Tseng ma ag report

©2011 Office of Massachusetts Attorney General Martha Coakley

MASSACHUSETTS ATTORNEY GENERAL’S 2011 EXAMINATION OF HEALTH CARE

COST TRENDS & COST DRIVERS

AAFP STATE LEGISLATIVE CONFERENCE NOVEMBER 5, 2011

MA REFORM IN NATIONAL CONTEXT

REFORMS MA FEDERAL

Insurance reform

• Guaranteed issue market

• Acceptance of preexisting conditions

• Modified community rating

1990s

Partially, through 2010 Affordable

Care Act

Expansion of coverage

• Individual mandate

• Employer responsibility

• Medicaid expansion

• Insurance exchange

Chapter 58 of the Acts of 2006

2010 Affordable Care Act

Initial cost containment

• Investigation of health care cost drivers

• Standardized reporting of cost/quality metrics

• Tools for prudent purchasing



TBD

©2011 Office of Massachusetts Attorney General Martha Coakley

2011 EXAMINATION: KEY FINDINGS

1. There is wide variation in the payments made by health insurers to providers that is not adequately explained by differences in quality of care.

2. Globally paid providers do not have consistently lower total medical expenses.

3. Total medical spending is on average higher for the care of health plan members with higher incomes.

4. Tiered and limited network products have increased consumer engagement in value-based purchasing decisions.

© 2011 Office of Massachusetts Attorney General Martha Coakley

FINDINGS CONT’D

5. PPO health plans, unlike HMO health plans, create significant impediments for providers to coordinate patient care because PPO plans are not designed around primary care providers who have the information and authority necessary to coordinate the provision of health care effectively.

6. Health care provider organizations designed around primary care can coordinate care effectively (1) through a variety of organizational models, (2) provided they have appropriate data and resources, and (3) while global payments may encourage care coordination, they pose significant challenges.


MEASURING HEALTH CARE COSTS

PRICE

• Negotiated amount insurers pay providers for health care services provided to members.

TOTAL MEDICAL EXPENSES (TME)

• Total cost of all the care a patient receives (price of services X utilization of services).

• Often attributed to the patient’s primary provider group. This shows, for each provider group, how much health care the group’s patients consume on average.


MEASURING HEALTH CARE DELIVERY

QUALITY OF CARE

• With expert assistance, we reviewed the best available, well-vetted, widely accepted quality measures from state and national agencies and nonprofit organizations.

• We focused on outcome measures where available.

CARE COORDINATION

• We examined how MA providers perform on a variety of quality measures related to the degree of coordinated activity over time and/or across health care specialties.


FINDING #1: THERE IS WIDE VARIATION IN THE PAYMENTS MADE BY HEALTH INSURERS TO PROVIDERS

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MA Hospital Performance on CMS Process MeasuresCompared to National Average Performance

FINDING #1: DIFFERENCES IN PRICE ARE NOT ADEQUATELY EXPLAINED BY DIFFERENCES IN QUALITY:

MA PROVIDERS HAVE CONSISTENTLY HIGH QUALITY


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FINDING #2: GLOBALLY PAID PROVIDERS DO NOT HAVE CONSISTENTLY LOWER TOTAL MEDICAL EXPENSES


FINDING #2: GLOBAL PAYMENTS POSE CHALLENGES, ESPECIALLY FOR SMALLER PROVIDERS

• Bearing financial risk through global payments requires significant investment in expertise, resources, and infrastructure, which many providers lack.

• Risk contracts expose providers to random insurance risk, which providers, especially smaller providers, are ill-equipped to bear.

• We should ensure the incentive to manage risk contracts does not lead providers to avoid patients whose care may be more difficult to manage.

• We should address concerns regarding how risk contracts interact with self-insured accounts.


FINDING #3: TOTAL MEDICAL SPENDING IS HIGHER FOR THE CARE OF COMMERCIAL HEALTH PLAN MEMBERS

FROM HIGHER INCOME COMMUNITIES

• We received health status adjusted TME from the three major insurers in MA for all their commercial members – HMO, PPO, and indemnity.

• For each Massachusetts zip code, we compared average TME for members living in that zip code with average income for that zip code, as reported on 2007 federal income tax returns.

• The next graph shows that total medical spending for the care of patients from higher-income zip codes is higher on a health-status adjusted basis than total medical spending on the care of patients from lower-income zip codes.


FINDING #3: TOTAL MEDICAL SPENDING IS HIGHER FOR THE CARE OF COMMERCIAL HEALTH PLAN MEMBERS

FROM HIGHER INCOME COMMUNITIES

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FINDING #4: TIERED AND LIMITED NETWORK PRODUCTS HAVE INCREASED CONSUMER ENGAGEMENT IN VALUE-

BASED PURCHASING DECISIONS

• Health insurance products that do not differentiate among providers based on value do not give consumers an incentive to seek out more efficient providers, because consumers are not rewarded with the cost savings associated with that choice.

• As a result: (1) consumers are de-sensitized from value-based purchasing decisions and (2) providers are not rewarded for competing on value.

• Massachusetts has seen recent developments in tiered and limited network products; these types of innovative products should be further encouraged.


FINDING #5: PPO HEALTH PLANS CREATE SIGNIFICANT IMPEDIMENTS FOR PROVIDERS TO

COORDINATE PATIENT CARE

• We found that primary care providers, with adequate data and resources, are the foundation of effective care coordination.

• Preferred provider organization (PPO) plans do not require selection of a primary care provider, and as such are inconsistent with structured approaches to improving care coordination.

• Enrollment in PPO plans is increasing: for the three largest commercial insurers in MA, it has surpassed 40% of their membership.


FINDING #6: A VARIETY OF PROVIDERS WITH ADEQUATE DATA AND RESOURCES CAN COORDINATE PATIENT CARE,

REGARDLESS OF ORGANIZATIONAL STRUCTURE

• A variety of provider organizational models, with adequate data and resources, can deliver high-quality, coordinated care.

• Enhanced availability of information on patient care is essential to supporting care coordination and measuring system-wide performance.


1. The importance of access to timely data on patient care

2. The importance of effective oversight and solvency standards for providers who contract to manage the risk of patient populations

3. The importance of supporting primary care providers who can assist patients in coordinating care based on each patient’s needs and best interests

THOUGHTS FOR PRACTITIONERS

RESOURCES & CONTACT INFORMATION

• Massachusetts Attorney General’s 2011 Examination of Health Care Cost Trends and Cost Drivers: http://www.mass.gov/ago/docs/healthcare/2011-hcctd-full.pdf

• Massachusetts Attorney General’s 2010 Examination of Health Care Cost Trends and Cost Drivers: http://www.mass.gov/ago/docs/healthcare/final-report-w-cover-appendices-glossary.pdf

• Massachusetts legislation (Chapter 288 of Acts of 2010) to increase transparency and control costs in health care market: http://www.malegislature.gov/Laws/SessionLaws/Acts/2010/Chapter288

• Massachusetts Division of Health Care Finance and Policy materials on cost trends hearings: http://www.mass.gov/dhcfp/costtrends

Karen Tseng, Assistant Attorney General, MA Attorney General’s Office

[email protected]; (617) 963-2123

http://www.mass.gov/ago/docs/healthcare/2011-hcctd-full.pdf





http://www.mass.gov/ago/docs/healthcare/final-report-w-cover-appendices-glossary.pdf











http://www.malegislature.gov/Laws/SessionLaws/Acts/2010/Chapter288

http://www.mass.gov/dhcfp/costtrends

mailto:[email protected]

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