House Passes Bill to Cut Health Care Costs







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House Passes Bill to Cut Health Care Costs


(BOSTON) –State Representative James O’Day joined his colleagues in the Massachusetts House of Representatives on June 5, 2012 in passing legislation that addresses the unsustainable cost of health care while allowing the health care industry to continue to provide world-class quality care.


This legislation seeks to reduce health care costs while allowing our world renowned health care system to thrive. It provides for several areas: Division of Health Care Cost and Equality, transparency, Patient-Centered Medical Homes (PCMH), Accountable Care Organizations (ACO), alternative payment methodologies, consumer protection, Health Information Technology (HIT), health care cost growth targets, price variation, smart tiering, medical malpractice reform, workforce development, Medicaid, and administrative simplification.


“I hear frequently from businesses and consumers about the burden high health care costs put on them. Now we can provide relief. Just as Massachusetts leads the way in establishing health coverage for its residents, it will now lead the nation in finding a responsible way to curb health costs thanks to the tireless work of Chairman Walsh and the Joint Committee on Health Care Financing,” said House Speaker Robert A. DeLeo. “This legislation, years in the making, makes measured changes to our health care system, creates the opportunity for Massachusetts to create and attract jobs, and, most importantly, considers the basic needs of patients and providers in all corners of this state.”


“I applaud Speaker DeLeo and Chairman Walsh for their bold vision in tackling the skyrocketing cost of health care that is crippling state and local budgets, prohibiting businesses from reinvesting in their workforces, and unduly burdening the Commonwealth’s working families,” said House Majority Leader Ronald Mariano. “When we passed first-in-the nation health care reform in 2006, giving residents of the Commonwealth unprecedented access to care, this second phase of health care reform was always on the horizon. While we made great strides with small business cost containment legislation in 2010, the market has not moved fast enough to curb the rising costs of health care for consumers. This bill builds on the progress the health care industry has made and goes further by addressing the urgent fiscal needs of our community hospitals, providing them with an essential lifeline.”


“Massachusetts has the best health care system in the nation, but we also lead in medical spending,” said Chairman Steven Walsh.  “Health insurance premiums for a family average over $15,000 annually and mean lower wages, and less money for mortgages, rent, car payments, food, and tuition. This legislation focuses on increasing efficiency, eliminating waste, and curbing costs, all while enhancing the quality of care that our patients receive. We will not only save money for Massachusetts citizens, but we will save our health care system over $160 billion in the next fifteen years.”


Representative O’Day continued his long-standing advocacy for the working family by supporting numerous amendments that will give residents across the Commonwealth access to quality healthcare that is oriented towards their long term health.  “I am happy to join with my colleagues in cementing the role of Massachusetts as a national leader in implementing, quality, cost-effective, and accessible healthcare.”


The legislation provides patients’ tools to make informed health care decisions. Under this legislation, consumers will gain access to detailed comparative price and quality information; they will also gain important information from providers about services and payment.

The bill promotes health information technology and the use of electronic health records that will bring efficiencies and cost savings. The implementation of a fully interoperable health information exchange by 2017 will allow for secure electronic exchange of health records amongst providers.


This legislation provides further support to patients by allowing patients and providers to voluntarily join an ACO and ensuring that the ACO providers will be responsible for helping patients make decisions on their health care needs, including long-term care and supports like home care, nursing home care, and palliative care.


This bill also seeks to reduce miscommunication and fragmented care by establishing patient-centered medical homes, providing a patient with a single point of coordination for all their health care needs. This bill also provides consumers with new protections, giving patients the right to appeal medical decisions made by their ACO doctors and giving patients the right to receive a second opinion from any provider.

This bill reduces medical spending by setting a target for health care spending to grow less rapidly than the gross state product and allowing consumers to spend out-of-pocket, or through supplemental insurance, for any service or procedure they deem appropriate.


In these tough economic times, this legislation also helps our local hospitals, many of which are struggling to stay afloat. This bill requires high-cost providers to show quality or unique service to justify their higher prices and creates a one-time assessment on payers and providers with more than $1 billion in reserves to protect our community hospitals through a Distressed Hospital Fund. Community hospitals may apply for a competitive grant from this Fund, allowing them to thrive over the next 36 months before anticipated savings from the reform allow them to flourish on their own.


Under the bill, a number of functions will fall under the Division of Health Care Cost and Quality, which, like the existing Group Insurance Commission, will operate as an independent agency under the Department of Health and Human Services.


Other provisions of the bill include:

  • The adoption of alternative payment methodologies such as global and bundled payments for acute and chronic conditions as the industry transitions away from the fee-for-service reimbursement system that promotes quantity rather than quality;
  • The creation of a smart tiering system that makes services that are often unaffordable for some patients more accessible for patients by allowing payers to tier by service rather than facility and allowing patients to pay reasonable cost-sharing for more expensive unique services;
  • The implementation of the University of Michigan Health System’s Disclosure, Apology and Offer program, which resulted in a decrease of litigation costs and a reduction of malpractice claims;
  • The further development of a well-trained health care workforce through training, placement, and career ladder service programs, loan forgiveness grants for primary care providers, and residency funding in primary care settings;
  • The improvement of the operation of the Medicaid program; and
  • The simplification of administrative procedures in health care settings.