CRANSTON – These days, so much of the state’s economic and political future revolves around health care: the proposed merger of the two largest health systems, Care New England and Lifespan, in partnership with Brown University; the continuing crisis around the contagious spread of COVID-19 and the Delta variant, where resistance by some to getting vaccinated and wearing masks threatens to upend school openings; and the escalation in overdoses and deaths caused by the opioid epidemic, despite efforts to attach legal liability to drug manufacturers and distributors.

And, of course, there is the continuing saga of the increasing high costs of health care delivery, driven here in Rhode Island by pharmacy costs, according to the latest data analyses.

From the national perspective, the U.S. spends the highest percentage of its gross domestic product on health care, compared to 11 other wealthy industrialized nations, but ranks last in access to health care, according to an analysis by the Commonwealth Fund. The report found that the U.S. ranked last on access to care, administrative efficiency, equity, and health care outcomes, despite spending 17 percent of GDP on health care.

The question is: What can be done to control health care spending here in Rhode Island?

On June 28, the R.I. Office of the Health Insurance Commissioner released the 2022 requested commercial health insurance rates for review.

“I am concerned by many of the requested premium increases,” said R.I. Health Insurance Commissioner Patrick M. Tigue, in a news release accompanying the publishing of the requested rate increases. “Recently, health insurers have generated substantial profits as a result of the reduction in medical services during the coronavirus disease 2019 public health emergency. My office will scrutinize the requested increases and critically evaluate the necessity of significant increases, given the overall financial health of the insurers.”

At the same time, OHIC will be reviewing each health insurer’s coverage and benefit contracts with consumers to ensure that plans sold in Rhode Island meet all benefit, access, and member cost sharing required by state and federal law. A decision by OHIC to approve, modify, or reject the proposed rates is expected in mid-to-late August.

• The proposed individual market requests for 2022 revealed that Blue Cross Blue Shield of Rhode Island requested a 3.1 percent increase, while Neighborhood Health Plan of Rhode Island requested an 8.5 increase.

• The proposed small group market requests for 2022 revealed that Blue Cross Blue Shield of Rhode Island asked for a 2.9 percent increase, Neighborhood Health Plan of Rhode Island asked for a 6.5 percent increase, UnitedHealthcare asked for a 17.5 percent increase for its HMO plans and a 10.7 percent increase for its PPO plans, and Tufts Health Plan asked for a 5.2 percent increase for its HMO plans and 5.1 percent increase for its PPO plans.

• The proposed large group market requests for 2022 revealed that Blue Cross Blue Shield of Rhode Island is seeking a 7.4 percent increase, UnitedHealthcare is seeking a 14.1 percent increase, Tufts Health Plan is seeking a 9.1 percent increase for both its HMO and PPO plans, Aetna is seeking a 9.0 percent increase, and CIGNA is seeking a 5.3 percent increase.

Translated, the increased costs of health insurance show no signs of diminishing in 2022, despite the due diligence of OHIC to exert its regulatory authority to improve access, improve quality, and increase affordability.

Tracking the high cost of health care
In ConvergenceRI’s recent interview with R.I. Health Insurance Commissioner Patrick Tigue, in addition to talking about a working paper the agency drafted looking at the risks and opportunities of the proposed merger, there was also an in-depth dialogue around the potential to develop new affordability standards. [See link below to ConvergenceRI story, “Ensuring affordability, access and quality.”]

One topic concerned the controversial use of the practice of step therapy by health insurers as a method to control costs, through which a patient needs to move through a series of lower-priced drug interventions before receiving authorization for the higher-priced treatment.

[It was an issue raised by a neurologist and a primary care physician, when ConvergenceRI asked them for what question they would like to ask Blue Cross and Blue Shield of Rhode Island President and CEO Martha Wofford; see link below to ConvergenceRI story, “Ensuring better access and more health equity.”]

ConvergenceRI: Is the practice of what is known as “step therapy” as a cost containment technique deployed by health insurers something that falls under the purview of OHIC?
TIGUE: Step therapy deserves scrutiny, in my opinion. It concerns me that [the practice] can function as a barrier to access.

[We need to ask:] What are the most efficient ways to contain costs? Are there more global ways that can help us to contain cost that do not have these [alleged] adverse impacts on patients?

To give a concrete example of that, in contrast to imposing co-payments on particular services, or as you said, step therapy, I would much rather see our emphasis be on moving the system holistically toward value–based payment, where we are not rewarding volume, where we are actually paying for quality outcomes and value.

Obviously, health policy experts say that all the time. But that is where our efforts should be focused, not on these individual types of efforts, even if they are permissible from a regulatory standpoint.

I think that containing costs is critically important, because that obviously is what is directly related to maintaining affordability.

Regulating the cost of specialty care
Another focus of the conversation was looking at the degree to which specialty care, differentiated from how inpatient and outpatient care by hospital systems, was regulated.

ConvergenceRI: How is specialty care regulated when it comes to health insurance plans, looking at value-based care?
TIGUE: This is actually another area in the next generation of affordability standards that we are considering.

That area, physician services, which includes specialty services, is commonly referred to as “professional services” in our field.

Historically, OHIC, through our regulation of the payers, has worked to contain the growth of inpatient and outpatient costs. OHIC has not done work, historically, on professional services. That is an area that we considering expressly for the next generation affordability standards, for the exact conceptual reason that you are alluding to, that so far, that is an unregulated area of our market.

Rhode Island has been quite successful historically at containing inpatient and outpatient hospital costs. But we have not been successful in many cases in doing that on the professional services side. We need to think about addressing physician services and specialty services, in particular, in terms of prices, price growth, and price variation. It can have a very negative impact on affordability.

Drug prices as the driver of higher medical costs
Recent data analyses conducted in partnership with OHIC identified that rising medical costs were being driven by higher drug costs, not utilization. [See link below to ConvergenceRI story, “Prescription drugs, not utilization, are driving higher health costs in RI.”]

ConvergenceRI: The most recent market analyses showed that pharmacy costs, not utilization, were the driver of higher medical costs in Rhode Island, across all areas of the market, in commercial insurance, in Medicare and Medicaid. Yet there appears to be little or no regulation of drug pricing.
TIGUE: It is an absolutely critical issue, and I would be even more precise. With pharmacy costs, when you dig a little deeper on the data for issue, it is not the volume of drugs being prescribed; it is unit price that is driving that overall cost.

And, you are absolutely right. In the commercial market, one of the most significant drivers of health insurance premium increases are pharmaceutical price increases.

I absolutely think it is something that needs to be addressed. It is something that is most amenable to federal policy action. However, because I don’t have any confidence in the short term that we are going to see short-term federal action, although that would be incredibly welcome.

In my view, I think that we have to strongly consider what are our options for taking state action. One approach that OHIC testified in favor of this past legislative session, there was action in both chambers of the legislature to consider a bill to establish reference pricing as a model for containing pharmacy costs. [The bill would have] pegged the cost that is paid for a specific drug to external benchmarks, which are significantly lower, particularly when you look at international benchmarks.

Infusion policies
The recent FDA approval of a new drug to treat Alzheimer’s, which is administered through an infusion treatment, has raised questions about the payment models for the drug, for which initial projections had Medicare paying some $26 billion next year.

As a subset of drug pricing, ConvergenceRI asked Tigue about the costs of expensive drugs used in infusion treatments and how they might become part a broader examination of drug-pricing regulation.

ConvergenceRI: Has there been any study of the role that the costs of drugs used in infusion treatments factor into the overall increases in drug pricing?
TIGUE: I am not aware of any analysis that has been done to look at the issue, at infusion specifically.

It could be included as an important feature of annual rate review process that is one of the important features of our annual rate review process. Obviously, the first focus is on the data that is collected to make an informed judgment on the decision whether the requested rates should be approved, modified, or rejected, but as a secondary benefit for the state and the public interest, we can collect a wide range of data, to your point, Richard, that can be used for other public interest objectives.