Bay State Goes Back to the Future

Massachusetts’ universal health care plan has increased the number of insured Bay State residents and caused the states’ already highest-in-the-nation health care costs to balloon 42% in just 3 years.

Now it’s time to pay the piper, and the Bay State’s Special Commission on the Health Care Payment System believes the way to do that is to implement a capitation model similar to the one that was ridiculed, then buried 15 years ago.

In proposing a system that establishes prospectively a single, comprehensive payment that covers all care for an entire year, Commissioners hope to discourage providers from offering unneeded tests and treatments, and encourage provider network development.

The networks would, they hope, more effectively manage care across the continuum of care and reduce errors in information handoffs.

The old fee-for-service system “has all the wrong incentives,” Dolores Mitchell, a Commission member told the Boston Globe. “People know the system has been dysfunctional for years.”

The Commission must still decide how quickly to implement the new payment mechanism, which necessitates a massive reorganization on the provider side, and how to split fees among PCPs, specialists and hospitals. That’s the La Brea of tar pits.

Capitation was popular during the heyday of managed care in the 1980s and early 1990s.

It caused many small practices to lose millions on very sick patients, and raised concern that physicians were denying patients necessary care in order to stay within budget.

Commissioners believe the state can overcome the former problem by setting aside a separate pool of funds for the very sick, or by insuring providers against large losses.

The denial of service issue, they hope, could be handled through close monitoring of the quality of care.

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