Massachusetts is again leading the nation in healthcare reform. This time the state is considering an overhaul of the way payments are made to hospitals and doctors. Last week a state commission voted unanimously to scrap the current system "fee-for-service", in which insurers typically pay doctors and hospitals a negotiated fee for each individual procedure or visit.
The commission recommends that the state make the shift within five years. This would make Massachusetts the first state to end fee-for-service, and instead pay providers a yearly fee for each patient, thus eliminating financial incentives to overtreat. Could more states follow? There are plenty of critics of ending fee-for-service, but if you are going to reform healthcare you need to follow the money. Over time I would hope that pay-for-performance would also be introduced to encourage best-practices and to financially discourage inefficiencies (but that is a subject for another entry).
I'm not certain when the state legislature will vote on this recommendation, but I do believe that Gov. Patrick supports the commissions recommendations. It is likely that this too could serve as a model for President Obama and the U.S. Congress as they address the issue of healthcare reform. No doubt states like California which are nearly bankrupt in part due to sky-rocketing healthcare costs will also be watching closely to see what sort of impact this has on access to service and over all cost.
For more information here are some additional articles:
BusinessWeek - A MA model to fix health care
Breaking News 24/7 - MA considers move from fee-for-service