / downside risk arrangements, employers generally benefit. These agreements often protect the employer and employees from supplier costs (complications and infections) as part of the agreement.

Other insights from the report:

  • “The percentage of members in global full payment agreements decreased from 35.3% in 2016 to 31.5% in 2018”.
  • “The overall APM adoption rate across all MA products decreased from 45% in 2016 to 42% in 2018.” This is truly remarkable. We see other states making progress, influencing suppliers to switch to alternative payment methods that require supplier quality and risk outcomes. The bottom line is that APMs hold providers directly accountable for the care they provide to patients through attribution. APM slippage is a negative trend.

So, in the face of an apparent slip, who wants the state to be more involved? As part of the 2019 Summary Policy Recommendations in the report, there is a very clear recommendation for employer engagement and consumer choice. This recommendation appears repeatedly in the report and is a call to arms, as it were, for the Massachusetts business community:

Involvement of the employer and choice of the consumer. The Massachusetts business community should increase its coordinated effort to drive change in healthcare. Employers should work with payers, suppliers and other stakeholders to influence changes in spending and accessibility, in the delivery of care and in promoting a value-based market. ”

The recommendation goes on to suggest the promotion of “bilateral contracts”.

Massachusetts policymakers and others worked hard over a thirty-year period to promote innovation, access and accountability in health care.

Massachusetts boasts the lowest rate of uninsured residents in the United States. At the same time, MA also experiences many of the same problems that plague other states. Employers and employees continue to bear the burden of ever-increasing hospital and pharmaceutical costs, and progress with APMs has apparently stalled or reversed.

Will employers seize the moment and ask for a change? Will intermediaries and benefit consultants finally be held accountable by employers for value-based arrangements that are fair to providers but also fair to patients and buyers?

The payer market in MA has been slow to offer transparency and shared savings products to employers and many consultants have benefited continued to favor the status quo. Perhaps the findings of this new report will inspire active change and an employer movement toward value.

Jeffrey Hogan is the Northeast Regional Manager for the Rogers Benefit Group, a national benefits marketing and consulting firm. Jeff has been with RBG for 29 years, starting his career in Massachusetts and expanding his territory to include all of the northeastern states. Jeff uses an analytical approach to solving health problems and has acted as an advisor to payers and integrated health systems for product development and launch, and as a resource for brokers and employers keen to implement strategies to manage their health spending. Jeff focuses on the value of health care, payment reform, quality of care and patient outcomes. Jeff regularly appears in national and local forums focusing on the shift to value-based healthcare and actively works to promote healthcare transparency in the New England commercial market. Jeff also serves as the regional leader for the Leapfrog group.


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