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Massachusetts to debut Medicare pay plan

Partners, Steward doctors to be paid for total care, rather than piecemeal

Massachusetts is set once again to become a testing ground for a major federal effort to overhaul the health care industry.

Five of the 32 hospital systems and physician groups that will become “pioneers’’ in a program to change how doctors are paid for the care they provide Medicare patients are from Eastern Massachusetts. Starting Jan. 1, the program will give them a budget to care for their estimated 150,000 patients, rather than a payment for each test or treatment.

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Called accountable care organizations, the participants were announced yesterday by the US Department of Health and Human Services. Among them are the state’s two largest hospital systems, Partners HealthCare and Steward Health Care System.

The accountable care model - which puts hospitals and doctors on the hook if the cost of caring for Medicare patients is more than expected but allows them to reap some benefit if they come in under budget - has been gaining traction in Massachusetts in the past year.

“To have this many providers involved with it will really shift the market, which I think is a good thing,’’ said Dr. Gary L. Gottlieb, Partners chief executive.

Atrius Health, the Beth Israel Deaconess Physician Organization, and Mount Auburn Cambridge Independent Practice Association also will be in the Pioneer program. Others in New England include Eastern Maine Healthcare Systems and the Dartmouth-Hitchcock ACO.

Together, they make up one of three clusters of accountable care organizations in the country that will give federal officials the opportunity to evaluate the effectiveness at a local level, Dr. Richard Gilfillan, director of the Innovation Center overseeing the program, said in an e-mail. The others will be in Southern California and in the Twin Cities area of Minnesota.

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Along with patient safety programs and the launch of state insurance marketplaces, the creation of accountable care organizations is a key facet of the Affordable Care Act. The program does not stipulate specific changes in how doctors care for their patients or control which doctors a patient can see.

Instead, proponents say, such systems provide financial incentives for health care providers to give better care at lower cost by improving communication between specialists and primary care doctors, reducing unnecessary tests, and focusing on preventive care.

While many hospital systems have a long way to go in making those changes, those that signed up to become early accountable care organizations are “kind of an advanced breed,’’ said Dr. Donald Berwick, who this month returned to the Boston area after stepping down as administrator of the federal Centers for Medicare & Medicaid Services.

“It’s the beginning of a learning process for the country,’’ he said. “I think it’s a great beginning.’’

Echoing that sentiment, Health and Human Services Secretary Kathleen Sebelius said those in the Pioneer program will serve as role models.

“They won’t just improve care for their patients,’’ Sebelius said during a news conference. “They’ll also blaze a trail toward better care for all Americans.’’

Federal officials expect that most people enrolled in a traditional Medicare program in Eastern Massachusetts will now be seen by a doctor in an accountable care organization.

But the program is designed to have an effect beyond Medicare patients, and not just indirectly.

Participants must commit to receiving half of their total revenue through contracts with insurers that follow a similar system, paying for a patient’s complete care rather than a fee-for-service model.

Atrius has already met that target, said chief executive Dr. Gene Lindsey. Others in Massachusetts are on their way. The state’s largest health insurer, Blue Cross Blue Shield of Massachusetts, introduced its “alternative quality contract’’ in 2009. The program also gives doctors a budget for managing patients. About 620,000 people now enrolled in Blue Cross coverage in the state see doctors covered by the contract.

Policy makers in Massachusetts have shifted their focus in the past few years from expanding access to care to grappling with its costs. Lindsey said the prominence of Massachusetts systems in the Pioneer program is a reflection of that work.

The success of accountable care organizations “will be a New England phenomenon,’’ he said. “People recognize there has to be something done. . . . I hope the public is not frightened by it and embraces it as an opportunity to be part of something that’s important and potentially beneficial for everyone.’’

Jonathan Gruber, a Massachusetts Institute of Technology health economist who was a consultant to the Obama administration during the drafting of the Affordable Care Act, said those who joined the program thought it was the right thing to do, saw an opportunity for financial gain, or both.

He said he did not expect the Massachusetts providers to play such a prominent role, because major hospitals here have done well under the traditional payment system.

“We don’t have to be the leader on cost control,’’ he said. “I didn’t think we would be. I’m impressed we’re taking these steps.’’

Chelsea Conaboy can be reached at cconaboy@boston.com. Follow her on Twitter @cconaboy.

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