Massachusetts and the Bold Move

Those of you who read David Osborne's Health column in this month's Governing (Rx for Reform) know he laid out the case for cost savings via the payment process. He wrote about doing away with fee-for-service payments to doctors and hospitals and replacing them with per-patient fees.

Now, his home state of Massachusetts is moving a step closer to putting such a program in place. According to the Boston Globe , a state commission is poised to recommend to the governor and the legislature that insurers radically change how doctors and hospitals are paid. They will recommend that the current system, in which insurers typically pay doctors and hospitals a negotiated fee for each individual procedure or visit, be replaced with a set payment for each patient that covers all that person's care for an entire year.

Variations of such a plan are being discussed for national health reform. Payment reform is seen as one of the more effective ways of taming costs. It could discourage doctors and hospitals from providing unneeded tests and treatments, and it could force the medical community to provide better post-hospital care so that patients who survive, say, heart surgery, aren't readmitted when their condition deteriorates because they didn't understand follow-up instructions.

Massachusetts would be the first state to broadly adopt such a system.