Remarks by Senator Richard T. Moore Senate Chairman, Joint Committee on Health Care Financing Chairman, Special Senate

1. Massachusetts Health Reform And Implications of National Reform Efforts for the Commonwealth Remarks by Senator Richard T. Moore Senate Chairman, Joint Committee on Health Care Financing Chairman, Special Senate Committee on National Health Reform Nichols College Monday, November 9, 2009 Dudley, MA

2. Focus of Remarks • Massachusetts Health Reform was about More than Expanding Access • Nevertheless, Expanding Access Also Helps Contain Costs • What Massachusetts has done to Improve Quality and Contain Costs • Health Reform I • Health Reform II • Next Steps for Massachusetts Health Reform • Health Reform III • National Health Reform • Themes that Work: Based on Massachusetts Model • Concerns: Potential Problems that Could Undermine State Progress

3. Massachusetts Health Reform Goals • Reduce the number of uninsured by at least half in two years beginning in 2007 to reduce cost shifting and to increase access to primary care • Increase the amount of insured without significantly adding to state costs • Renew the Federal 1115 Waiver that brings billions of federal dollars to cover safety net health costs • Establish the foundation for improving health care quality and containing health care costs

4. Access, Quality and Cost

5. Access, Quality and Cost Health Reform Progress Chapter 58 of the Acts of 2006 – Health Care Reform I This statute recognized this critical formula and all three concepts were included in the law!

6. Not Without Critics Health Reform Progress • Critics of Massachusetts Health Reform and of National Health Reform, which is largely based on the Massachusetts model, have said: • “Health Reform in Massachusetts addressed access, but not quality and cost.” • “Massachusetts is sinking financially because of the high cost of health reform.” • “Massachusetts Health Reform helped insurance companies but hasn’t helped physicians or the average citizen.”

7. The Massachusetts Model Health Care Reform I: Policy Objectives and Rsults Expanding access – covering over 97% of Massachusetts residents in less than three years is the result of a public demand for access to care and the prolific outreach efforts of community health centers, hospitals, physicians, the faith community, and health care advocate groups and many others.

8. Expanding Access Health Reform Progress Is expanding access to near universal insurance coverage only about reducing the number of uninsured?

9. The Massachusetts Model Health Care Reform I - Progress Report A strong case can be, and has been, made to support the conclusion that universal access to care can improve quality and contain health costs

10. The Massachusetts Model Health Care Reform I: Policy Objectives and Rsults Improving Care and Reducing Costs by Expanding Coverage By examining Medicare claims data from 1996 to 2005, Harvard Medical School researchers found that individuals who were uninsured before becoming eligible for Medicare at 65 had significantly higher spending than did those with coverage prior to Medicare enrollment. Source: Study in Annals of Internal Medicine

11. The Massachusetts Model Health Care Reform I: Policy Objectives and Rsults Improving Care and Reducing Costs by Expanding Coverage On average, those who were previously uninsured cost Medicare an additional $1,000 annually per person when compared with those who had been consistently covered. Increased costs were incurred primarily from delaying costly elective procedures and from deficient care and complications resulting from cardiovascular disease and diabetes. The authors estimated that providing coverage to adults ages 51 to 64 would cost $197 billion. However, this increased coverage would reduce subsequent Medicare spending (for adults ages 65 to 74) by about $98 billion – offsetting almost half of the original costs. Source: Study in Annals of Internal Medicine

12. Health Care Costs Health Reform Progress Is Massachusetts “sinking” because of the cost of Health Reform?

13. Access, Quality and Cost Health Reform Progress • “Health Law Costs Aren’t the Problem!” • Massachusetts Taxpayers Foundation – July 23, 2009 • Despite claims to the contrary, the Massachusetts Taxpayers Foundation’s recently released analysis of the costs to taxpayers of achieving near-universal access to health care showed that the average yearly increase was only $88 million, well within original estimates. Because of health reform, employee-sponsored enrollment has grown by 150,000 and individuals private coverage by 40,000 adding at least $750 million in costs to Massachusetts employers. Critics ignore the fact that the fundamental problem is not the costs of Commonwealth Care but rather the unprecedented collapse of state tax revenues. • Source:

14. The Massachusetts Model Health Care Reform I - Progress Report August 9, 2009 EDITORIAL The Massachusetts Model The state’s experience so far suggests that it is more than possible to insure almost all citizens and stay within planned budgets – although it will take great creativity and political will hold down rising costs so that the program is sustainable.

15. The Massachusetts Model Health Care Reform I - Progress Report • Expanding Access Reduces Cost Shifting – Insured help pay for the Uninsured Through Premiums • People with Insurance and who Access Primary Care, Save by Reducing Reliance on High Cost of Emergency Department Use • Healthier Population Eases Burden on Expensive Episodes of Care – “If you don’t get sick or injured – health costs are VERY reasonable!”

16. The Massachusetts Model Health Care Reform I - Progress Report Those who say that Chapter 58 was only about access, and not about quality and cost, don’t know what they’re talking about!

17. The Massachusetts Model Health Care Reform I - Progress Report The fact that Massachusetts – from the very beginning of our most recent health reform efforts – has taken significant steps to address health care quality improvement and containment of rising health costs, seems to have been missed by the media, by conservative “think tanks,” and by politicians seeking to score points, whether it is Minnesota’s Governor Pawlenty trying to undermine Mitt Romney’s presidential momentum or our own Tim Cahill trying to score points in his campaign against Governor Patrick or Charlie Baker.

18. Provider Support Health Reform Progress Do physicians and the public support Massachusetts Health Reform?

19. Access, Quality and Cost Health Reform Progress October 22, 2009 A new poll indicates that physicians on the front lines in Massachusetts overwhelmingly support the state’s closely watched 2006 overhaul, which is considered a national model.

20. Access, Quality and Cost Health Reform Progress October 22, 2009 Doctors supported the law by a 5-1 margin, and three-quarters of the 2,135 physicians surveyed in August/September 2009 poll said they wanted the law to continue. But nearly half said there should be changes, most notably to ensure more comprehensive coverage for their patients and to control costs.

21. Access, Quality and Cost Health Reform Progress September 28, 2009 Public support for Massachusetts’ closely watched health insurance overhaul has slipped over the past year, a new poll indicates, but residents still support the path-breaking 2006 law by a 2-1 ratio. 59% support the law, 28% oppose it. Last year, 69% supported it compared to 22% opposed.

22. The Massachusetts Model Health Care Reform I - Progress Report Passage of Chapter 58 helped to assure billions of federal health care dollars through approval of the 1115 Medicaid Waiver under Governor Romney, and additional billions from the second Waiver under Governor Patrick

23. Chapter 58 – Cost & Quality Achievements Health Care Reform I - Progress Report • Let’s review briefly what Chapter 58 achieved in the areas of health care quality improvement and cost containment: • Appropriated over $12 million new dollars for prevention programs in the Department of Public Health; including the first $1 million to fund statewide infection prevention program following Centers for Disease Control (CDC) guidelines to save lives and eliminate millions of wasted dollars from costly health care acquired infections

24. Chapter 58 – Cost & Quality Achievements Health Care Reform I - Progress Report • Appropriated a half million dollars for the operation of the Betsy Lehman Center for Patient Safety and Medical Error Reduction saving millions more in medical error reduction; • Established and funded a Massachusetts Quality and Cost Council to set and implement health care quality improvement and cost containment goals intended to lower or contain the growth in health care costs while improving the quality of care, including reductions in racial and ethnic disparities and to report on progress on a publicly available web site;

25. Chapter 58 – Cost & Quality Achievements • Established and funded a first-in-the-nation Pediatric Palliative Care Program to improve the quality of care and contain costs in treating terminally and seriously ill children; • Established a MassHealth (Medicaid) Payment Policy Advisory Board to promote cost-effective reimbursement rates for providers of Medicaid Funded Services; • Established a commission and annual review to determine if employer contributions to the safety net pool could be reduced or eliminated;

26. Chapter 58 – Cost & Quality Achievements Health Care Reform I - Progress Report • Established a Massachusetts Health Disparities Council to advise the Quality and Cost Council on ensuring equitable delivery of care across the Commonwealth regardless of race, gender, ethnic, cultural, or geographic differences; • Reorganized the Massachusetts Public Health Council to provide more professional, committed leadership to the Commonwealth’s development of evidence-based public health policies;

27. Chapter 58 – Cost & Quality Achievements Health Care Reform I - Progress Report • Reorganized the Massachusetts Insurance Partnership to expand the number of small businesses and employees who could obtain affordable health insurance; • Linked hospital rate increases to adherence to quality standards and achievement of performance benchmarks, including the reduction of racial and ethnic disparities in the provision of health care so as to advance a common national framework for quality measurement and reporting, drawing on measures that are approved by the National Quality Forum;

28. Chapter 58 – Cost & Quality Achievements Health Care Reform I - Progress Report • Required that employers who do not adequately assist employees to obtain health insurance coverage will help to support the rising costs of the safety net care pool; • Required that all employers implement the provisions of Section 125 of the IRS code to withhold health insurance premium payments in order to lower the cost of health insurance by employees using pre-tax dollars to purchase health insurance; • Established a mechanism through the Commonwealth Connector to determine the quality of health insurance products offered in Massachusetts and to use the state’s purchasing power to hold down costs for health insurance;

29. Chapter 58 – Cost & Quality Achievements Health Care Reform I - Progress Report • Strengthened employer-sponsored health insurance programs that have helped nearly 200,000 Massachusetts residents obtain privately funded health insurance; • Established a pilot program for smoking and tobacco use cessation, education and treatment to reduce expensive and deadly cancer and cardio-vascular diseases; and

30. Chapter 58 – Cost & Quality Achievements Health Care Reform I - Progress Report • Established and funded with an initial $5 million the initial implementation of a computerized physician order entry system initiative and other activities designed to save lives, reduce health care costs and increase economic competitiveness for the citizens of the Commonwealth – a system that has clearly demonstrated it can reduce health costs by $170 million annually in Massachusetts hospitals. 69% 71% 67% 61% 68%

31. Chapter 305 – Health Care Reform II Health Care Reform I - Progress Report • Health reform in Massachusetts didn’t end with the passage of Chapter 58. The Legislature recognized the need to focus even more strongly on the issues of quality improvement and cost containment, and we enacted Chapter 305 of the Acts of 2008 – Health Reform II

32. Chapter 305 – Health Care Reform II Health Care Reform I - Progress Report • Having achieved substantial progress in expanding health access and building a foundation for improving health care quality and containing health costs, Health Reform II focused more specifically on the quality and cost issues, while continuing to expand access to care, not just to health care insurance.

33. Chapter 305 – Health Care Reform II • The law – • Established and funded ($15 million) the Massachusetts e-Health Institute for health care innovation, technology and competitiveness to advance the dissemination of health information technology across the Commonwealth, including the deployment of electronic health records systems in all health care provider settings that are networked through a statewide health information exchange; Health Care Reform II Chapter 305 of the Acts of 2008 Improving Quality and Transparency while Containing Costs Health Care Reform II Bending the Cost Curve Chapter 305 of the Acts of 2008

34. Chapter 305 – Health Care Reform II Health Care Reform II: Policy Objectives and Results • Set goals implementing the statewide health information exchange and for physicians to demonstrate competency in using health information technology as a condition of licensing; • Directed the University of Massachusetts Medical School to develop, implement and promote an evidence-based outreach and education program about the therapeutic and cost-effective utilization of prescription drugs for physicians, pharmacists and other health care professionals authorized to prescribe and dispense prescription drugs to counter the high cost effects of pharmaceutical marketing;

35. Chapter 305 – Health Care Reform II Health Care Reform II - Goal 1 • Limited the marketing practices of pharmaceutical and medical device manufacturers by imposing new ethics standards so that the practices of these industries will not continue to influence higher cost drugs and devices that increase the cost of care; • Restructured the capital improvements program by emphasizing “need” in determination of need (DoN) authorization for expanded hospital, imaging and other programs that drive up costs without, necessarily, improving quality of care;

36. Chapter 305 – Health Care Reform II Health Care Reform II - Goal 2 • Implemented a number of workforce incentives to encourage more primary care providers to improve quality of cost-effective care; • Established patient and family advisory councils at health care providers to promote better quality of care; • Reduced the expensive requirement for health records storage from 30 years to 20 years, saving millions of dollars as well as promoted shifting to electronic records rather than paper records;

37. Chapter 305 – Health Care Reform II • Strengthened the statewide infection prevention program with enhanced reporting of infections; • Established transparency in the process of increasing provider rates and insurance charges to push back against cost increases that do not improve quality or access to care;

38. Chapter 305 – Health Care Reform II • Early analysis of provider payments and contracts between providers and payers is revealing startling findings! • There is no correlation between high costs and health care quality! • Case Mix (high patient acuity or high percentage of public pay patients) does not produce high cost shifts to commercial sector! • Primary driver of high cost is market share!

39. Chapter 305 – Health Care Reform II • Streamlined and standardized bill coding to save millions of dollars and wasted time in the processing of claims between providers and insurers and the ensure the uniform reporting of information from private to public health care payers; • Established the Massachusetts Nursing and Allied Health Workforce Development Trust Fund to assist with expanding the workforce so that sufficient primary care providers are available;

40. Chapter 305 – Health Care Reform II • Elimination of payments to providers for “never events,” and for preventable hospital re-admissions, both of which will improve quality of care and reduce costs; • Directed the Administration to maximize enrollment of eligible persons in the MassHealth Senior Care Options program, the Program of All Inclusive Care for the Elderly (PACE), the Enhanced Community Options Program and the Community Choices program, or comparable successor programs, and shall develop dual eligible plans to provide comprehensive and cost-effective care for Medicare-Medicaid eligible individuals that will improve care and minimize expensive alternatives;

41. Chapter 305 – Health Care Reform II • Required the Division of Insurance to study the impact of Massachusetts medical malpractice law on the quality and cost of health care, especially the expensive practice of defensive medicine; • Required the Executive Office of Health and Human Services to study end-of-life care to look for quality improvements and cost containment policy development opportunities; and • Created a Special Commission on Payment Reform to investigate reforming and restructuring the system to provide incentives for efficient and effective patient-centered care and to reduce variations in the quality and cost of care.

42. Payment Reform – Health Care Reform III • The Administration and Legislature are currently working on legislation to implement the recommendations of the Special Commission on Payment Reform – Health Reform III. There are several themes which we expect to emerge in Health Reform III. • They are: • A transition over the next five years from the current fee-for-service payment system to global payments by all payers to those who obtain good patient outcomes through coordinated care;

43. Payment Reform – Health Care Reform III • Shifting payment rates to create incentives for primary care providers so that more physicians, nurses, and others focus on primary care and delivery of primary care at times and in places that meet patient needs such as in community health centers; • Incentives to promote urgent care centers and to encourage patients to utilize urgent care centers and primary care providers rather than hospital emergency departments; • Coordination of care by both actual and virtual “accountable care organizations,” focusing primarily on the “medical home” concept of care;

44. Payment Reform – Health Care Reform III • Sharing of savings between the payers and the providers who achieve savings in order to provide incentives for appropriate care; • Implementation of health information technology throughout health care; • Streamlining of the administration of health care emphasizing electronic health networks;

45. Payment Reform – Health Care Reform III • Expanded use of remote delivery of care to maximize the capabilities of existing personnel through telemedicine; and • Reform of the medical malpractice system to end the pressure for defensive medicine.

46. Massachusetts Themes in National Proposals • Universal Coverage • Individual Mandate • Employer Responsibility • Minimum Creditable Coverage • Exchange • Cannot be Denied because of Pre-Existing Condition • Cannot ave Benefits Capped

47. + National Health Reform A Law of Unintended Consequences? Health Care Reform I - Progress Report Massachusetts Concerns Many of these concerns are shared by other Health Reform states

48. National Health Reform A Law of Unintended Consequences? Health Care Reform I - Progress Report • Coverage Issues • Medicaid Expansion Maintenance of Effort • States that expanded Medicaid enrollment or eligibility could be penalized for early efforts • Creditable Coverage • State requirements for minimum health insurance coverage and mandated benefits should be respected • Outreach & Enrollment • Need for outreach/counseling for enrollment to individuals and small businesses (cannot rely on Internet to reach everyone) 69% 71% 67% 61% 68%

49. National Health Reform A Law of Unintended Consequences? Health Care Reform I - Progress Report • Financing Concerns • Medicaid Match Reduction • States with 50% floor of federal match would be penalized if the floor is further reduced • Maintenance of effort for Medicaid Enrollment • Provider Payments • Concern that the level of payments to providers be high enough (higher than Medicare or Medicaid rates) to attract and retain primary care providers • Waivers • Can 1115 waivers be grandfathered?

50. National Health Reform A Law of Unintended Consequences? Health Care Reform I - Progress Report • Employer-Based Health Care • Concern about taxing or reducing tax benefits of employer-based health care • Payment Reform • Payment reform provisions must allow for all payers to use common system, including Medicare or Medicaid • Legal Aliens • Need a federal match for coverage of legal aliens, burden is currently solely on states