Delivery of Care

Crunching numbers on state's health innovation plan

Financial analysis is discussed before an elite group of stakeholders

The financial analysis underpinning the State Health Innovation Plan was revealed for the first time at a Nov. 20 meeting, to an elite group of stakeholders. It has yet to be posted online or to have copies made available.

By Richard Asinof
Posted 11/25/13
For much of the last year, Rhode Island’s health care establishment has been engaged in developing a State Health Innovation Plan, with the goal of winning as much as $50 million in new federal funds. Despite promises of an open, transparent process, the financial analysis has not been widely shared – made available only to those stakeholders who attended a meeting last week. At stake is how the state will invest future funds, under the goal of reforming the health care delivery system.
The projected outcomes of the plan say that the medical cost curve will be slowly bent over time, reducing the increase from 6-7 percent to 4 percent a year. But where do the savings go? Into the pockets of insurers? Hospitals? Big group providers? Why are small businesses, patients and families left out of the financial equation? Why is it that the road not taken in the plan is making investments in public health and the root causes of health problems? And, who are the decision-makers who will invest the funds? Will there be any public accountability?
A much more innovative, comprehensive community-based approach is currently brewing in Rhode Island, looking at managing data to achieve better outcomes through targeted interventions. It is being led the R.I. Alliance for Healthy Homes. More than just community engagement as a form of outreach, the group is looking to build engaged communities that can leverage change in the new digital world. It offers a stark contrast to the top-down approach of The Advisory Board, which appears to assuage stakeholders at every turn.

PROVIDENCE – The financial analysis under girding the new State Health Innovation Plan, or SHIP, was finally made public – sort of.

A two-hour presentation with a deck of PowerPoint slides was held on Nov. 20 at the Brown University School of Public Health on Dyer Street, to an invitation-only gathering.

The presentation was made by The Advisory Board, the principal consultant hired by the state to prepare a federal grant proposal to the Center for Medicare and Medicaid Innovation potentially worth as much as $30-50 million. The plan’s stated goal is to “lead the state in the transition to value-based health care delivery and payment models.”

The Advisory Board, working with Milliman, the world’s largest independent actuarial firm, had crunched the numbers and found that innovations proposed under the Rhode Island plan would lower – but not eliminate – the annual increase in rising health care costs by about 3 percent in the next few years.

Instead of a projected 6-7 percent annual increase, health care costs would be held to about 4 percent a year in Rhode Island, according to the consultants. The findings, the consultants stressed, “were intentionally conservative.”

Questions and scrutiny
The findings – and the methodology – came under questions and scrutiny from about 50 attending the session, including many of Rhode Island’s top health care leaders: Dr. G. Alan Kurose, president and CEO of Coastal Medical, Louis Giancola, president and CEO of South County Hospital, Dr. Cedric Priebe, chief information officer for Care New England, and Ray Lavoie, executive director of Blackstone Valley Community Health Care center.

One of the stakeholders questioned the validity of Milliman’s use of a previous study examining cost reductions at Massachusetts General Hospital, given that it was one of the most expensive medical centers in the nation, and its application to Rhode Island.

Ted Almon, president and CEO of the Claflin Company, and co-chair of the executive committee of HealthRIght, questioned the metrics of the analysis. “By what means are we going to measure current costs?” he asked, saying he was not doubting the actuarial projections of costs, but the forecast of savings.

Kurose, who has been a leader in Rhode Island in developing new models of health care delivery to bend the medical cost curve, questioned the time needed to accomplish the savings. Coastal is now the largest primary care group practice in Rhode Island, serving more than 110,000 patients in 18 locations. It has entered into shared savings contracts with health insurers. Coastal has also introduced a 24/7 approach to services, in an effort to reduce visits to emergency rooms. And, Coastal has become a federal Medicare Shared Savings Accountable Care Organization. [Kurose told ConvergenceRI that Coastal is still awaiting “reconciliation of our first year of performance” under the Medicare shared savings program.]

At the meeting, Kurose questioned the curve on a graph showing an optimistic creation of billions in savings. “How long does it take to do these things?” he asked, a question that he has been struggling with at Coastal, adding that it was very hard work.

The Advisory Board consultant answered that the projections were based on the assumption that the implementation of the state plan “would be rolled out in a comprehensive manner.”

The 6-7 percent annual increases in health costs, the consultant continued, were a global projection. The savings were projected from a decrease in health costs in the 4 percent range over the first three to five years. The consultant predicted that the increases would flatten out over time during a 10-year period.

After the meeting, Kurose told ConvergenceRI that he was working on public comments, but wanted to refrain from sharing those comments outside the Healthy Rhode Island process.

Are all options on the table?
Louis Giancola, president and CEO of South County Hospital in Wakefield, asked the consultant about the stated goal in the SHIP of having 80 percent of Rhode Island’s population enrolled in a value-based primary care practices. Were there specific kinds of innovations that were being promoted or recommended?

“Nothing is being taken off the table [in terms of innovation approaches],” the consultant replied.

“Kind of like with Iran,” Giancola responded.

The room erupted with laughter.

Will it work?
After the meeting, ConvergenceRI asked Dr. Michael Fine, the director of the R.I. Department of Health, about the feasibility of the innovation plan being able to slow down the medical cost curve over the next five years from 6-7 percent to 4 percent. He voiced skepticism.

“If all the interventions work as described, it is theoretically possible,” he said, questioning some of the proposed innovations contained in the plan. “Co-location of primary care and behavioral health has been tried in Rhode Island, and failed. Community health teams have been tested in places where the population is less dense than Rhode Island’s, but it's not clear whether the teams will be effective in an urban environment.”

Fine continued: “Focused care-coordination of people at highest risk has been used effectively in places like Camden, N.J., but its use hasn’t been integrated well into patient-centered medical homes. It’s not clear how a segregated approach to the highest risk will impact the primary care ecology.”

Fine, who has proposed creating a series of neighborhood health centers through what he has called the Primary Care Trust, believes that from a public health perspective, there is a more innovative approach that Rhode Island could consider investing in.

“From a public health perspective we think the Primary Care Trust should be considered at the same time as other interventions,” he said. “The Primary Care Trust is likely to create the same or more effective impact as the creation of Accountable Care Organizations.

The SHIP’s financial analysis is focused on a payment reform methodology on how best to transfer risk to the provider and the hospitals, with incentives for them to share in savings of bending the medical cost curve. Do you believe there a better way to invest those savings, ConvergenceRI asked Fine.

“I’d like to see the savings used to pay primary care practices to do Quality Assurance/Quality Improvement of public health educators, which would lead to improvements in public health,” Fine said. Another way to spend the savings more effectively, he continued, would be “on education, housing, the environment, and public safety, which all also have an impact on the public's health.”

Transparency, deadlines, timelines
The financial analysis has not yet been posted online or distributed. Participants who attended the morning sessions and who requested a copy of the financial analysis were told that the presentation was “an in-person event” only.

ConvergenceRI’s request for a copy, sent to Dan Meuse, a member of Lt. Gov. Elizabeth H. Robert’s staff who is coordinating the SHIP project, went unanswered.

The latest public version of the plan did not seem to incorporate any of the comments made by stakeholders at two sessions on Oct. 24, despite assurances from Meuse that the omissions would be added to the plan.

The deadline for the grant proposal is Dec. 30, leaving about 30 days time to revise the plan, add omissions, secure public comment, and send the proposal to the Center for Medicare and Medicaid Innovation.

There are still unanswered questions about the plan, which potentially could bring as much as $50 million in new federal funds to Rhode Island to be invested in health care delivery.

As much as SHIP puts its trust in Accountable Care Organizations – or, as they are described in the plan, “coordinated care organizations" – there appears to be limited discussion about what kinds of accountability there will be in managing the money or engaging with the public once the grant is secured. The decision-makers are not named.

Investments will be made through a new organization, called the Rhode Island Care Transformation and Innovation Center. The proposed center would be a large statewide not-for-profit agency that would have responsibility to coordinate technical assistance in contracting and measuring population health management outcomes, provide technical assistance to analyzing data, and provide support for re-training the workforce.

The proposed center would also manage funding of future innovation programs and serve as a convener of resources. It would be a new entity largely outside the purview of either state government or the R.I. General Assembly.



Health care IT will clearly be at the center of population health analytics needed to measure outcomes in a value-based payment system. Much of that investment the new Center will make is targeted at health IT population health management analytics.

SHIP offers an endorsement of the Rhode Island Quality Institute’s Currentcare program, without any critical evaluation. Under the plan, Currentcare is positioned to be a key component of the state’s innovation plans, despite persistent operational problems.

It may be, as Almon suggested in his public comments, that “the real goal here is to get the grant,” and the consultants know how to achieve that.

Public engagement with the communities most affected by the disparities in access to affordable health care has never been part of the equation, it seems. It’s been a top-down exercise, with limited transparency.

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