Read More

Health Care In Massachusetts – State Report Indicates Focus On Pay For Performance And Innovative Plan Designs

In February I wrote about the healthcare delivery system in Massachusetts, specifically about how Carriers and Providers were working toward greater collaboration in an effort to lower healthcare costs and improve quality. In a recent report released by the Massachusetts Attorney General, those efforts are discussed along with other indicators of the continuing cost trends. You can read the full report, titled "Examination of Health Care Cost Trends and Drivers" here. The key findings of the report are:

  1. Given the continued pricing increases on traditional carrier products, an increasing number of employers and individuals have migrated to tiered or limited network products. These plans provide incentives for employees and individuals to choose lower cost providers and or facilities. Also, PPO plans with greater networks and no referrals for specialists continue to be the plans of choice.
  2. Carrier plans in Massachusetts continue to pay Providers significantly different amounts for similar treatments. Wide variations in medical expenses exist in different geographic areas. The primary cost driver of healthcare in the state is the growth in prices of medical services and not utilization.
  3. Providers are taking on increased performance risk, but through complex contracts which don't consistently incentive-ize for coordination of care, management of costs, and outcomes. Providers are also aligning themselves, but not in ways that always result in access to lower cost services and value-based alternatives for employees and individuals.

The outlook for strategy and trends for the cost effective delivery of healthcare in Massachusetts includes:

  1. An increase in risk contracting for Providers. A movement towards measurable "pay for performance" is ongoing as provider groups continue to consolidate.
  2. Innovative benefit plan design offerings. Carriers continue to offer variations on High Deductible Health Plans and more movement towards tiered or limited networks, which incent employees and individuals towards lower cost providers/facilities.
  3. Increase use of self-insurance by employers as a vehicle towards increased control over plan costs and design, greater access to claim data and enhanced understanding of plan performance. The integration of wellness strategies is critical, as employers enter into these arrangements and take on controlled risk.

It will be an interesting year as these strategies continue to evolve, and are impacted by Federal Health Care Reform in 2014. We will be keeping a close eye as the landscape continues to evolve.