Massachusetts is the first state to move towards a reformed healthcare payment system, but it is facing hurdles even before implementation.  Physicians and hospitals are in opposition to the proposed plan to put providers on a per-patient annual fee, called global payments, rather than on a per procedure basis.  Hospital and physician leaders are proponents of changes to the reimbursement system to providers, but they want the program to begin as a pilot and a voluntary basis so all issues can be identified and addressed before widespread adoption.

The global payment structure would require doctors and hospitals to organize into Accountable Care Organizations (ACOs) that would provide all of the patient’s care during the year, and they would have to allocate payments to the appropriate provider within their group.  This would place the risk and financial burden of medical complications directly on the providers, a risk now mostly carried by insurers.  There is also concern that similar to the issues raised with capitation in the early 1990s, that patients would be denied necessary but very costly care.  Incentive payments would be available for high quality care, but physicians worry that those incentives will not be enough to ensure access to necessary but costly care for all patients.

The legislators will be making the final determination on the structure of the program, and they hope to have it implemented statewide within 5 years.  Discussions are beginning on whether the transition shall be voluntary or mandatory and whether the state would provide financial incentives for the creation of these ACOs.  The hospital association wants legislators to include health care providers on the oversight board, shield providers from financial risks they can’t control such as the swine flu outbreak, change insurance plans so patients stay with their ACO for all of their medical needs, provide extra compensation for providers treating low income patients and teaching hospitals, and offer incentives for providers that volunteer to participate.  Another issue some independent hospitals are concerned about, is that the current disparity in negotiated rates by hospitals and physician groups would carry over to the new system and those inequities would become permanent,

Public hearings are beginning in Massachusetts this week and the state legislator hopes to address and finalize some decisions this fall.