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MAHPS10thAnnualPolicyConference11/18/2011 AGCoakleyRemarks

(Aspreparedfordelivery) Iampleasedtobebackthisyearonceagaintodiscussthechallengesweallfaceinreininginhealth costs. IknowthatcontrollingcostsisagoalsharedbyeveryoneinthisroomandIvepersonallyworked withmanyofyouonit. ThismorningIwasatFaneuilHallwatchingoneofmyemployeesbeingsworninafterpassingthebar. IwasremindedthatthefirstfloorofFaneuilHallhasalwaysbeenreservedasamarketplaceof business.Andthesecondfloorhasbeenreservedasthemarketplaceforideas. Allofyouinthisroomarepartofthatbusinessmarketplace,butequallyasimportantforthefutureof healthcareinMassachusettsisthatweareallalsopartofthatmarketplaceofideas. ItisbecauseofthissharedcommitmentthatIbelieveMassachusettscanleadtherestofthecountry indemonstratingthatuniversalcoveragecanbeachieved,thatqualitycanremainhigh,andthatcosts donotneedtoescalateoutofcontrol. Ourofficehasbeenengagedonanumberoffrontsasweworktocontrolcosts. IwanttomentiononesuchissuequicklythatIknowhasnotbeenparticularlypopularwithsomehere today,andthatisourviewthatnonprofitboardmembersshouldnotbecompensated. Webelieveitisacriticalissuethatgoestotheheartofthehistoricaldifferencebetweenforprofit companiesandcharitableinstitutions. Itensuresthatboardmembersdonothaveeitherrealorappearancesofconflictsofinterestandthat theysolelyservetheircharitiesmissions. Sinceweissuedourfindings,twoplanshavesuspendedpaywhiletwohavenot.Imhopefulwell continuetohaveadialogueaboutwhyvolunteerserviceissoimportant. Wealsohavefiledlegislationthatwearecommittedtopassingandinthemeantimewillrequire furtherdisclosurebyallcompensatedboards. 1

SHORINGUPTHEFOUNDATION Oneofthemostsignificantwaysourofficehasbeenengagedincostcontainmentisthroughthetwo examinationswehavedoneonthecostdriversofhealthcare. YouheardfromourHealthCareteamthismorningabouttheresultsofthoseexaminations,including thedataweanalyzedandthecostdriversweidentified. Ifyouremember,lastyearIdiscussedmanyofthosefindingswithyouaswell. Weexplainedthatashifttoglobalpaymentsiscertainlynotapanaceabecauseitignorestheflawed foundationofthedysfunctionalhealthcaremarket. Thatdysfunctionisamarketwherecostsarenotbasedonvalueorquality,butonthemarketleverage ofproviders. TodayIdliketooffersomespecificsolutionstoaddressthatdysfunctionthreepillarstoshoreup thatfoundationandreducecosts. ThosesolutionsincludeprovidinggreatertransparencyandwhatIcallconsumerhealthcareliteracy, ensuringacompetitivemarketplace,andfixingunwarrantedpricevariation. GREATERTRANSPARENCYFORCONSUMERS Thefirstfundamentalpillarisprovidingmoretransparencyandhealthcareliteracyforconsumers. Consumersarefeelingtheimpactofrisinghealthcarepriceswithoutnecessarilyhavingmorechoices orcontroloverthosecosts. Patientsareresponsibleforcoinsuranceanddeductibles,andashealthcarecostsrise,moreandmore ofthatcostisbeingbornebypatients. Consumerswhofindthemselvesinmedicaldebtfaceadversecreditratings,homeforeclosures,and evenbankruptcyandincrediblestress. Forexample,ourofficereceivescomplaintsfromconsumerswhoaskedhowmuchamedicalservice wouldcost,andweretoldnottoworryaboutit.Butthenwhentheirinsurancecompaniesdidnt coverthosecoststheyarestuckwithahugebill,theyareunpreparedforitandIcantellyoutheyare angry. Wehadoneconsumercontactusbecauseshehadcompletedanonemergencymedicalprocedure andneededtransportationhome.Thehospitalstaffinformedherthattheycouldarrangeforan ambulancetotransporthome,whichsheagreedtodo.Onlytwoweekslatershereceivedabillfor morethan$2000. 2

Whenconsumersgotobuyacar,forinstance,theycanshopforthelowestpriceatthequalitythey want.Whentheygotorepairacar,theycanevengetestimatesfrommechanicsbeforetheyauthorize therepair. Inthesameway,consumersneedinformationabouttheirhealthcostssotheycanmakedecisions aboutthemostcosteffectivechoices. So,howdoweimprovethathealthcareliteracy? Weareconsideringrequirementsthatprovidersdisclosethefullamountthatconsumerscouldbe liabletopay,sothatpatientsknowinadvancewhattheyareagreeingto. Forexample,patientsareoftenrequiredtosignaformindicatingthattheyareliableforanyamount notpaidforbytheirinsurance,buttheydontgetanyinformation,orevenanestimate,ofthecostof thatcare.Thatshouldchange. Obviously,therearemanycomplicatedissuesthatmustbeaddressed.Notallservicescanbe scheduledorquotedinadvance. Butstartingtoprovideconsumerswiththisinformationisacriticalcomponentofcostcontainment, andwelookforwardtoyourinputonthebestwaytodothis. ENSURINGAMOREEFFECTIVE,COMPETITIVEMARKETPLACE Thesecondpillartoshoringupthisfoundationisensuringamoreeffectiveandcompetitive marketplace. Inadditiontogivingconsumersbetterinformation,weneedtomakesuretheyhavecompetitive optionsforcaredelivery. Providersinthemarketareconsolidating,merging,andaffiliatingatanincreasedrate.Withincreased focusonpaymentanddeliverysystemreform,weshouldanticipateevenmoreconsolidationinthe future. Buthowbigistoobig?TheGovernorsBillandotherproposalslooktoourOfficetomonitormarket consolidation.Butthisisinsufficientinanumberofways. First,thecurrentlegalstandardsimposelimitsforinvolvementbyourantitrustorpubliccharities divisions. Actionthatmaynotbeintheinterestofaneffectivemarketplacemaynotrisetothelevelofalaw enforcementviolation. Second,ourlawenforcementtoolstoaddressthesesituationsareofteninsufficient. 3

Touseahealthcarereference,therearemanycircumstanceswhenascalpelmaybemosteffective butourofficeusuallyonlyhasbluntinstrumentsatourdisposal. Toputitanotherway,ifallyouhaveisahammer,everyproblemlookslikeanail. Webelieveabettermechanismshouldbeinplace.Onethatbettertracksdataaboutmarket consolidationtoidentifyproblemsearlyandthenisabletoactonthatdatashortofinvolvementby lawenforcement.Rightnow,thereisnoreportingmechanisminplacetoeffectivelymonitorprovider marketsizeorclout. Thereshouldbeanadministrativereviewprocessinplaceinwhichupdatedinformationisprovidedto aregulatoryagencyDPHisapossibleexampleormaybesomethingnew. Whenaproviderdoesreachacertainlevelofmarketclout,itshouldtriggeramarketimpactreviewto determinewhethertheproviderssizeishavinganegativeimpactonconsumerchoice,access,or healthymarketfunction. Theagencymustthenhaveauthoritytorestrictcertaintypesofprovideractivitytoprotectconsumers andthemarket.Wewillcontinuetoplayourtraditionalroleoftheconsumeradvocateinthis administrativereviewprocess. Now,Imaybeoneofthefirstpublicofficialswhoisnotaskingformoreauthorityformyoffice!ButI believeitismuchmoreeffectiveforallpartiestohaveanagencythatmonitorsthesemarketforces andcanactshortofalawsuit.Ibelievethatagencymustalsobetransparentwithitsgoalsand actions. Ofcourseweareandwillbereadytointerveneandbringindependentenforcementactionswhen appropriate.Werenotgoingaway! ABALANCEDAPPROACHTOADDRESSINGPRICEDISPARITIES Theseimprovementsarecrucial,buttheyareunlikelytofullyaddressthemarketdysfunction.Westill needtoaddressthisentrencheddysfunctioninordertocreatealevelplayingfieldforcompetition. Therearesomewhosaythemarketcancorrectonitsown.Thereareothersincludingmanyofyouin thisroomwhosayitcant. Webelievethatthemarketshouldbegivenachancetocorrectitself.Butitwillbetrustbutverify. Ifthosemarketeffortsfail,thenweneedtosetthestageforlimitedandtemporarygovernment interventiontobringthemarketintoalignmentandreducecosts.Hereshow. First,wealreadyhaverulesinplaceprohibitingexcessiveorunreasonablehealthplanpremiums.We needtohavesimilarrulesforhealthcareproviders. 4

Theadministrationshouldhavespecificauthoritytoensurethatprovidercontractratesarenot unreasonableneitherexcessivenorinadequate. Wethenshouldgivethemarketachancetocorrecttheunwarrantedpricevariations,butset reasonableandfirmmarkerstoguidemarketcorrectionsoverthenextfewyears. Startingin2015,ifthemarkethasnotcorrectedunwarrantedpricevariation,theadministration shouldbeabletorejecthealthplancontractswithexcessiveorinadequateproviderpricevariations. Healthplansshouldbeprohibitedfrompayingproviderratesthatdifferbeyondacertainband.One examplewouldbe20%aboveor20%belowtheplansaveragepriceforthepreviousyear. Anysavingswouldthenbedirectedtoconsumersintheformoflowerpremiums. Finally,Ibelieveweshouldmakethismarketinterventiontemporary. Weshouldincludeasunsetprovisiontoreevaluatethissystemanddeterminewhetherthis regulatorymechanismshouldbecontinuedin2018or2019. MovingForwardonCostContainment:WorkingTogether Webelievetheseideasarenecessary,buttodaytheyarejustideas.Ultimately,theyneedtobecome tangiblesolutions. Wealsorecognizethatotherideasshouldbeonthetablesuchassolvencyreviewforatrisk providers,additionalconsumerprotections,andmaintainingmomentumontransparencyand standardization. Wewanttoworkwiththeadministration,legislature,healthplansandprovidersallofyouto discusstheseideasandputthebestsolutionsforward. Andifpeopledontliketheseideas,thenIdlovetoheartheiralternatives. Buttheonethingwecantacceptistodonothing. MAHPanditsmembershavebeenengagedinthisconversationandyouhavebroughtimportant principlestoguidethediscussion. Wereluckythatwehavealotofpeopleinthemarketplaceofideasworkingontheseissues. ThatswhyImconfidentthatwecangetthisrightandtheneveryoneintheCommonwealth,andthe Commonwealthitself,isgoingtobenefit. Thankyou. 5