PROVIDENCE – Beginning Monday, Oct. 27, at 9 a.m. in Room 35 at the State House, state officials will begin the work known as the Consensus Revenue and Caseload Estimating Conference.

The twice-yearly conference, usually held in May and November, organized by Thomas Mullaney, the state’s budget office, Stephen Whitney, the Senate’s fiscal advisor, and Sharon Reynolds Ferland, the House’s fiscal advisor, must reach a consensus on “what the state general revenues and caseload expenses are estimated to be for the current fiscal year and the budget year,” according to the legislative news release.

These consensus projections then become the basis for preparing the FY 2016 budget.

This year, the fact that the conference was beginning in October, a week before Election Day, struck some observers as earlier than normal. That was not necessarily true, Whitney told ConvergenceRI.

Still, the public hearing could easily become fodder for the candidates, because the projected numbers will offer a glimpse into next year’s projected budget crunch.

On Oct. 27, testimony will be offered first by officials from the R.I. Department of Human Services on cash assistance, followed by officials from the R.I. Executive Office of Health and Human Services on medical caseloads.

In particular, the testimony will reveal in part the how much the state projects it will need to spend as part of its Medicaid budget in FY 2016, which amounts to about one-quarter of the state’s budget.

On Monday, Nov. 3, the day before Election Day, state officials will hear testimony regarding both state and national economic and labor forecasts.

Then, on Wednesday, Nov. 5, the day after Election Day, the caseload estimating conference will wrestle with what the projected costs will be moving forward.

In other words, whomever has been elected governor the day before – Raimondo or Fung – will wake up on Nov. 6 and confront how big the gap will be that they have to close in next year’s budget – playing havoc with whatever well-laid plans and promises for the state’s economy they may have campaigned on.

Cost, policy and externalities
Last year, the Chafee administration, under the leadership of former Director of Administration Richard Licht, balanced its FY 2015 budget by cutting some $46 million in Medicaid benefits payments – kicking the can down the road for the next governor to face.

The R.I. General Assembly then cut some $10 million in funding for the community mental health centers, under the apparent rationale that new health insurance coverage provided under the Affordable Care Act and the expansion of Medicaid to previously uninsured adults would somehow cover the need.

What seemed a simple budget calculation didn’t quite play out that way: beginning this past summer, there has been a continuing surge in serious emergency mental health services reported by Butler Hospital, the state’s adult psychiatric hospital, requiring them to open an overflow facility.

In trying to understand what caused the surge, hospital officials noted that many of the patients in crisis had health insurance. Yet, many of the patients also had serious chronic disease issues, in need of primary care services.

For many of those who work in community mental health, the cause and effect was clear: the inability of community mental health centers to provide a continuum of care to clients with behavioral and mental health issues because of the cutbacks in state funding precipitated the surge in emergency [and more expensive] care.

The budget calculation may have looked good on paper, and seemed convincing to members of the R.I. General Assembly. But it appears to have only exacerbated the state’s ongoing crisis in behavioral and mental health.

The cause-and-effect of the budget cuts certainly demands more research and analysis, but it is not part of the purview of a statewide study now underway analyzing the overall costs of behavioral and mental health costs.

Budget cuts are also not necessarily part of the calculations of ongoing efforts to change the health care delivery system in Rhode Island. At the recent R.I. Business Group on Health annual summit, a panel consisting of Dr. G. Alan Kurose, president and CEO of Coastal Medical Group, Laura Adams, president and CEO of the R.I. Quality Institute, and Dr. Pano Yeracaris, co-director of the R.I. Chronic Care Sustainability Initiative, all expressed surprise – they said they were unaware of it – when asked by ConvergenceRI about the reasons behind the surge in demand for emergency mental health services [despite the surge having been a front-page story in The Providence Journal.]

And, despite the ongoing epidemic in substance abuse, addition, prescription painkiller over-prescription and abuse, with the latest body count since Jan. 1, 2014, at 162 Rhode Islanders dead from an accidental overdose, it has not emerged as part of the current gubernatorial race.

A ray of light?
A front-page story by G. Wayne Miller on Oct. 26 in The Providence Journal detailed the cause-and-effect impact of the $10 million in budget cuts on the delivery of behavioral and mental health services at the community level.

To some degree, Miller’s story touched on the consolidation trend of mental health and behavioral services with hospital systems – with first Gateway joining with Lifespan, and then the affiliation that The Providence Center has planned with Care New England. [In his story, Miller appeared to get the timing of the consolidations wrong.]

Miller also [as yet] did not write about the pilot program developed as a partnership with Blue Cross & Blue Shield of Rhode Island, The Providence Center and Care New England to create a new model of integrated care for commercially insured patients – HealthPath, run by Continuum.

Miller also did not [as yet] address the growing integration of behavioral and mental health services in the delivery of primary care through the R.I. Chronic Care Sustainability Initiative and the network of community health centers. Or, the planned Adolescent PCMH pilot program to focus on the prevalence of chronic conditions and risk behaviors.

More importantly, Miller did not [as yet] go back to question the source of the problem: the budget process and the budget priorities of House Speaker Nicholas Mattiello, the self-proclaimed pro-business legislative leader.

Questions, questions, questions
In the budget deliberations for next year, health care policies promise to be front and center. In the absence of any policy debate from the candidates, and the lack of any questions from the news media [and the lack of a dedicated health care reporter at The Providence Journal], here are some of the issues that will confront the next governor and the R.I. General Assembly.

How many of the newly signed up Medicaid members were previously eligible – and not part of the state’s expansion of Medicaid under the Affordable Care Act? What will be the projected cost to the state? 

How many members enrolled under Medicaid’s RIte Care program have been re-registered? How many have fallen through the cracks? Have the budget savings projected by having some parents excluded from RIte Care because they were eligible for health insurance through the state-run exchange materialized?

What kinds of additional Medicaid pharmacy benefits will be required for Hepatitis C patients in Rhode Island for the new drug treatment now available, particularly from the prison population?

Under the new program, Rhody Health Options, will Neighborhood Health Plan of Rhode Island honor the new state law and pay nursing facilities the same rate equal to what they would received under Medicaid?

Peter Marino, the former state budget director, is now the president and CEO of Neighborhood Health Plan of Rhode Island, with annual revenues of more than $700 million a year. What will his role be in advocating for more resources within the state budget process?

When will the R.I. Executive Office of Health and Human Services sign the pending MOU with the Center for Medicare and Medicaid Services for the dually eligible program under Rhody Health Options?

Does UnitedHealthcare still plan to jettison its one-third share of the managed Medicaid program on Dec. 31, 2014? How will the state manage that change?

Will the financial risk-sharing contract between the state and Neighborhood Health Plan be made transparent? Does it need to be renegotiated so that shared savings can go back to the providers, rather than just to the state’s general revenue fund?

Will any of the $10 million cut from the state budget be restored to community mental health centers in Rhode Island?

And, of course, the biggest question: how will the state decide to move forward with HealthSourceRI, the state’s health insurance benefits exchange?

Perception vs. reality
In the 1980s, Rolling Stone magazine ran an advertising campaign, Perception vs. Reality. There were two photographs – one of an aging hippie sitting in front of a water pipe, the other a well-attired businessman, asking: which was the subscriber to Rolling Stone?

The punch line: it was well-attired businessman who subscribed – the magazine’s demographic reach was far different than the perception.

The same is mostly true about HealthSourceRI: fiscal conservatives believe that expenditures to fund the state-run health insurance benefits exchange are an example of another federal entitlement program. The reality may be far different: HealthSourceRI is proving to be an effective tool to make health insurance costs more transparent, offer consumers better choices and lower rates, and in particular, enable small businesses with under 50 employees to save money on their health insurance costs.

ConvergenceRI recently talked again with Christine Ferguson, the executive director of HealthSourceRI, to get her take on how the issue of budget is being defined, particularly after the report released by the R.I. Public Expenditure Council attempted to delineate the financial options moving forward with HealthSourceRI.

Ferguson did not necessarily believe that there was anything wrong, per se, with RIPEC’s analysis, calling it “a good addition to the conversation.”

But, she added, the difficulty is when you get reports, they often see the world according to their values, comparing the differences in analyses from the Congressional Budget Office, the General Accounting Office and the Congressional Research Office.

“You can seen programs analyzed according to those different values,” Ferguson said. “It depends on where you are coming from.” The RIPEC report, she continued, looked at the budget numbers year-to-year in its analysis.

The longer-term analysis of outcomes and benefits often get short shrift in the year-to-year budget process, and seeing the forest for the trees becomes difficult, Ferguson said. “I think that’s part of the problem we’ve had in health care: the challenge has always been with people who are steeped in [the budget process] on a day-to-day basis,” she explained.

“We have businesses that are buying as much as half-a-million dollars in health insurance a year [for their employees], they don’t find out what the increases in rates will be until 30 or 60 days before renewal,” Ferguson said.

As a result, the businesses then have to scramble with their broker, with limited options: increase the co-payments and/or increase the deductibles, Ferguson explained.

The cost of health insurance becomes more than the cost of the raw materials they need to produce the product the businesses are manufacturing, more than the taxes they pay, she continued. “The businesses have found that it’s difficult to get their arms around health care costs,” Ferguson said. “It seems like a black hole.”

Now, through HealthSourceRI, Ferguson said, small businesses are offered tools to help change the equation of ever-rising premiums. There are side-by-side rate comparisons, transparency of the costs. There is a new tool HealthSource is debuting to let businesses calculate their costs six months in advance, so that they don’t experience premium rate shock.

A disruptive startup
Ferguson believes that increased competition, increased transparency, and more employee choice in purchasing plans will serve as a brake on costs. She likened HealthSourceRI to a promising startup firm that is disruptive to the current market.

“There is no proof, no proof that anything works,” Ferguson said, talking about efforts by insurers and providers to cut costs. “People want something that says, ‘If we do X, we will save Y.’ What I am saying is, ‘If we don’t do X, we have [little chance] of saving Y.’”

The question moving forward is: how much to invest in HealthSourceRI?

Ferguson said that HealthSourceRI, in its second year, is putting a heavy emphasis on enrolling small businesses. “We are seeing some changes in rates, but it’s still not where it needs to be,” she said. “Businesses can say today, I paid $400,000 this year, I can afford $405,000 next year, and I can find a plan that does that.”

Ferguson also addressed the push back HealthSourceRI has received from some in the health insurance industry, particularly as it moves into the small business market. “The insurance carriers and the brokers, have a business interest in maintaining their market share,” she said.

What has emerged, Ferguson continued, is that the relationship between the insurer and the consumer is changing, and that the consumer’s relationship with the provider network becomes more important – as a result of the transparency of HealthSourceRI.

The provider community, she said, likes the change. “It gives them a little more control to push back against the carriers – and how they pay,” Ferguson said. At the same time, she added, “it helps to improve their value as a provider, and become comfortable with outcome measures.

Ferguson made it clear that HealthSourceRI was not trying to drive what payment reform and the delivery system should look like. Rather, she continued, “I’m trying to create an environment where innovations – the way that doctors and hospitals and nurses and nurse practitioners say they want to be practice medicine, the way in which they can be most helpful and successful with their patients – [can be leveraged]. And not just the way the payer decides to pay [them.]

The bottom line
Ferguson said that the right questions to ask in terms of framing the budget debate on the future of HealthSourceRI were: “What is it that having a state-run exchange can provide to the state in terms of a return on investment? How can it improve our business climate, and support the state’s effort to become more competitive, regionally and nationally? How can it help reduce medical spending from its current 21 percent of GDP?”

The idea of asking, she continued, “What’s the least we can do to run a federal entitlement program for a group of people who are getting tax credits?" that's simply a recipe for creating other problems.