MINNEAPOLIS, February, 28, 2008 - The Senate got its first look at a major health care reform bill Thursday and MMA CEO Robert Meiches, M.D., was on hand to testify.

Sen. Linda Berglin, DFL-Minneapolis, presented her health care reform bill to the Senate Health and Finance Policy Committee for the first time Wednesday. The bill, S.F. 3099, included many of the recommendations put forward in February by reform work groups appointed by the Legislature and Gov. Tim Pawlenty.

Meiches testified that the MMA supports much of the proposal including increased efforts to expand public health efforts and payment reforms designed to support the medical home concept and care coordination.

Berglin’s bill would raise $40 million annually for additional public health expenditures by a new assessment on hospital revenues. It would also provide additional payments to physicians for coordinating the care of patients and providing them with a medical home. 

“I testified that we were really happy that health care reform is moving forward and we were pleased to see that so much of what the MMA has been advocating is included in the proposals,” Meiches said after the hearing.

However, Meiches also emphasized that the MMA continues to be concerned about some elements of the proposed payment reform, specifically those provisions known as Level 3, which would result in a system whereby providers submit bid prices and are held accountable for a population’s total cost and quality of care.

“We are very concerned that there seems to be a lot of reliance on this payment reform approach, which is extremely complex, not understood,  internally inconsistent, and increases the administrative burden on the system,” Meiches said after the hearing.

Under the Level 3 payment reform, providers would put forth bids on how much it would cost them to care for a patient population with an average risk profile. The business community and Gov. Tim Pawlenty consider Level 3 payment reform a critical piece of the plan that will ultimately drive down health care costs.

The state would create a quasi-governmental body called the Health Care Transformation Organization to manage the bidding process, basically creating a market among providers, health plans, and purchasers.

The Health Care Transformation Organization would establish a standard benefit set on which providers would base their bids. Providers would submit bids, and insurers, employers, and consumers would select the care system of their choice. Providers would receive fee-for-services payments equal to their bid, but reflecting differences in the risk profile of their patient population.  Such payments, however, would be adjusted periodically to ensure that payments actually match the bid level.

Berglin’s bill would set aside $20 million from the Health Care Access Fund to finance the Health Care Transformation Organization.

“We have real concerns about using the Health Care Access Fund for this purpose, we need to be mindful about adding significant new administrative costs to the system,” Meiches said.

The Senate Health and Finance Policy committee is expected to hear more testimony and pass the bill on Friday. Lawmakers don’t have much time to consider the bill, since it needs to travel through five committees in about two weeks to stay on schedule.

The MMA views the House reform proposal, H.F. 3391, authored by Rep. Thomas Huntley, DFL-Duluth, more favorably, since it establishes a deliberative process to better define and clarify the Level 3 proposal before rushing to implement it.

Meiches testified in support of H.F. 3391 on Thursday before the House Health and Human Services Committee.