PROVIDENCE – If they can get you asking the wrong questions, they don’t have to worry about the answers, wrote novelist Thomas Pynchon, as a proverb in Gravity’s Rainbow.

It’s apt advice to remember when the coming offensive to cut and control state Medicaid spending in Rhode Island launches in January.

After more than a year of not talking about health care costs and postponing any discussion of health policy issues, Gov.-elect Gina Raimondo announced on Dec. 7 that she would nominate outgoing Lt. Gov. Elizabeth H. Roberts to be the next Secretary of the R.I. Office of Health and Human Services, giving Roberts the mission: “We have to commit ourselves to being the national leader in controlling Medicaid costs.”

Hmmm. Go through all Raimondo’s speeches prior to her election, and all her position papers published on her website, and there is little if anything about promises to become “a national leader” in controlling Medicaid costs.

Call it the difference between running for office and getting elected, and the actual chore of governing.

In bestowing her blessings on Roberts, Raimondo said that, as governor, she wanted to cut Medicaid costs in a way that’s creative and innovative “…so we don’t hurt people in the process.”

In other words, Raimondo is going to control state spending by cutting Medicaid costs and services, but the process won’t be hurtful because it will be done in a creative, innovative manner.

The follow-up question, not asked by the news media and not answered by Raimondo, is:  hurtful to whom? Hospitals? Health insurers? Providers? Elected officials? Or, Rhode Island’s working poor? The economics of the equation are missing.

The big disconnect
Roughly one-fifth of Rhode Islanders received Medicaid health services last year, and the state’s budget reflects that, with about 22 percent of the budget spend going to Medicaid [with, of course, half of that total paid by the federal government, so the state spend is actually 11 percent]. 

For sure, the level of state Medicaid spending will climb – in a supplemental budget and in the FY 2016 budget. But, before you can control the costs, you have to better understand the choices – and ask, in best tradition of Studs Terkel, the impertinent questions.

The current debate over rising Medicaid spending is much like listening to a retro beer commercial: with one side shouting “less filling,” the other side shouting “tastes great.” The only thing that the two shouting sides can agree on is the fact that spending on Medicaid is increasing.

The vocal “less filling” advocates of smaller government see the rising costs of Medicaid as symptomatic of federal entitlement programs gone wild and socialism running rampant.

The “less-filling” folks would have you believe that the working poor were the ones most responsible for the increasing costs of health care, and the way to cure our economic malaise is to jettison these programs and let private industry, like some mythic Seventh Cavalry, come riding to the rescue.

The “less-filling” true believers want to blame government largesse and the people receiving benefits for the escalating costs. But, for ideological reasons, they don’t ever seem to criticize the private health care delivery system itself and the perverse incentives of fee-for-service – what some health care officials have dubbed a “wealth extraction” system.

RIte Care works
The successful track record of RIte Care, Rhode Island’s managed Medicaid program to provide affordable health care for children and families for the last 20 years, doesn’t fit very well into the “less filling” worldview.

Over the last two decades, the program has achieved the lowest rates of emergency hospital admissions, low rate of preventable hospitalizations, improved access to primary care, fewer pregnant women who smoke, healthier pregnancies, fewer infant deaths, and healthier infants and children, according to Rhode Island Kids Count. These outcomes have translated into direct savings in future medical costs.

In many cases, RIte Care has outperformed commercial insurers. In 2012, it had the fewest emergency hospital admissions for children and adults, compared to private commercial insurers. Not surprisingly, the rates of emergency admissions were double for those uninsured.

Under RIte Care, about 95 percent of Rhode Island’s children have health insurance. At the recent annual celebration of children’s health, R.I. House Speaker Nicholas Mattiello made a public pledge to find the resources so that 100 percent of Rhode Island’s children would have health insurance.

The evidence suggests that the Medicaid-managed RIte Care is one of the most cost-effective, affordable programs in Rhode Island – something that Mattiello said he wants to expand.

Question: If expanding RIte Care makes sense to Mattiello from an economic point of view, can that same equation be applied to expanding other successful Medicaid programs?

Demographics
A big cause of the rising Medicaid spend is related to demographics – Rhode Island has a disproportionate share of the seniors who have the highest health costs – those of an extremely advanced age. And, the bulge of Baby Boomers who are turning 65 and retiring [or becoming part of the new semi-retired and part-time underemployed] is beginning to disrupt existing systems, as they have done in each phase of their life cycle. Because of increased life expectancies, the number of “old old” in Rhode Island and elsewhere is projected to continue to increase over the next decade.

The reality is that many of these “old old” people in Rhode Island will require more, not less services, as they age, particularly as they become susceptible to dementia, Parkinson’s and Alzheimer’s diseases, as well as the care required by chronic diseases such as diabetes and heart disease.

These demographics are another “inconvenient truth” that doesn’t fit very well into the “less filling” worldview. Denying it – like denying climate change or the state’s changing racial dynamics, such as minority children becoming the majority in 2018 – will not stop it from happening.

As much as there is a lot of wishful thinking around the desire to have senior citizens to be cared for at home, the idea that adult children in their 60s and 70s will be able to have the resources to provide continuous care for their elderly parents in their 80s and 90s strains credulity.

As Rhode Island’s senior population grows, so, too, will the state’s Medicaid expenditures, much like the rising sea levels.

In this time of scarcity, the other dynamic that gets played out is pitting the undernourished home and community-based care services vs. financially struggling nursing facilities in a competition for limited resources.

Questions: How can the either-or dynamic of investments in home care and community-based care vs. nursing facilities become a shared, collaborative framework? Would Medicare/Medicaid paying for a nurse practitioner to be on duty at nursing facilities prevent unnecessary hospitalizations and ease the burden of transitions in care? How can Medicare/Medicaid support the cultural change movement within nursing facilities? Are there health IT innovations that will allow more patient-directed care?

Brief history lesson from the not-too-distant past
Raimondo – like Gov. Lincoln Chafee and Gov. Donald Carcieri before her – enters the State House arena with big plans to trim Medicaid costs.

Carcieri argued for and won a new federal global waiver, allowing the state to manage its Medicaid funds, with the promise that it would produce savings. However, despite the unproven, wildly inaccurate claims that as much as $100 million had been saved, as purported by Gary Alexander, Carcieri’s secretary of the R.I. Executive Office of Health and Human Services, the new waiver did achieve something like $20 million in initial savings. The risk of the waiver was long-term: how the state would be able to control future Medicaid costs, something the state is now struggling to do.

Chafee balanced his FY 2015 budget on the back of more than $40 million in cuts to state Medicaid spending. His team, beginning in 2011 under current Secretary of the R.I. Health and Human Services Steven M. Costantino, consistently argued for cuts in Medicaid benefits [sometimes using inaccurate numbers], claiming that Rhode Island’s benefits under RIte Care were more generous than neighboring states in Massachusetts and Connecticut.

Costantino also launched the Integrative Care Initiative, a program supported by the Centers for Medicare and Medicaid Services, in an effort to reduce the costs of dual eligibles – Rhode Islanders who receive both Medicaid and Medicare benefits – targeting those Rhode Islanders in nursing homes, under Rhody Health Options.

The results in the early going have not produced the promised discernible outcomes or savings – in part because only the Medicaid leg of the stool has been implemented. The Medicare leg – supposed to go into operation in April of 2015 – is stalled in a dispute over details of a Memorandum of Understanding between CMS and EOHHS and who gets to share in the promised financial savings.

The stated goal of moving seniors from nursing facilities back into the community as a way to save Medicaid dollars has not been realized under Rhody Health Options – the rate of those transtions has not budged, according to state documents. In the meantime, the administrative expenses of the program appear to dwarf any potential savings. [See link to ConvergenceRI story below.]

What has been accomplished is a massive infusion of government funds to Neighborhood Health Plan of Rhode Island, the sole bidder on the Rhody Health Options contract. The health insurer’s annual revenue doubled in the last year, from $439 million in FY 2013 to $890 million at the end of FY 2014. Neighborhood Health Plan has also added some 80 new staff positions, and will reach 515 employees by the end of 2015, according to a recent story in The Providence Business News.

Question: Will the incoming Raimondo administration and Roberts re-examine and revamp the ongoing Rhody Health Options program and be willing to make wholesale changes? Is sole-sourcing the contract to Neighborhood Health Plan the best financial alternative?

Boomerang effect of cutting services
Cutting Medicaid services and limiting access to services has been one solution proposed, but in many cases, it may only exacerbate the problem – and end up costing more money in the long run. For instance, the R.I. General Assembly cut $10 million in funding for community mental health services in the last budget, in the midst of an epidemic of drug overdose deaths, believing that the increased enrollment in health insurance would suffice to provide patient services. Surprise, surprise, surprise! The number of emergency mental health events soared this summer following the cuts, overwhelming the resources at Butler Hospital, leaving hospital officials wondering what caused the surge. They reported that most of the emergency patients had health insurance.

Promoting health care reform
Intrinsic to Raimondo’s argument and the Roberts’ appointment are the efforts underway to reform the health care delivery system in Rhode Island.

Unlike the “less filling” advocates, the “tastes great” adherents believe that there is a strong role for government to play in reshaping the health care delivery system, based upon moving away from fee-for-service toward global payments and accountable care organizations. It is to be built upon health IT systems, patient-centered medical homes, and integrated, better-coordinated networks of care.

Here is Rhode Island, the health care reform evolution is well underway, with the major hospital systems and major health insurers talking about ending about 80 percent of fee-for-service payments by 2019. There are strategic alliances that have formed between Blue Cross & Blue Shield of Rhode Island and Care New England. Lifespan has embarked on a tiered network for its own employees.

The all-payer R.I. Chronic Care Sustainability Initiative has expanded to now have its network of primary care patient-centered medical homes serving some 320,000 Rhode Islanders, about one-third of the state. R.I. Health Insurance Commissioner Dr. Kathleen Hittner envisions the CSI model growing to encompass 80 percent of Rhode Island’s population.

Lifespan, Care New England and CVS Health have all invested in new health IT systems with Epic, promising that the investment will foster greater interoperability.

Indeed, the pending State Innovation Model application to the Centers for Medicare and Medicaid Services, which Roberts has championed and shepherded, targets statewide health delivery transformation.

[The July 2013 application asked for $58 million over three years; the response from CMS in November was to ask Rhode Island to send a revised budget for $20 million. Rhode Island sent a revised budget for $23 million; CMS asked them to resubmit a budget for $20 million, which they finally did. If awarded, will result in about $6.6 million a year over three years.]

But the best projections under the initial State Health Innovation Plan, or SHIP, the precursor of SIM, had medical costs shrinking from a projected 7 percent annual increase to a 3-4 percent annual increase, under the new global payment, accountable care organization, patient-centered medical home model.

Turning the current health care delivery system around has been likened to changing the direction of the huge nuclear-powered aircraft carrier. It will take time, and it is unclear how that will fit within the quarter-by-quarter scorecard of the state budget on Medicaid spending.

Questions: Are there current models of innovation, such as the sophisticated integration of health IT at the point of care being done by Blackstone Valley Community Health Care, which can be incorporated into the design of SIM? Are there ways to create shared savings programs under Medicaid that reward the innovative programs, and not just the insurers or returning the money to the state’s general revenue fund? Are there ways to invest money in the front-end of the system, to promote prevention, wellness and community health, which can prove to be more effective in reducing health care costs and Medicaid spending?

Health equity zones
The money invested in health insurance and in the health care delivery system are not necessarily investments that promote better health, but rather better coordinated care once you’re sick.

There are other models for health care underway in Rhode Island that put emphasis on investing in the front end of the health care delivery system, focusing on prevention and wellness at the community level. The Centers for Health, Equity and Wellness investments, coordinated through the R.I. Department of Health, will be making some $4 million in investments in community approaches to improving health. Proposals are due on Jan. 23, 2015, and contracts should be in place by March 1.

Keeping people healthy and communities healthy may prove to be a better driver of reducing Medicaid costs than investments than reform of the health care delivery system.

In addition, the proposed Neighborhood Health Stations, championed by Dr. Michael Fine, the director of the R.I. Department of Health, offers an alternative model to the patient-centered medical home model developed through the CSI program. A progenitor of that effort is underway in Central Falls at the city high school, in the form of a collaborative health clinic.

Enter Ted Nesi, from stage right
Ted Nesi, the well-respected news blogger at WPRI, entered the Medicaid discussion by publishing what he called “12 facts” to help understand the program, its costs, and its importance.

Nesi likened the focus on Medicaid spending to the reasoning of Willie Sutton: when asked why he robbed banks, Sutton responded that was where the money was.

Missing from Nesi’s analysis, however, was some rather critical information: there was nothing about the current EOHHS investment of hundreds of millions of dollars in Rhody Health Options and the stalled MOU with Medicare. [Nesi has yet to report on Rhody Health Options since it began in October of 2013.]

What was fascinating, then, was Nesi’s decision to post a response by Kali Thomas, an assistant professor of health services, policy and practice at Brown University, who, according to Nesi, “thinks there are ways Rhode Island can reduce its far-above-average Medicaid spending on elderly residents.”

In response, both Virginia Burke and Bill Flynn posted comments, providing a more detailed understanding about the problems of Medicaid spending related to elderly residents – and what was wrong with Thomas’s approach. [A link to Thomas’s post, and Burke’s and Flynn’s responses, is posted below.]

As Flynn wrote: “There has been almost a total absence of leadership and vision from our last three governors and General Assembly leaders.” There hasn’t been transparency and accountability, he continued, “when programs like the [Medicaid] Global Waiver aren’t making progress.

And, as Burke wrote: “Thomas [said] that ‘focusing on efforts to reduce the numbers of low-care residents in our state is a great opportunity to reduce the excessive spending in our Medicaid program.’ But no one knows whether that is true. There may be people in our nursing homes [that] could be cared for less expensively at home, but we don’t know who they are, or how many of them there are.”

Further, Burke continued: “We also don’t know whether there is any ‘excess spending’ in our Medicaid program. It’s impossible to know that without knowing more about the health condition of our Medicaid recipients.”

It’s the kind of dialogue that needs to happen when efforts to control Medicaid spending are launched – and not get caught up in the “less filling” or “tastes great” shouting.