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Now, on the national health care debate, one fundamental question is how to keep costs under control. Massachusetts has been wrestling with exactly that issue for the past several years. Thanks to a state law passed in 2006, the state leads the nation in getting people covered. More than 97 percent of its residents now have health insurance. And that turned out to be the easy part. The state is struggling to hold down costs so the whole system doesn't fall apart. NPR's Richard Knox reports on how the Massachusetts experiment is working.

RICHARD KNOX: Dolores Mitchell is on the board that's implementing the Massachusetts health care law.

Ms. DOLORES MITCHELL (Board of the Commonwealth Health Insurance Connector Authority): It has been a really notable achievement that we should be proud of.

KNOX: But she admits the achievement is in jeopardy. Massachusetts has the highest health costs in the country.

Ms. MITCHELL: I think the critical point is whether or not we can begin to do something about cost control. We've just got to do it.

KNOX: So Mitchell and other health experts have drawn up an official plan to bring Massachusetts health costs under control. The first thing they decided was the current way of paying doctors and hospitals and other medical providers has to go.

Ms. MITCHELL: It was absolutely clear. There was no argument about that.

KNOX: In the world of health care, this is big news. Massachusetts is going to kill off fee-for-service. That's the time-honored system which pays health care providers a fee for every service they provide. Instead, Massachusetts policymakers want to pay doctors and hospitals a set amount per year for each patient they care for. They call it global payment.

Dr. RICK LOPEZ (Atrius Health): Global means it's for all services.

KNOX: That's Dr. Rick Lopez, the chief doctor at Atrius Health. It's one of the state's biggest doctor groups.

Dr. LOPEZ: It includes when the patient comes in to see the physician, hospitalization, pharmacy drug costs, skilled nursing facilities, home care services — the whole spectrum. That's what global means.

KNOX: About half of Atrius Health's doctors are already on global payments.

Dr. LOPEZ: Global payment actually allows us the freedom to look at the best way to provide patients' care - the right time, the right place.

KNOX: For instance, it allows people like nurse Chris Roddy to pay close attention to patients who could cost Atrius Health a lot of money in hospital bills.

Ms. CHRIS RODDY (Nurse): Connie?

Ms. CONNIE JOHNSON (Patient): Yes.

Ms. RODDY: Hi, honey, it's Chris.

Ms. JOHNSON: Hi, how are you?

Ms. RODDY: Okay, how are you?

Ms. JOHNSON: Oh, good, thanks.

Ms. RODDY: Good.

KNOX: Connie Johnson is an 81-year-old patient with severe heart failure, diabetes and a history of strokes.

Ms. RODDY: Now, what was your weight this morning?

Ms. JOHNSON: 229.

Ms. RODDY: 229? Good. Excellent, excellent, excellent.

Ms. JOHNSON: Yeah.

KNOX: The idea is to keep Connie Johnson out of the hospital.

Ms. RODDY: Anything else? Oh, your blood sugar?

Ms. JOHNSON: It was 110.

Ms. RODDY: Sweet.

Ms. JOHNSON: Yeah.

Ms. RODDY: That's beautiful.

KNOX: It works. Johnson is healthier and happier, and Atrius Health saves money.

Ms. RODDY: All right, my dear. so you know when to give me a jingle.

Ms. JOHNSON: I'll talk to you the next time, all right?

Ms. RODDY: Okay, Honey.

KNOX: It's nice that global payment can allow for encounters like this, but some worry. Global payment sounds suspiciously like the managed care and HMO plans of the 1990s. They were also based on paying health care providers a flat fee per patient.

That experiment failed, because it gave doctors and hospitals an incentive to hold back on care.

To avoid a repeat, advocates of global payment say health providers will need to be watched closely.

Ms. NANCY KANE (Harvard School of Public Health): I think you need someone monitoring this. You can't just walk away just because you've set the limit.

KNOX: Nancy Kane is a Harvard health care financing expert who also served on the Massachusetts Payment Reform Commission. She says there are ways nowadays to prevent stinting on care.

Ms. KANE: There's a lot of quality measuring that can go on now that didn't used to be available. You know, we now have electronic medical records. It's easier to monitor what's going on. So I think the whole reporting system and the intention to maintain a monitoring infrastructure is all critical to avoiding the bad days of managed care.

KNOX: Kane says there are also ways now to protect health plans so they don't lose their shirts taking on older or sicker patients.

The stakes are high — and not just for Massachusetts.

Ms. KANE: The nation's looking at us because we've done the universal coverage. And now everybody's saying ha ha ha, we don't think that's sustainable unless you bend the cost curve. So if we can actually come through and do that too, I think we've shown the nation how to do it. It's huge.

KNOX: The target isn't to cut out the 30 percent of health care costs that some experts call waste. It's just to reduce the amount that costs are going up.

Ms. KANE: You know, if it's flattened out to no growth for three to five years, we would be ecstatic.

KNOX: She says that's ambitious enough.

Richard Knox, NPR News, Boston.

INSKEEP: This health care debate is hardly beginning. And you can follow all the twists and turns in that debate at the new npr.org. You can also visit our new health blog at npr.org/health.

You're listening to MORNING EDITION from NPR News.

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