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A necessary prescription for MassHealth

Scott Rothstein

Before considering MassHealth by the numbers, it might be wise to take a deep breath. The state Medicaid program provides health insurance coverage for 1.8 million low-income and disabled Massachusetts residents, at a cost of $14.7 billion in this fiscal year alone. That’s about 40 percent of the entire state budget. MassHealth spending is projected to rise by another $300 million in the next fiscal year, and keep going up, draining money from other crucial programs and projects.

It’s the very definition of unsustainable.

Everyone agrees that action is needed to control public health insurance expenses while at the same time improving efficiency and the level of care. That’s a formidable challenge, and there’s nothing close to a consensus on how to meet it. But the Baker administration, thankfully, isn’t waiting for a collective epiphany. Starting in October 2017, and contingent on federal funding, the state plans a major remake of MassHealth. It wants to phase out the current fee-for-service health care model — under which doctors and hospitals are paid for individual procedures and services — and replace it with so-called accountable care coverage. The accountable care payment structure is based on giving doctors and hospitals fixed annual budgets to treat patients. The idea is to encourage better-coordinated care, leading to healthier patients, fewer hospital admissions, and cost savings.

A major overhaul of MassHealth — which has been in the works for a year — is bound to be initially disruptive and will require plenty of adjustments during the roll-out. Lora M. Pellegrini, chief executive of the Massachusetts Association of Health Plans, favors incremental change, saying it would be less disruptive for patients and easier to monitor. But accountable care is not a radical proposal, as some have suggested. MassHealth has already been experimenting with accountable care on a pilot basis. In addition, Medicare, the federal government’s insurance program for seniors, is moving toward accountable care, as are many private insurers.


While so-called global payments haven’t been around long enough to make a long-term assessment of their effectiveness, early results from both public and private insurance plans that employ them have been promising. Blue Cross Blue Shield of Massachusetts, the state’s largest private health insurer, says that about 900,000 of its 2.1 million Massachusetts members are being treated under an accountable care model. In 2014, a Harvard Medical School study found that, over four years, Blue Cross accountable care reduced spending by 6.8 percent while producing better outcomes for patients. A big chunk of the savings, the study found, came as a result of fewer services being ordered, “some of which may be overused in the first place, such as certain lab tests, imaging tests, and procedures.”


Marylou Sudders, Massachusetts’ health and human services secretary, stresses that the state won’t adopt a “one-size-fits-all” approach to converting patients to accountable care plans. “That would be simplistic,” she says. “We need to move deliberately.” Patients, she said, won’t be required to opt for an accountable care plan, and they will still be able to pick their primary care doctor.

Fixing MassHealth isn’t going to be easy — and the overhaul plan won’t address the disparity between reimbursement rates for community hospitals and urban medical centers — but the state is facing a health care cost emergency. MassHealth requires immediate attention.