Delivery of Care

Ensuring affordability, access and quality

R.I. Health Insurance Commissioner Patrick Tigue charts a new course, with plans to introduce new affordability standards, and publishing a comprehensive analysis of the risks and opportunities in the proposed merger between Care New England and Lifespan

Photo by Richard Asinof

Patrick Tigue, the R.I.Health Insurance Commissioner.

By Richard Asinof
Posted 8/2/21
An in-depth interview with Patrick Tigue, R.I. Health Insurance Commissioner, talking about a new OHIC working paper that analyzes the risks and opportunities of a proposed merger of Care New England and Lifespan.
What is the best community forum to talk about the proposed merger of Care New England, Lifespan, and Brown? What kinds of conditions might R.I. Attorney General Peter Neronha impose on the proposed health system consolidation? If housing is health care, what kinds of investments in affordable housing can health insurers and health care delivery systems be required to make? What is the level of medical debt in Rhode Island?
With the change in Rhode Island’s health information exchange, CurrentCare, moving from opt-in to opt-out, the potential has been created for greater participation in the sharing of electronic health records. Moving forward, there are opportunities to create additional research projects that can take advantage of the state’s relatively small size and its robust, collaborative academic research enterprise.
Among the topics that might be explored are the ways in which Health Equity Zones have improved health outcomes in numerous Rhode Island communities. Another potential research project would be to look at the ways in which exposure to endocrine disruptors and toxic chemicals have resulted in increases in chronic diseases.

CRANSTON – The day before ConvergenceRI was scheduled to sit down for a lengthy, one-on-one interview with Patrick Tigue, the R.I. Health Insurance Commissioner, OHIC published a remarkable 25-page working paper on the proposed merger of Care New England and Lifespan [and Brown University], which, if approved, would create an integrated academic health system that would control approximately 80 percent of the market share of the state’s health care delivery system. [See link below to working paper.]

The document put forth a series of recommendations, based upon an extensive review of the best available evidence from the research literature, using the framework of OHIC’s statutory purpose to promote affordability and improve quality and access to health care.

“The available evidence clearly suggests that hospital consolidation leads to higher prices and that the evidence on the impact of hospital concentration on the quality of care is mixed,” the report found, in a surprisingly candid conclusion.

The interview began with a discussion of the working paper, and many of the questions posed by ConvergenceRI to Commissioner Tigue, not surprisingly, seemed to lead back to the findings from the working paper on the proposed merger.

Here is the ConvergenceRI interview with R.I. Health Insurance Commissioner Patrick Tigue, who is developing a strong voice when it comes to articulating future health care policies under the purview of OHIC.

ConvergenceRI: I saw the memo that got put out yesterday [June 29] about the proposed merger. And to me, it was fascinating. It was not required for you to write the memo, but it seemed as if you felt obligated to do so, to at least frame the issues. How are you framing the issues, in terms of what are the right questions to ask about the merger?
TIGUE: Thanks for the question, Richard. What you are referring to is the working paper that we published yesterday morning about the proposed Lifespan and Care New England merger.

You are correct; we are not required to put out such a paper. And so, in the working paper, we tried to look at it from the perspective of [what are] the potential effects of the proposed merger, should it be approved, and how would those effects impact OHIC’s statutory purpose.

Fundamentally, if you look at OHIC’s statutory purpose, it really does boil down to three goals: which are to improve access to the health care system, to improve affordability, and to improve quality.

And so, given the nature of the proposed merger of that size and scope, I think it is quite obvious, and it was substantiated by the data, that [the merger] would have a very significant impact on all those of public interest objectives.”

ConvergenceRI: You think?
TIGUE: [laughing] That is why I felt it was important for the Office to speak, and for me to speak, about how we, and I, are thinking about that issue.

I would characterize how the paper frames the issues as follows:

• First, I would point out what the paper expressly does not do, is that it does not take a position whether or not the merger should be approved.

The reason for that is that OHIC is not the regulatory entity charged with evaluating the transaction. That authority, as I think you know, rests at the federal level with the Federal Trade Commission, and here in the state, with both the Office of the R.I. Attorney General and the R.I. Department of Health.

I thought it was very important to be respectful of the regulatory [authority] of those other entities, to not take a position from the Office’s perspective about whether or not the merger should be approved.

But what the working paper does do is to evaluate what the likely impacts of the merger, if it is approved, could be for access, quality and cost.

• What the paper essentially says is this: the combination of our analysis of the data in our current market and the research literature strongly suggest that there would be both risks and opportunities related to that merger. But that the risks to have a negative impact on affordability without having a positive impact on quality are so significant that they warrant the strongest possible regulatory scrutiny and regulatory oversight, should it be approved.

ConvergenceRI: There is this huge pot of federal money that comes into Rhode Island through Medicare to support medical education. I have had difficulty trying to figure out where the money goes and how it is spent, and who is accountable for that money. Will that become a potential part of the regulatory recommendations regarding the proposed merger?
TIGUE: The funding through Medicare for medical education, as you alluded to, is not something that OHIC has authority or purview over.

In the working paper, for that very reason, we do look at, broadly speaking, the evidence in the literature about operating costs, which is not exactly analogous to that. What we found in the paper, based on the research literature, is that while there may be some potential for very small operating cost efficiencies that come out of a merger, that after a period of a few years, the efficiencies that are gained do not appear to be sustained.

ConvergenceRI: Another big issue with the proposed merger, I believe, will be the interoperability of data systems and electronic health records. Which I think does intersect with all three of OHIC’s goals – access, quality and costs.
If we are looking at access to data as part of the proposed merger, and something that falls within your regulatory purview to lower unnecessary costs and improve access, what is the right way to frame the question about achieving interoperability of data?
TIGUE: I think that is a great question, Richard, and I think about it in a couple of different ways.

The first would be, as it relates to the merger, specifically, is that certainly conceptually, one could imagine a conceptual benefit, an opportunity would be through a merged system to create an integrated system.

You also pointed out, which I think is likely correct as well, that even if that were the result, ultimately, of a merger, or a benefit that was very tangible and real, there would be a cost to achieving that benefit.

Because, to produce that integration, there would be transition costs that could be quite significant. I think it is fair to point to, over the long term, there could certainly be a benefit to having a more integrated data system, matching up with having an integrated hospital system.

However, what I would caution us  to do is to look at the research literature on these questions. You would expect that ultimately, if that would be the result, the literature would show that you would see improvements in quality that would result from that kind of integrated information system.

However, what you see in the research literature is that is not the case, that there is very mixed evidence on quality. There is really no evidence that quality improves as a result of larger mergers of hospital systems.

That does not mean that it is impossible or that it is conceptually not a possibility. I think that it is, but my message, what I wanted to emphasize, and what the paper emphasizes is this: we can’t take that conceptual potential benefit for granted.

We can’t assume that that is going to happen. We have to have the strongest possible regulatory oversight measures in place if a merger is approved to ensure that those kinds of benefits actually do come to fruition.

ConvergenceRI: Two follow-up questions. One is about the cost of achieving an interoperable data system, which promises to be phenomenal. Who pays for it? Is that a cost that is borne by the hospital entity? Is that a cost that is covered by an overhead charge, a facilities fee, to every patient who engages with the merged system? And, how would such costs be reflected in insurance premiums?
TIGUE: Given OHIC’s focus on affordability of health insurance, this is exactly why the working paper raises concerns about potential negative impact on affordability from a merger.

The questions that you pose, Richard, squarely reflects what the evidence shows us, again, in other markets, is that the question of who pays turns out to be, in the commercial health insurance market, commercial ratepayers. Meaning employers, employees and consumers in their premiums, because that’s the primary source of revenue for any provider system, be they merged or unmerged.

But what the literature also shows is that a highly consolidated entity will then wield its market power to extract very high prices from commercial payers. And, that will eventually accrue, as it has to for fiscal solvency reasons, to commercial ratepayers.

From my standpoint, because of that fact – and what is present in the research literature – that is why I think the proposed merger deserves the strongest possible scrutiny.

And, if it is approved, it again needs strong regulatory guardrails to ensure that that type of negative impacts on affordability does not come to pass.

ConvergenceRI: One of the lessons from the COVID-19 pandemic is that there were a large number of people who fell below the radar screen when it came to accessing primary care, who were uninsured or underinsured, in terms of administering testing and vaccinations.
Does there need to be new affordability standards in place to protect people who are underinsured or uninsured in terms of accessing care, beyond utilizing charitable care through emergency rooms?
TIGUE: I would respond by making two points. As it relates to the merger specifically, the exact points that you are raising, about ensuring that there is an obligation to address population health and improve health equity, because that is really at the core of what you are talking about – making investments that are targeted specifically in an evidence-based way in improving disparities in health outcomes that are certainly not limited to race and ethnicity but absolutely encompass them.

My view, and what the working paper articulates, is that because of the size and scale of what a merger would look like for Lifespan and Care New England, it is my view that if the merger were to be approved, there should be specific regulatory requirements placed on that entity to improve population health and health equity, and that there should be specific financial goals and incentives and disincentives tied to that obligation.

I would make an added point here. I think that the obligation in a merged entity, should it be approved, should extend not just to the patient that that system is serving, but because we are talking about a system that would [encompass] potentially 80 percent of the Rhode Island hospital market, I think it is fair in this case to apply responsibility for statewide performance in health outcomes and in health equity.

Normally, that would not be reasonable, because an individual doctor’s office or an individual health care system cannot reach the entire population. But again, the merged entity we are talking about, with the size and the scope that we are considering and contemplating as a state, I think it can and should have the obligation to address health equity and population health on a statewide scale.

The second point I would raise, you mentioned our affordability standards. One thing that I am potentially most excited about in working with the team at OHIC and with stakeholders is that we are looking right now at developing what we are calling our next generation affordability standards. We have developed our initial concept presentation.

One of the standards, the second proposed standard that we are developing in an exploratory phase [we will move into a more formal rule-making process down the line], is specifically focused on commercial health insurer community investment to address health equity and social determinants of health.

So, to answer you question globally about where should that responsibility lie, it should lie with both provider systems – certainly a provider system the size and scope of what is being considered in the Lifespan/Care New England merger – and the payers as well, the commercial health insurers, who have an obligation, in my view, to specifically make investments to address those things and improve population health, affordability.and health equity.

ConvergenceRI: Another piece of the policy and fiscal puzzle related to the potential merger is crafting a statewide policy about coordinating care in emergency rooms and the diversion of ambulances.
TIGUE: I have not looked at the issue of diversion closely, but my understanding is that ultimately it would fall under the regulatory purview of the R.I. Department of Health.

But from a broader policy perspective, if you think of it in the context of the proposed merger between Lifespan and Care New England, an entity with that size, scope and resources could be accountable for proactively addressing the emergency room policies, for bringing creative solutions to the table, for thinking through what is in the best interests of Rhode Islanders, in a way that can reduce costs while improving quality and the experience of the individuals who need to be placed in the appropriate care setting, in a timely way.

My message overall would be that we should not assume that this type of an issue, without proper regulatory oversight, would be naturally addressed by a proposed merged entity. But if that entity does come to pass, there should be strong regulatory accountability mechanisms.

ConvergenceRI: I recently interviewed the new president and CEO of Blue Cross and Blue Shield of Rhode Island, Martha Wofford. In preparing for the interview, I asked a number of folks involved with health care – neurologists, physical therapists, primary care physician assistants, social workers, and nurses – what questions they would want to ask if they could meet with Wofford. The overwhelming majority responded with questions about the practice of co-pays.
Is it in OHIC’s purview to ask about the value of co-pays? And, how they affect access to health care? Do they add value to the insurer’s bottom line?
TIGUE: It is absolutely true that cost-sharing, which includes co-payment and co-insurance as well as deductibles, have been a long-standing feature as you know, Richard, of the commercial health insurance market.

You are right, however, that these are squarely in our purview at OHIC to review the benefit designs that the insurers in the commercial market offer, of which cost-sharing is part of that, as well as the clinical services that are ultimately covered.

As I think you are aware, in addition to reviewing annual premiums that the insurers propose to charge, we also review their plan designs every year, as part of the form review process, which is a parallel process along with our rate review process.

The first question that you have to address is: does it conform to federal and state requirements? Much as we look at the rates, we also ask the question: is it in the public interest? And, does this type of cost-sharing create an undue barrier to access? And, then we look at the benefit design and the way it is structured and the way that cost-sharing is imposed and how that is related to the cost of premiums.

That has to be the first question that you ask. And then look at the beneift design and the way it is structured or the way that the cost-sharing is imposed and also how that is related to premiums.

I would say broadly, in my general view, even though many plans with very high cost sharing, whether it is the form of co-pays, deductibles or co-insurance, those may very well be regulatory permissible.

The fact that plan designs are put forward that have very, very high cost sharing on consumers, and that is the only way to achieve what is viewed as being a more affordable premium.

That just shows that the work that we have left to do to actually address underlying health care costs. It should not be the only way that we are achieving lower cost premiums is through having extremely high cost sharing. That is not then ultimately benefiting the consumer or serving the system.

That is one of the things that animates why I want to do this work, because we have so much work left to do. Where we are today is not where I believe we need to go.


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