MA Healthcare Cost Containment Law Comes with Teeth

Karen Minich-Pourshadi, for HealthLeaders Media , August 13, 2012

Moreover, Moody's also expects new reimbursement models, such as bundled payments and shared savings, will reduce Massachusetts hospital revenues. "The state will also likely incentivize the creation of additional accountable care organizations (ACOs), a loosely defined concept that involves a hospital managing the health for a set group of people. Hospitals unable to swiftly adapt to the new models will likely lose revenues. Given that payment models have not yet been defined, it is too early to estimate the revenue impact," Moody's wrote.

S 2400 isn't all bad for large providers, though. It seeks to control medical malpractice costs by creating a 182-day "cooling off" period. This is supposed to give both sides a chance to negotiate a settlement.

Though Massachusetts may have been the first state to climb aboard the health insurance reform bandwagon, its success has been mixed.  For while an estimated 95% of the state's population is insured, the healthcare costs have also risen 6% annually.

"There wasn't anything in the initial Massachusetts reform [legislation] to 'restrain' or bend the cost curve. It really was about universal coverage," says Sadowski. "The pursuit [of universal coverage] is not the solution, [but] rather the first step. Now we have universal coverage and we need to figure out how to constrain costs. So as I look at this law and at healthcare reform elsewhere in the country I think there is still a long, arduous journey ahead for all."

Financial leaders should keep a close watch on how this law plays out at reducing costs. If it proves successful, it may become the model that other state legislatures adopt in the coming years.

Karen Minich-Pourshadi is a Senior Editor with HealthLeaders Media.
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