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The Associated Press February 17, 2011, 4:41PM ET

Mass. gov unveils plan to curb health care costs

Declaring that Massachusetts has made health care "universally accessible but not yet universally affordable," Gov. Deval Patrick unveiled legislation Thursday designed to control spiraling costs by rewarding doctors and hospitals for improving patient care while limiting expensive but often unnecessary tests.

"Most health care is currently provided under a fee-for-service model that creates financial incentives for the quantity of care patients receive, not the quality," Patrick said in a speech to the Greater Boston Chamber of Commerce. "We pay for individual procedures and appointments, not for coordinated care that treats the whole patient."

The governor said the landmark 2006 health care law that was signed by his predecessor, Republican Mitt Romney, has succeeded in providing insurance to 98 percent of the state's residents. But while coverage has expanded dramatically, the law has done little to contain costs for consumers, small businesses or government.

Patrick said he was proud that Massachusetts provided a national model for access to health care, but that the state must now lead the way in "cracking the code" for containing runaway costs.

To do that, the governor proposed moving the state toward a payment system in which doctors are rewarded by how healthy they keep their patients, not by how many procedures or office visits they schedule. The bill would set boundaries and standard criteria for providing patient care at lower costs.

The overall goal would be to significantly reduce fee-for-service payments and replace them with alternative payment methods by 2015.

While participation in the new fee structure would not be mandated, the bill seeks to give the state insurance commissioner broader power to reject premium increases that are out of line with medical costs in the region or growth in the state's economy as measured by its Gross Domestic Product.

"If the legislation I'm filing today feels like pressure on the market, good. That's exactly what it's intended to do," said Patrick. But the governor quickly added that his goal was not to punish any part of the health care industry or mandate overly aggressive price regulation.

Insurance company representatives and doctors' groups expressed cautious support for the framework of the governor's proposal while noting that many specific aspects of the plan have yet to be worked out.

Some health care providers in Massachusetts are already moving in the direction of a global payment system. Blue Cross and Blue Shield of Massachusetts, the state's largest insurer, and doctors at Beth Israel Deaconess Medical Center in Boston signed an "alternative quality contract" in December designed to lower costs by paying doctors and hospitals for the quality, not the quantity, of the care they provide.

"(Patients) can still see their same doctors, go to their same hospitals, the difference is that their doctors will have a different incentive," said Andrew Dreyfuss, chief executive of Blue Cross and Blue Shield of Massachusetts. "Right now, doctors only get paid if there is a visit to the hospital, a visit to the doctor, tests or a procedure."

Alice Coombs, president of the Massachusetts Medical Society, said the change to a global payment system would present obstacles to many primary care physicians, including those who serve low-income urban neighborhoods and those who practice in rural areas.

"There are some doctors who will have a very difficult time making this transition," said Coombs, who also said it was important that providers have input into health care boundaries established by the new system.

Patrick's proposal would create a new health care council made up of top public health officials to act as a central clearinghouse for the system. One objective of the panel would be to encourage creative new ideas for lowering the cost of health care delivery.

The bill, which must be approved by the Legislature, also seeks reforms in the medical malpractice system, including a 180-day cooling off period before a malpractice suit can be brought, and also a provision that would make apologies by doctors inadmissible as evidence in lawsuits.

Rep. Bradley Jones, the Republican leader in the House, said Patrick deserved credit for proposing what would be a "monumental shift" in the approach to health care. But he also said it would be unrealistic to expect speedy passage of the bill given the many complex issues involved.

Lora Pelligrini, president of the Massachusetts Association of Health Plans, said the bill was a good first step toward a global payment system, but more details were needed. She said the burden should be placed on doctors, not insurers, to make sure that quality of care comes before quantity.

"No physicians should get rewarded because they do more X-rays or more tests, many that are not needed," said Pellegrini, whose group represents more than a dozen insurers including Harvard Pilgrim Health Care and Tufts Health Plan, the second- and third-largest in the state.

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