Massachusetts has passed legislation intended to limit the growth in health care spending (both public and private). And you were worried about the Independent Payment Advisory Board in Obamacare.

Now keep this in mind, health care costs are a combination of fees for specific services provided and the number and type of services provided. Which do you think is the main cost driver? Here is a small hint; it is NOT the fees for a specific service.

Look at the words “demanding cost cutting by providers and insurers.” If that means every provider and insurer can become 100% efficient, hey that’s great. But you see that’s not what they mean nor is that what will meet the goal. How will insurers cut costs except by denying claims and lowering their payments to providers? How will providers lower costs except by cutting fees and providing fewer services. Clearly there is room for becoming more efficient and for reducing unnecessary health care, but has anyone told the patient how this will work?

Think about what you read below and then consider how all that can apply to thousands of private practice individual and small group physicians. Well, it can’t. Note the legislation also encourages the formation of accountable care organizations. Once that occurs what do you have, you have an “organization” the state can monitor, audit, fine and force to change the way it practices medicine. Some people will see that as a good thing. How about you?

I think I will go to medical school and then set up practice in the good old Bay State … ah, maybe I need to rethink that plan.

Here is a brief excerpt from an August 5, NYT article:

The new legislation sets a very ambitious target: to hold the annual increase in total health care spending to the rate of growth of the state’s gross domestic product for the first five years, through 2017, and then even lower for the next five years, to half a percentage point below the economy’s growth rate. The savings are projected to be as high as $200 billion over a 15-year period.

Setting goals is a necessary step, but there is skepticism among health care analysts that these targets could be met in such a short time given the lack of a strong enforcement mechanism in the legislation.

That does not mean the bill is completely toothless. It will establish a commission to monitor the growth in spending and require that health care providers or insurers explain themselves if their costs rise above the target growth rate. If there is no valid reason, the commission can demand that an organization submit a plan to bring its spending back in line. As a last resort, the commission can impose a $500,000 fine if it finds that the organization failed to make a good-faith effort. Many analysts expect the state will have to become increasingly aggressive in demanding cost cutting by providers and insurers if savings do not materialize.

The bill also contains other policy changes. It encourages more hospitals and doctors to set up “accountable care organizations” that would move away from traditional fee-for-service billing, which encourages needless tests and procedures. How successful those organizations will be at cutting costs is uncertain.

Other useful provisions include a requirement that health care providers report regularly on cost trends and quality measures, which should help patients shop comparatively; a new $60 million fund to invest in programs to reduce obesity, diabetes, asthma and other chronic diseases; $30 million to accelerate conversion to electronic health records; and malpractice reforms that could reduce litigation without imposing caps on damage awards.

So what do you think of this approach? Are there any possible unintended consequences? LOL

Related articles

• Massachusetts Takes on Health Costs (nytimes.com)
• Patrick to sign health care cost containment bill (mysanantonio.com)