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UMass Memorial pulls out of state Medicaid overhaul

UMass Memorial, which has its flagship teaching hospital in Worcester, said it will continue to care for MassHealth patients.Pat Greenhouse/Globe Staff/File 2015

Central Massachusetts’ largest health care provider has dropped out of a program to redesign the way the state pays for and manages health care for poorer residents, saying the financial risks are too great.

The move makes UMass Memorial Health Care the state’s only large network of doctors and hospitals that will not participate in the restructuring of the Massachusetts Medicaid program, called MassHealth.

UMass Memorial, which has its flagship teaching hospital in Worcester, said it will continue to care for MassHealth patients. But the nonprofit health system said Thursday that it will not join 17 other groups of providers and insurers that will participate in the overhaul.


Those organizations will form networks known as accountable care organizations that seek to contain costs and improve patients’ health by better coordinating services. The goal is to avoid costly and unnecessary hospital stays and procedures while helping patients stay well.

Health care providers that succeed under this model can reap savings, while those that don’t meet their goals would take a financial hit.

Governor Charlie Baker’s administration has been pushing medical providers and insurers to move to accountable care, and last year secured federal funding to help with the transition. The providers that have signed five-year contracts to participate in the redesign of MassHealth include Partners HealthCare, Steward Health Care System, Beth Israel Deaconess Medical Center, Lahey Health, Boston Medical Center, Boston Children’s Hospital, and many community hospitals.

Insurers that have agreed to participate include Tufts Health Plan, Boston Medical Center HealthNet Plan, and others.

Baker said in a statement that the agreements “will directly lead to better and more coordinated care for MassHealth members across the Commonwealth.”

UMass Memorial officials had been planning to team up with some other health care providers and the insurer Tufts to create an accountable care organization for Central Massachusetts. But on Thursday, they said they couldn’t make the numbers work.


“Over the past year, all participants collaborated closely, at the highest levels of our leadership, to develop a quality and sustainable partnership that would allow each entity to bring strengths and expertise to an ACO plan,” UMass Memorial spokesman Tony Berry said in a prepared statement. “Despite best and continuous efforts, it was determined that the financial risks were too great.”

About 27 percent of UMass Memorial’s patients are on MassHealth. Berry said the system remains committed to these patients. UMass Memorial earned about $41 million on operations in the last fiscal year and collected revenue of nearly $2.4 billion.

MassHealth spokeswoman Sharon Torgerson said officials were pleased with the response to their accountable care program.

“While the decision by UMass Memorial . . . to withdraw from participation in the program was disappointing, MassHealth members in Central Massachusetts will continue to have access to high-quality health care,” she said in a statement.

John E. McDonough, professor at the Harvard T. H. Chan School of Public Health, said most health care providers appear to be enthusiastic about the restructuring of MassHealth, which he called innovative and exciting.

“With the exception of UMass and maybe a couple of others, it’s hard to see who’s not playing,” McDonough said.

MassHealth provides coverage to 1.9 million people with low or no incomes, including the elderly and the disabled.

More than 850,000 MassHealth patients are expected to be included in the accountable care program. It is set to launch in March, about two months later than initially planned, to give health care organizations more time to prepare for changes.


Under the new contracts, health care providers will try to better manage patient care by keeping patients within set networks. Providers will be paid more when they meet quality scores and contain spending.

This is a significant shift from the traditional model of paying for medicine known as fee-for-service, in which doctors and hospitals earn more for every service, test, and procedure, regardless of outcomes.

“Under the new ACO model, health care providers will be paid to improve the care coordination and health outcomes for MassHealth members,” Marylou Sudders, state secretary for Health and Human Services, said in a statement. “As part of the ACO program’s focus on quality, MassHealth will be tracking member experience and is committed to improving the care members receive.”

Priyanka Dayal McCluskey can be reached at priyanka.mccluskey
. Follow her on Twitter @priyanka_dayal.