Massachusetts proposal to end fee-for-service could be national model

Jul 22 2009

A proposal in Massachusetts to end the practice of paying doctors for individual procedures could prove a model to hold down costs for U.S. health care reform, Reuters reports.

"A state-appointed panel of experts has endorsed the proposed 'global payment system,' which would make Massachusetts the first state in the nation to end the practice of paying healthcare providers for individual procedures. The proposed system instead attaches a fixed price to the routine healthcare costs incurred by a patient for a given time period, such as a year."

A special commission in Massachusetts endorsed the idea last week. The state provides near-universal coverage and has often been used as a "template for revamping the national healthcare system," Reuters reports.

"Advocates see the Massachusetts idea, which has yet to be included in legislation, as a way to curb costs, but they also are concerned about how long it would take to realize those savings. Proponents say it will eliminate unnecessary medical procedures that the current system encourages by paying doctors for each test or treatment they administer. Requiring doctors to treat patients under a set-fee system would give them a financial incentive to not perform unneeded treatments or tests, the panel said. … Under the Massachusetts proposal, healthcare providers and insurance companies would create a common system for evaluating quality of care and setting budgets."

Insurers would set a budget for doctors who would receive a portion of the savings if they come under budget. Insurers and employers would do the same if the amount spent on care came in under budget. "Critics say that unanticipated patient healthcare costs could pose a huge financial burden on doctors and hospitals. They have also expressed fear that the budget structure of the global payment system would limit patient access to care, but Nicholas said that problem would be managed in a similar manner to the current system" (Kutz, 7/21).