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Massachusetts To Recommend New Insurance Reimbursement Model

Armen Hareyan's picture

Massachusetts soon may come up with a new on how the health insurance companies will reimburse doctors and hospitals for their services. Government may want the health insurance providers to radically change the way they pay health care service providers.

The Massachusetts Special Commission on the Health Care Payment System this month is expected to recommend that the state change the method by which physicians and hospitals are reimbursed for services, the Boston Globe reports. According to Dolores Mitchell, a member of the panel and head of the state employees' health insurance program, the current "fee-for-service" system "has all the wrong incentives." She added, "It encourages excessive use and does nothing to discourage waste. People know the system has been dysfunctional for years."

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Commission members -- who include members of the state Legislature and representatives from hospitals, physicians and insurers -- will recommend that providers be paid a single, annual fee for each patient that covers all care for the year. The hope is that such a system will discourage doctors from performing procedures that have a questionable benefit and improve coordinated care and quality. According to the Globe, "Massachusetts would be the first state to broadly adopt such a system, which would essentially put doctors and hospitals on a budget in an effort to restrain health spending."

The administration of Gov. Deval Patrick (D) supports the proposal. Leslie Kirwan, secretary of the state's Administration and Finance division and co-chair of the panel, said, "We need to move forward as quickly as we can," adding, "but this is going to take a very thoughtful transition." Commission members still must develop a time frame for the proposal and decide how to divide payments among primary care doctors, specialists and hospitals, which could delay the process, according to Globe. In addition, the state would have to receive federal approval for payment changes to Medicare and Medicaid programs.

James Mongan -- president of Partners HealthCare, which already is set up to handle global payments -- said, "The devil is in the details," adding, "Most of the healthcare system is not structured in a way that could really work out a very rational global payment system" (Kowalczyk, Boston Globe, 5/7).