Delivery of Care

Before the deluge

Senate members will question Raimondo administration officials about plans to respond the dismantling of Obamacare

By Richard Asinof
Posted 2/6/17
Despite the apparent unwillingness of the Raimondo administration to prepare budget plans to respond to the potential economic threats posed by the dismantling of Obamacare, a joint committee hearing will be held on Feb. 7 by the Senate Finance and Health and Human Services committees to ask questions of Raimondo administration officials about the best ways to react.
Will Republican members of the R.I. General Assembly voice their continued support the dismantlement of Obamacare, even if it precipitates an economic recession in Rhode Island? How strongly will the hospitals and the health insurers speak out against the effort to repeal, replace or repair Obamacare? What are the public health consequences for Rhode Island in dismantling Obamacare? Will the leaders of the Rhode Island’s emerging innovation ecosystem speak up about the potential loss of funding for academic research centers as a result of the loss of federal funding? How will a newly engaged community make their voices heard in the debate, so the dialogue doesn’t become one of legislators talking back and forth with government officials?
If and when Trumpcare replaces Obamacare, with the resultant economic consequences, causing the health care industry to retract in Rhode Island, what kinds of alternatives are being developed to build a new kind of health care delivery system based upon community needs? What kinds of new economic development projects can be leveraged by Neighborhood Health Stations in Scituate and Central Falls?
There are rumors that a buyer for Memorial Hospital is actively being sought, although Care New England spokesman Jim Beardsworth told ConvergenceRI that there was nothing new to report at this time. What kinds of innovative approaches could be employed to repurpose the building? Who will convene that conversation?

PROVIDENCE – Whether you call it repeal, replace or repair, the dismantling of Obamacare, soon to become Trumpcare, threatens to devastate the Rhode Island health care industry sector, and with it, plunge the entire state economy into recession.

Three different studies have forecast the potential damage to Rhode Island’s economic prosperity as follows: the loss of $1.7 billion in Medicare and Medicaid funds to hospitals over the next 10 years; the loss of more than 10,000 jobs in the next two years; and the loss of more than $540 million in Medicaid funds if a system of federal block grants is enacted. [See link to ConvergenceRI story, “Life, death and taxes in a post Obamacare world,” below.]

Hu-u-u-ge
In calculating the potential economic damage that could be inflicted by the transition from Obamacare to Trumpcare, the equation needs to be framed with a clear understanding of exactly how the flow of funds from federal insurance programs of Medicaid and Medicare supports the Rhode Island economy and spurs job creation.

Money from Medicaid and, for that matter, Medicare, doesn’t flow to the people who qualify as members. It goes to pay the health care service providers who take care of people when they are sick – the doctors and nurses [and health system administrators] as well as the insurers who manage the risk.

The latest figures from the Hospital Association of Rhode Island say that in 2014, hospital revenues of $4 billion created nearly $7 billion in economic impact. Some 58 percent of the $4 billion hospital revenue in Rhode Island is generated from the two federal health insurance programs, Medicaid and Medicare.

In 2012, the total worth generated by the health care industry sector by physicians in Rhode Island was calculated to be $7.7 billion – roughly one-sixth of the state’s gross domestic product. That included the total sales from physicians, some $4.8 billion; wages paid to employees, some $2.8 billion; and $1.96 million in state and local taxes, according to figures from a study conducted in partnership with the Rhode Island Medical Society.

The actual total economic impact of the health care industry sector in Rhode Island may be far north of those numbers. It is unclear how the numbers from the hospitals and the physicians intersect and overlap. It is also unclear how much of the academic research enterprise funded through federal, state and private sources is included. Or, for that matter, how those numbers would increase if revenues from academic enterprises, such as nursing schools, the medical school and public health school at Brown University, physician assistant schools at Johnson & Wales and Bryant universities, were included.

In terms of employment in the private sector in Rhode Island, the Health Care and Social Assistance cluster employed the most workers in 2015, with 80,277 employees, representing 19.5 percent of the state’s private sector workforce, according to the R.I. Department of Labor and Training. The projected loss of 10,000 jobs by 2019 could wipe out all the job creation gains in the decade since the Great Recession of 2008.

More than the economic cost, there is also the human cost to consider: more sickness, more uninsured, more delayed care, more children and families at risk, more disparity in health outcomes, more increases in serious behavioral and mental health conditions, and inevitably, more unnecessary deaths.

Trouble with a capital T
When it comes to Trumpcare, call it trouble with a capital T right here in the Ocean State. Yet Gov. Gina Raimondo’s proposed FY 2018 budget does not address any of the potential shortfalls. If anything, her proposed budget promises to exacerbate any future shortfalls, calling for more cuts to be enacted for hospitals and nursing homes under the alleged reinvention of Medicaid.

The bottom line: Rhode Island could be facing an economic tsunami, and there appears to be no planning or preparation underway by the Raimondo administration – or even an attempt to engage the public in a conversation, to acknowledge the looming threat.

Thumbs in the dike
Into the breach, attempting to stick their thumbs in the dike, have stepped members of the R.I. General Assembly, convening a Joint Senate Finance and Health and Human Services hearing scheduled for Tuesday, Feb. 7, to discuss the consequences of “the repeal of the Affordable Care Act.”

A number of the usual subjects in the Raimondo administration are scheduled to testify: Elizabeth Roberts, secretary of the Executive Office of Health and Human Services; R.I. Health Insurance Commissioner Dr. Kathleen Hittner; Dr. Nicole Alexander-Scott, director of the R.I. Department of Health, and Zack Sherman, director of HealthSourceRI.

[Michael Raia, communications director for Raimondo, will no doubt be hovering in the back of the hearing room.]

The second part of the hearing will involve testimony from the broad categories of insurers, providers and consumers, with no companies as yet identified, followed by public comment – anyone who shows up and has the patience to wait for a couple of hours to be heard.

[Of course, the tenor of what happens at the hearing could change if hundreds of community members were to show up to ask questions and voice their concerns about the future of health care in Rhode Island, changing the nature of the narrative. The kickoff for the Earned Sick Days Campaign is at 3 p.m. in the Bell Room at the State House, the joint hearing begins after 4 p.m. in the Senate lounge. What say you, Rep. Aaron Regunberg? Will you lead a march to the Senate hearing?]

Do some homework, Governor
The goal of the hearing, according to Sen. Josh Miller, the chair of the Senate Health and Human Services Committee, and co-chair of the joint hearing, is to enable the R.I. General Assembly to react when details finally emerge from Congress about their health care plans.

No one knows what the current status of the health care law will be, moving forward, Miller explained. When we do know, Miller continued, the hearing will provide the basis for how “we can react and go forward in designing the state’s response, responsibly and accurately,” to future budget and statute changes.

When asked about ongoing efforts to plan for the rumored switch to a block grant system for Medicaid at the state level, Miller told ConvergenceRI: “That’s a great example of why it’s so difficult. A block grant could be totally consistent with what we’re getting now,” he said. Or, he continued, “It could be 75 percent of the current level.”

[Or, perhaps more accurately, it could end up being 50 percent, according to some analyses by health care experts.]

Miller likened the joint hearing to the state doing “some homework.”

“If we want to react very quickly, we should know what the dollar signs are behind [the changes in federal law],” he said.

Miller said the initiative to hold the hearings came from legislators; the Raimondo administration is “participating” by making its top directors available at the hearing.

“We’re asking everybody, if they haven’t done their homework, to do a little homework on it,” Miller said.

Based on the dialogue that occurs at the hearing, Miller expressed optimism about the ability to reach a consensus about the best path forward.

Miller said he was hopeful that: “We can go ahead and [reach] a consensus of what might need to be preserved – in terms of legislation to preserved benefits and access to health insurance acquired through the exchange.”

A primer on health care, population health
There are some basic facts that need to be better understood in talking about health care in Rhode Island, particularly when framed around the concepts of improving population health and the dismantling of Obamacare.

Rhode Island has about 1 million people living within its boundaries. Population growth has been flat for more than a decade.

Given current demographic trends, it is highly likely that Rhode Island could lose one of its Congressional seats in 2020. Over the last decade, the birth rate in Rhode Island has declined while the number of “old old” – residents who are older than 85 years of age – has increased dramatically.

Roughly 250,000 Rhode Islanders are enrolled as members of Medicaid, receiving health insurance through this federal health insurance program, in partnership with the state through a waiver. Through the federal waiver, the state and federal match for paying for health care delivered through Medicaid is roughly 50-50 for most programs.

Translated, Medicaid provides health care delivery for about one-quarter of the state’s population, with the state paying about half of the cost of that care. Once again, the money is paid to hospitals and providers, not to Medicaid members.

From a state budgeting standpoint, Medicaid represents about 30 percent of the proposed $9 billion state budget for FY 2018.

The major drivers of increased health care costs are no secret. They include: increases in utilization; the ever-escalating costs of drugs; the dramatic rise in costs of care for chronic diseases, such as diabetes and Alzheimer’s, and the investment in health IT systems to manage population health in a bundled payment world of reimbursement.

About 90 percent of what influences health care outcomes occurs not in a doctor’s or nurse’s office, but in the community, directly related to personal lifestyle choices, social, economic and racial disparities, the lack of access to safe, affordable housing and clean water and clean air free from environmental toxins, and educational opportunities.

Translated, the focus of the health care delivery system is what happens when you become sick; it is not about health, wellness and prevention.

Taking care of the health needs of children and families is much less expensive than taking care of the health needs of an aging population. As people age, chronic diseases tend to peak and to flower, often requiring expensive, 24/7 care, whether in at home or in a nursing home.

In turn, interventions to curtail what appear to be the most costly users of the Medicaid system often position the system into becoming catchers in the rye, trying to save people who are falling off the cliff, while not addressing the long lines of people who have not yet reached the crisis mode.

Translated, the solutions offered are often short-term political and economic fixes that fit within a four-year electoral cycle.

Most of managed care Medicaid population in Rhode Island receive their primary health care through eight federally qualified community health centers, one of the more successful, low-cost, high-outcome models for delivering health care in Rhode Island.

Most community health centers offer integrated services for dental care and behavioral and mental health needs.

What won’t be in Trumpcare
Whatever the final version of the legislation that seeks to dismantle Obamacare turns out to contain, there is much more clarity about what it is not likely to contain. It will not:

Promote health equity

Address economic and racial disparities in health care outcomes

Promote patient-centered or patient-directed care as a function of primary care

Increase funding for public health initiatives to combat the spread of disease in our interconnected world

Endorse parity in mental health and behavioral health care coverage

Promote health care business models through a reimbursement system that rewards a continuum of care

Protect the rights of women to have access to family planning as well as to control health choices for their own body.

In turn, Trumpcare as envisioned by Republicans in Congress appears to be about reinforcing the money-making infrastructure of the health care delivery system, propping up an unsustainable system, in a trickle-down economic approach.

The callousness of the economic arguments to support the dismantling of Obamacare and the dismissal of concerns about inequality was perhaps best articulated in a recent column in The Washington Post by George Will, praising a new book Walter Scheidel, The Great Leveler: Violence and the History of Inequality from the Stone Age to the Twenty-First Century.

Will wrote: “Policymakers fretting about income equality could give an epidemic a try,” citing the example of the bubonic plague and what Will termed the “Black Death century” and its success in reversing income inequality.

Will continued: “By killing between 25 percent and 45 percent of Europeans in the middle of the 14th century, Scheidel explains, the bubonic plague radically changed the ratio of the value of land to that of labor, to the advantage of the latter.”

Long live death?

A few grains of salt
Given the enthusiasm of Raimondo administration officials in touting the success of its programs that have turned out to be, ah, problematic – including Rhody Health Options, the Unified Health Infrastructure Project, and the Reinvention of Medicaid – perhaps legislators should take what they have to say at the hearing with a few grains of salt.

Whatever the testimony by state officials, the real opportunity will be for Senate committee members to ask probing questions, to put Raimondo administration officials on notice and on the record.

Here are a few suggested questions that the legislators could consider asking at the Feb. 7 hearing:

1.  What is the total amount that has been invested in administrative fees paid to Neighborhood Health Plan of Rhode Island over the past four years, beginning in October of 2013, for the managed Medicaid population in nursing homes served by Rhody Health Options, the first phase of the Integrated Care Initiative?

In the weeds: In the FY 2018 proposed budget, Raimondo recommended cutting $12.2 million in administrative fees paid to Neighborhood to administer Rhody Health Options, according to the executive summary of the budget. [A previous budget document from R.I. EOHHS had recommended cutting $35 million; the total administrative fees paid to Neighborhood in the first year of the program totaled about $27 million.]

In 2015, the total number of transitions back to the community under the direct auspices of Neighborhood Health Plan [and not under other pre-existing programs] was 36, according to the state’s public records. For the $12 million figure, that’s $330,000 per transition; for the $35 million, that’s about $990,000 per transition; for the $27 million figure, that’s about $750,000 per transition, just in administrative fees. Put another way, the four years of administrative fees paid to Neighborhood Health Plan likely exceeds the total of the $75 million loan made to 38 Studios.

In the FY 2018 budget, the lack of outcomes achieved by Rhody Health Options under Neighborhood resulted in the recommendation not only to cut the administrative fees paid to Neighborhood but to return the program to the state to be run as a fee-for-service program, flying in the face of the mantra of investing in value, not volume.

Follow-up questions: Exactly how will the $12.2 million be reinvested? In terms of the anticipated cuts of up to 25 percent to 50 percent in revenues under a block grant program, would it make more sense to withdraw from the Integrated Care Initiative program and redistribute that money to respond to the challenges of Trumpcare? How much money would the state save by such a withdrawal?

The Senate committee members could also consider doing some homework on its own to analyze the outcomes and the money spent over the past four years, understanding what went wrong, as a prelude to reallocating scant resources under Trumpcare.

2.  How will the addition of more health insurers to manage the managed Medicaid population in Rhode Island decrease costs and improve outcomes?

In the weeds: Currently, two health insurers, Neighborhood Health Plan of Rhode Island, with a 67 percent share, and UnitedHealthcare of New England, with a 33 percent share, control the market for managed Medicaid. The state put out an RFP, and at least Tufts Health Plan responded, asking to get its share of the pie.

Follow-up questions: What are the economic advantages of including Tufts as a third managed care organization in this market? How will they improve the efficiencies of delivering care to the managed Medicaid population?

The addition promises to create more administrative costs for community health centers, cutting into their ability to recoup shared shavings under the reorganization of the managed Medicaid population into accountable entities.

When will the decision be made on the RFP about whether or not to offer Tufts its share of the pie? Would it make sense to postpone any such decision until after the details of Trumpcare are revealed?

3.  Under the Reinvention of Medicaid law enacted in 2015, the state was required to move the managed Medicaid population into what’s known as accountable entities. What are the shared savings to date that have been achieved under those accountable entities?

Into the weeds: In reality, what the plan to create a system of accountable entities accomplished was the inclusion of larger health systems into the mix of providers for the managed Medicaid population, to capture a share of that market, based upon a larger population base.

The mix of accountable entities now includes larger health systems such as Care New England, Lifespan, and CharterCare.

Follow-up questions: How does the cost of patient care by these larger health systems, in partnership with other health care providers, measured in per member per month costs, compare with those of current community health centers? And, how does this promote innovation and efficiencies in care, with better outcomes? How does the planned rollout of accountable entities for long-term care services for the managed Medicaid population intersect with the apparent failure by Rhody Health Options?

Another big question is how shared savings will be calculated for accountable entities going forward. If you’re a community health center, and you have achieved, say, a rate of $210 per member per month cost in the delivery of health care, one of the best in Rhode Island, moving that number further south, to $200 per member per month, may prove difficult.

However, if you are a larger conglomerate in an accountable entity, and your current cost of care is $340 per member per month, and you reduce that to $300 per member per month, the $40 decrease looks impressive – unless, of course, you compare the $300 per member per month to the $210 per member per month.

Which program should be rewarded? The program with the highest annual reduction of previous costs, or the program with the lowest costs?

4.   When will the $40 million owed to nursing homes in the state because of backlog in processing eligibility applications for long-term Medicaid services be paid? Where does that fit into the priorities of fixing glitches in the UHIP software system built by Deloitte?

In the weeds: The failures of the $364 million UHIP software system built by Deloitte have been well documented. Despite the efforts underway by the Raimondo administration to fix the glitches, the delays in paying nursing homes, with the backlog dating back more than a year, has put the nursing home industry in a financial crunch.

Follow-up questions: How have the glitches with UHIP raised the overall cost of the system from its $364 million price tag? What is the projected cost of having to rebuild or replace the software system built by Deloitte?

5.  Is the state willing to fund the expansion of Medicaid for Rhode Island residents, even if the federal government withdraws its 90 percent match? What kinds of new revenue streams and new taxes could support that effort? Is there a way to target a portion of the potential revenue, such as from the legalization of marijuana, to cover that expense?

In the weeds: Thousands of older Rhode Islanders risk being thrown off their Medicaid coverage if the federal funding of Medicaid expansion is canceled under Trumpcare, cutting a huge hole in the state’s safety net for its citizens. These are the very citizens where access to primary care can prevent the explosion of future Medicaid costs.

6.  What protections is the R.I. General Assembly willing to legislate as part of state law if Trumpcare is enacted? Protection of women’s rights to make decisions about their own health care? Parity in mental health and behavioral health spending by insurers? Support for substance abuse prevention and recovery?

7.   What are the potential cost savings that could be achieved by suspending payments to health IT infrastructure projects, such as the All Payers Claims Database, CurrentCare, and health IT efforts under the State Innovation Model?

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