It’s no mystery!

What you should know now about the state’s new Health Care Reform Law

On April 12, Gov. Mitt Romney signed the Massachusetts Health Care Reform bill, but vetoed several of its components. In early May, the state Legislature overrode the vetoes and the bill became law. The new law, which requires all Massachusetts residents over the age of 18 to have health insurance as of July 1, 2007, will have a significant impact on the state of health care in the Commonwealth. The new law has five key elements:

• Covering the Uninsured
• Market Reforms
• Improving Health Care Quality
• Hospital and Physician Payments
• Funding

Covering the Uninsured

Massachusetts ranks near the top in the nation for health coverage of its citizens, with only 10 percent of state residents uninsured. Still, approximately 550,000 Bay State residents lack health insurance. The new law includes three main provisions intended to help people meet the Individual Mandate for coverage:

• An expansion of Medicaid that will impact an estimated 92,500 people.
  • Expands Medicaid coverage to children in families with incomes up to 300 percent of the Federal Poverty Level (FPL), an increase from the previous level of 200 percent.
  • Expands MassHealth Essential, which provides coverage for the chronically unemployed.
• The establishment of subsidies for families and individuals with incomes less than 300 percent of FPL, which will provide coverage for an estimated additional 207,500 people.
• The creation of the Commonwealth Health Insurance Connector, an independent agency, that will sell affordable products developed by health plans, administer the subsidy program and grant waivers to individuals who remain unable to afford insurance. The Connector will facilitate the purchase of low-cost coverage for nearly 215,000 people.

Market Reforms

The market reforms address market size and product options.

• Market Size: Effective July 1, 2007, the small group (employers with 1 to 50 employees) and non-group or individual markets will be merged into one pool.
• Product Options: To support the development of lower cost products, the bill allows for network flexibility and a moratorium on all new mandated benefits through January 2008. It also permits lower-cost products for 19- to 26-year-olds, a segment of the population that has historically often opted not to buy insurance due to cost.

Improving Health Care Quality

To ensure that evidence-based guidelines and best-practice safety measures are followed and the health care provided is of the highest quality, the law will:

• Establish a 13-member Quality and Cost Council charged with setting goals that address quality improvement and cost containment, to be overseen by an Advisory Committee.
• Create a Consumer Health Information Website by July 1, 2006, which will be updated annually. The website will help consumers make more informed decisions about where to get care and contain information about patient safety and satisfaction, as well as provider cost and quality information related to specific services including obstetrical services and physician office visits.
• Tie Medicaid rate increases to a hospital’s ability to meet evidence-based quality standards and achieve specific performance benchmarks. The Pay for Performance methodology gives additional incentive for all hospitals to provide the highest standards of care.

Hospital and Physician Payments

Historically, reimbursement for Medicaid services in Massachusetts has covered approximately 75 percent of actual costs, leaving hospitals and physicians looking to private payers to close the gap. To address the long-standing shortfall, overall Medicaid reimbursement will increase by $270 million over the next three years, an average of $90 million per year. Hospitals will receive 85 percent of the increase, with physicians getting the remaining 15 percent.

Funding

Since Massachusetts already pays at least $1.1 billion to provide health care for the uninsured, the additional funding requirements are expected to be modest. The bill will redirect existing funds, often accessed by emergency room patients who lack coverage, to subsidize the cost of insurance. This will enable people to access care in more appropriate settings and establish relationships with PCPs. The additional sources of funding are:

• “Fair Share” Contribution: Employers with 11 or more employees that do not offer coverage will pay $295 per year for each employee.
• Free Rider Surcharge: Employers with 11 or more employees that do not offer access to pre-tax purchase of coverage will be assessed a surcharge if their employees access “free care” worth more than $50,000.

Next month we will highlight the next steps called for by the law.

For more information visit the Kaiser Family Foundation website at www.kff.org.