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July 18, 2012 | Eric Beyer

State needs to take stock before expanding health payment methods employers are rejecting

Tufts Medical Centerin Boston.Suzanne Kreiter/Globe staff/Globe Staff

The health care legislation under consideration in the State House has ambitious goals — to cap spending and change the way providers are paid. The bills encourage health insurance plans to move to a variety of payment methods that share the same focus: they would require providers to be held financially responsible for the health outcomes of their patients; they promote coordination of care; and they discourage redundant care. It’s easy to see the logic behind the concept of managing the cost of care through these methods, and why they have been embraced by policy makers and health care experts for some time. The problem, and what the legislation doesn’t recognize, is that fewer — not more — employers are offering these types of insurance plans.

I believe that physicians and hospitals should be rewarded for providing high-quality and efficient care rather than just more care, so I have supported these types of plans. Tufts Medical Center and the 1,500 physicians in our physicians network were among the first providers in the state to sign on to an Alternative Quality Contract (AQC), Blue Cross and Blue Shield of Massachusetts’ version of budgeting the cost of health care. AQC and similar plans by other insurers give providers a stake in maintaining patient health, rather than being paid for each procedure or service, and provide significant incentive payments for meeting quality goals. Those plans also provide infrastructure investments to support the information systems and analytic capabilities providers must have to take financial responsibility for overseeing their patients’ overall health, not just treating them when they’re ill.


The AQC model has been touted by Blue Cross and praised by policy makers and providers alike. But employers are not signing up for the plans in droves — in fact, more of our population is moving toward products that have no requirement for paying providers for quality over quantity. This migration from performance-driven to preferred provider organizations — from HMOs to PPOs in health care speak — is the kind of detail the general public pays little attention to because it’s always discussed in the impenetrable jargon of the industry. But for physicians and hospitals tasked with managing the health of populations — and for patients themselves — it’s an enormous step backward. Right now, PPO products come with none of the investment and support that enables us to build systems to monitor the health of patients and help keep them well. They pay the same way insurers have traditionally paid — for each visit, for each test, for each procedure. They do nothing to enable providers to transition to a model of care that we believe will engage patients, improve care, and keep costs down.

The great migration to PPO plans also continues the unfair and unjustified practice of paying hospitals wildly different prices for the same services. Under some PPO plans, several influential hospital systems in Massachusetts are paid 50 to 100 percent more than other hospitals despite there being no medical justification for this large gap. Essentially, many who have agreed to control cost and improve quality will see their patients and themselves greatly disadvantaged if more insured continue to abandon HMO/AQC-like solutions for status quo PPO plans.


As the Massachusetts House and Senate work toward a final reform proposal, the legislation must address the underlying economics that result from this shift from globally paid plans back to fee-for-service products. In order to contain costs and reward efficiently provided quality care, we must be prepared to understand and address why employers find fee-for-service plans so attractive. To ignore these market realities will only exacerbate the problems in the current system and fail to address what ails Massachusetts health care.


Eric Beyer is president and CEO of Tufts Medical Center.