Global payments aren't saving money in Massachusetts

Massachusetts has been leading the charge to contain healthcare costs, but a new report finds that its efforts thus far aren't successful. Attorney General Martha Coakley conducted a yearlong review of what the six largest Massachusetts insurers paid providers in 2009 and concluded that the state's global payment system, which puts doctors and hospitals on a budget, has not saved money.

"Our investigation shows that a move to global payments is not the panacea to controlling costs without first addressing provider price disparities that are not related to the quality or complexity of the services being provided." Coakley said, reports WBUR .

In fact, the globally paid providers didn't have less medical expenses than doctors paid the standard way, and some large doctor groups, such as Atrius Health and Mount Auburn Cambridge, were far more expensive than physicians paid under the traditional fee-for-service system. It appears that providers with market clout are still able to negotiate high payments, according to the report.

But Coakley stopped short of calling global payment reform unwise, instead blaming the dysfunctional nature of the healthcare market, which allows for wide variety in providers' negotiating leverage, notes WBUR. Therefore, she said, a shift to global payments without fundamental market changes "may not only fail to control cost, but may exacerbate market dysfunction."

Blue Cross took issue with Coakley's report, saying that its alternative quality contract, which gives doctors a set amount each year to spend on each patient, "is achieving our twin goals to both improve the quality of patient care and reduce the historical rate of increase in healthcare costs." The insurer said its plan is "a five-year strategy, not one year," and Coakley's report focused only on data from 2009, which was the first year it implemented the contract, according to the Boston Herald.  

"Our goal was not just to limit the disparities, it was to reduce the trend," Patrick Gilligan, Blue Cross senior vice president for health care services, told the Globe. "We do push harder on those providers who start high and ask them to come down over the life of the agreement." But, he said, "there will be some providers who will have leverage. We are watching the consolidation [of hospitals and doctors groups]. We have concerns about that too. Market clout could be an issue even in a global payment environment."

To learn more:
- read the Massachusetts AG report (.pdf)
- read the Boston Globe article
- check out the WBUR piece
- see the Boston Herald story

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