BOSTON >> The MassHealth program, which has 1.8 million members in Massachusetts, would be restructured toward the accountable care model of service delivery under a five-year deal with the federal government proposed Wednesday by the Baker administration.

Federal authorization and funding for key aspects of the state's current MassHealth program - jointly funded by the state and federal governments - expire on July 1, 2017 and the state is at risk of losing more than $1 billion a year if its waiver agreement is not renegotiated.

The Baker administration is seeking from President Barack Obama's administration a new five-year waiver extension - from July 2017 through June 2022 - that they hope will lead to the first fundamental course shift in 20 years for MassHealth and more sustainable growth in a $15 billion program that consumes 40 percent of the state budget, denying funds for other worthwhile public services.

The waiver request calls for $1.8 billion in upfront investments in the accountable care organization (ACO) model, including funding for behavioral health and long-term care service providers.


State officials see the ACO model, which emphasizes integrated and coordinated care and holds providers accountable for care quality and cost, as in keeping with the 2012 health care quality and costs containment law that called for a move away from fee-for-service models and "fragmented care."

Politics could come into play with the 92-page waiver request since the Baker administration is looking to strike a major new deal with the federal government just months before the White House changes hands and President Barack Obama leaves office after an eight-year run.

The waiver request will be submitted to the Centers for Medicare and Medicaid Services, which is overseen by US Health and Human Services Secretary Sylvia Mathews Burwell. A former director of the federal Office of Management and Budget, Mathews Burwell previously worked at McKinsey & Company, as president of the Walmart Foundation, and as president of the Global Development Program at the Bill & Melinda Gates Foundation.

Medicare is also moving away from a system in which it pays for each service a physician provides and towards a system that rewards physicians for coordinating with each other as they would in the ACO model.

At a New England Council breakfast last week, Baker said the Obama administration is "supportive" of the timeline the state hopes to operate under, but asked audience members to say a prayer as state officials press for a deal with billions of dollars riding on the outcome, hoping for an agreement by September.

"For everybody in here who's involved in the health care space, I would appreciate it if you crossed your fingers, grabbed your rosary, said a couple of Hail Mary's. I mean, we really need the help," he said.

State officials have opened a one-month comment period on their waiver request, ending on July 15, with two public hearings scheduled to accept feedback on the proposal. A 2:30 p.m. hearing is planned for Friday, June 24 at One Ashburton Place in Boston, followed by a 2 p.m. hearing on Monday, June 27 at the Fitchburg Public Library.

According to the Baker administration's waiver summary, the ACO model under MassHealth would not be a one-size-fits-all approach and managed care organizations could "remain the insurer, pay claims and will work with ACO providers to improve care delivery."

The waiver cements the ACO model in part by tying supplemental hospital payments to the care model and establishing public hospital payments and incentive programs tied to ACO performance. The state share of funds under the waiver is supported by a $250 million increase in assessments on hospitals.

The new waiver calls for $1.2 billion a year worth of so-called health care safety net programs, which often cover the cost of care to individuals who are underinsured or uninsured and features an expansion of services covered under MassHealth for substance use disorders "to include the full continuum of medically necessary 24-hour community-based rehabilitation services," with 400 beds scheduled to be added in fiscal 2017 and 450 more beds in fiscal 2018.

The waiver estimates that more than 96 percent of Massachusetts residents have health insurance.

The waiver also breaks down MassHealth enrollees. As of January 2016, enrollment stood at 1.86 million, about 27 percent of the state's population. The program provides coverage for about 40 percent of all children in Massachusetts and over 60 percent of residents with disabilities.

MassHealth covers one in five persons age 65 or older, and about two-thirds of all residents of nursing homes. It is the sole source of insurance for a majority of its members, and provides supplemental coverage to about 600,000 individuals, including almost 300,000 who have Medicare and 44,000 working people who receive premium assistance to help pay for their share of health coverage through an employer.

In a description accompanying its waiver posting, the Executive Office of Health and Human Services wrote, "A significant focus will be placed on improving integration and delivery of care for members with behavioral health needs and those with dual diagnoses of substance abuse disorder, as well as integration of long term services and supports and health-related social services. In addition, MassHealth plans to expand treatment for individuals affected by substance use disorder and opioid addiction."

Mass Home Care Director Al Norman said the waiver gives financial control over long-term supports and services to networks of acute care providers "who have little experience in the post acute setting."

Proposed "community partners" are empowered to conduct independent assessments for long-term care needs, according to Norman, "but at the same time they can self-refer." He wrote in an email: "Massachusetts has had an inconsistent relationship with the concept of 'conflict free care coordinators.' The home care system by law is operated by regional, non-profit agencies which are not allowed to own direct services, with a few minor exceptions."