Medicolegal Issues

Massachusetts Healthcare Law Highlights Implications for National Healthcare Reform


Next month marks the sixth anniversary of former Massachusetts governor Mitt Romney’s signing into law a health insurance reform bill that brought near-universal coverage to the state’s residents. The Massachusetts experience represents a microcosm of what might be expected on a national scale with the Affordable Care Act (ACA): success in covering the uninsured, but persistent access and cost challenges that can only be overcome with fundamental payment reform.

“There is more going on in Massachusetts than anywhere else in the country, by far—in terms of coverage, delivery, and finance reform of healthcare,” says Stuart H. Altman, PhD, professor of national health policy at Brandeis University in Waltham, Mass. “The state’s example sends the positive message that the healthcare delivery system can be improved, but it takes time. Massachusetts is ahead of most states.”

Positives & Negatives

The Massachusetts law expands Medicaid enrollment to those earning up to 300% of the federal poverty level; offers state-subsidized commercial health insurance coverage to all other uninsured citizens; and allows young adults to remain on a parent’s plan until age 25. The law also mandates that employers with more than 10 employees offer subsidized health insurance coverage, and that every state resident over 18 purchase coverage or face tax penalties.

There is more going on in Massachusetts than anywhere else in the country, by far—in terms of coverage, delivery, and finance reform of healthcare.

—Stuart H. Altman, PhD, professor of national health policy, Brandeis University, Waltham, Mass.

The law has brought coverage to nearly 412,000 previously uninsured residents (as of December 2010, the latest figures available), and less than 2% of residents remain uninsured—down from about 10% before the law was enacted.1

The law has not constrained the cost of healthcare in Massachusetts, which remains among the most expensive in the nation, and which current Massachusetts Gov. Deval Patrick acknowledges is continuing to rise at an unsustainable rate. A bill before the state legislature would give the governor the authority to review reimbursement contracts, to determine whether the fees paid by insurers to providers are appropriate, before approving insurance premium rates.

More surprising are the serious healthcare access challenges that persist in the state despite nearly universal health insurance coverage. The Massachusetts Medical Society outlined these challenges in a December 2011 white paper (see “Access Problems Persist Despite Insurance,” left).1

One of the biggest challenges the state faces is a dearth of primary-care physicians (PCPs). “One of the biggest lessons learned is that insurance expansion did not lead to better access,” observes Winthrop F. Whitcomb, MD, MHM, medical director of Healthcare Quality at Baystate Medical Center in Springfield, Mass., and co-founder of SHM. “Medicaid is a loss-leader and does not pay enough to cover the cost of running a medical practice. Expanding Medicaid may actually make access worse if primary-care physicians opt out of it.”

Insurance reform has not made it any easier for a hospitalist to find a PCP for a patient who comes to the hospital without one, Dr. Whitcomb says, or to discharge a patient to a long-term or post-acute-care setting that their insurance covers inadequately, if at all.

“We do continue to see ED visits and hospital admissions that would have been preventable had the patient seen a PCP first,” says SHM President Joseph Ming Wah Li, MD, SFHM, director of hospital medicine at Beth Israel Deaconess Medical Center in Boston.

Dr. Li says his group has experienced difficulties getting patients hooked up with timely and appropriate post-discharge follow-up care because of packed PCP schedules. In response, they developed a hospitalist-run, post-discharge clinic for outpatients to fill in the gap and provide their patients with the follow-up care they need.

“My hospitalists will manage the patient through their episode of care, regardless of whether they are an inpatient or outpatient, until their PCP is available,” Dr. Li says. “I would love to see our hospitalist-run, post-discharge clinic made obsolete by PCPs with available appointments.”

Fundamental Payment Reform

Access and cost problems like these have serious national implications, as Medicaid eligibility under the ACA is expected to grow by 16 million people by 2019, or roughly 25%. The Massachusetts experience suggests that decreasing financial barriers to care can raise other barriers, such as inadequate physician availability, and does nothing to address the 800-pound gorilla of spiraling costs.

Critics who dismiss the Massachusetts experiment as “doing nothing to control costs” miss the larger picture of innovation occurring in the state, however. Insurance reform was never intended to be the end of the story.

In response to a mandate to investigate reforming and restructuring the payment system as the next step in statewide healthcare reform, a Special Commission on the Health Care Payment System released recommendations in July 2009 ( that proposed that Massachusetts phase out fee-for-service reimbursement and replace it with an accountable-care approach that incorporated a global payment model combining elements of risk-adjusted capitation, pay-for-performance, evidence-based guidelines, and medical-home-style care coordination. Although a bill to accelerate statewide implementation of the model awaits a vote in the state legislature, the private health insurance market is well into the game.

Blue Cross Blue Shield of Massachusetts has been using a version of the model (known as the “alternative quality contract”) since 2009, with the goal of reducing healthcare cost growth by half over five years by holding providers accountable for cost and quality, and encouraging the most appropriate treatments by the right kind of providers in the most appropriate settings. Participating hospital and physician groups receive a monthly global fee for each patient (adjusted annually for patient health status and inflation) in return for providing them with all the preventive, primary, specialty, hospital, and follow-up care they need. Providers have the incentive to reduce inefficiencies, and they can earn additional incentive payments for meeting or exceeding clinical performance measures tied to process, outcomes, and patient care experience.

More than a third of the insurer’s provider network is participating in this alternative quality contract program, and early results are promising. A recent Harvard Medical School study found that medical spending at the end of the first year was nearly 2% lower among physicians and hospitals participating in the program compared with those working under traditional fee-for-service contracts, largely the result of physicians changing referral patterns and shifting care to lower-cost facilities.2 Quality of care among participants was significantly higher than that of non-participants in the insurer’s network, especially for adults with chronic illness and for children.

Several major healthcare delivery systems in Massachusetts are taking the accountable-care model to the next level this year by participating in the Pioneer Accountable Care Organizations (ACO) initiative, which also replaces fee-for-service with global revenue sharing plus quality and care-coordination incentives.

Part of the reason that providers in Massachusetts and around the country have a genuine interest in testing global payments and other value-based models is that they fear the day when the government and private sectors say “We just don’t have the money” and exert draconian fee-for-service rate control, Altman maintains.

Hospitalist Impacts

Hospitalists could find their referral patterns shifted slightly under global payment arrangements—potentially seeing fewer consults for low-risk patients and seeing greater demand for their services for more medically complex patients, Dr. Whitcomb says. HM likely will be the most heavily involved in ACOs that cover the Medicare population, whose patients are of higher acuity and more frequently hospitalized.

When fee-for-service reimbursement ultimately does give way to alternative reimbursement models, such as global payments, effective team-based care will become paramount to ensure effective hospital discharges and that preventable readmissions are minimized, Dr. Li says. He urges hospitalists to prepare their programs to manage a sicker patient population, and to cultivate the strongest possible coordination and alignment with PCPs, discharge planning professionals, and outpatient providers of all sorts. That way, hospitalists will be positioned to leverage their value in a healthcare system that requires value.

Christopher Guadagnino is a freelance medical writer based in Philadelphia.

For SHM’s official position on issues like healthcare reform, value-based purchasing, and medical errors, visit

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