Delivery of Care

Distraction rules: Are $8B in annual health costs the ‘third rail’ in RI politics?

Major discussion of health care spending trends in RI was “not covered” by news media

Photo by Richard Asinof

Dr. G. Alan Kurose, second from left, talks about the new Value Based Payment Compact, with Michael Bailit, from Bailit Health, Michele Lederberg, from Blue Cross and Blue Shield of Rhode Island, and R.I. Health Insurance Commissioner Patrick Tigue.

By Richard Asinof
Posted 5/2/22
A critical public conversation occurred around the findings of the 2020 health care cost trends analysis in Rhode Island, the year when the COVID pandemic disrupted and swept away the status quo in health care, but the event was “not covered” by the news media in Rhode Island.
As the conditions related to long COVID continue to emerge, including liver, kidney, brain and lung conditions, what kinds of changes to health insurance coverage are needed to address these health conditions? As Rhode Island grapples with continuing climate emergencies, what is the best way to calculate the health costs associated with exposure to toxics and pollutants from plastics, from air emissions, and from water pollution? What are the health costs of gun violence to gun-shot victims in Rhode Island? How can community health centers have a greater voice in shaping health insurance policies around payment methodologies? Will OHIC conduct a cost-benefit analysis of how cost-sharing – in particular co-pays and co-insurance – influence the actual bottom-line margin for health insurers in Rhode Island?
The day after the public gathering to discuss the cost trends analyses for 2020 for health care spending in Rhode Island, consumer groups and advocates testified en masse in favor of legislation that would enable the R.I. General Assembly to increase rates for Medicaid providers beginning in FY 2024. [See link below to ConvergenceRI story, “Rate setting becomes a legislative priority.”]
The irony, of course, is that the failure to raise Medicaid rates was not a major focus of the cost trends analysis discussion – in part because it would require new investments and new costs for the overall health care system.
The current McKee administration is attempting to reduce its liabilities for potential Medicaid costs at Eleanor Slater Hospital, because any more long-term, mentally ill patients as the current care system is configured, will result in tens of millions of dollars in Medicaid costs. But, at the same time, it has not included in its proposed budget increases in spending on Medicaid reimbursements for community providers for mental health and behavioral health services. Call it a kind of cognitive dissonance when it comes to health care investments.
In Rhode Island, where nearly 350,000 of all residents – some 38 percent – are Medicaid members, it becomes an increasingly risky political calculation to think that those residents receiving Medicaid will not vote in the upcoming election.

PART One

WARWICK – Let’s begin at the beginning. First, you will not read this story in any other news outlet in Rhode Island – not the Boston Globe, not the Providence Journal, not the Providence Business News, not WPRI, not WJAR, not The Public’s Radio, nowhere else. Why not?

The fact that Rhode Island spent $7.98 billion on health care spending in 2020 is not newsworthy, apparently. [If you add in the $580 million in federal COVID funds provided to providers and the $275 million in payments disbursed by the R.I. Executive Office of Health and Human Services, the total amount was nearly $9 billion.]

Not too shabby when it comes to spending by the largest private industry jobs sector in Rhode Island. It is the hole in daddy’s and mommy’s arm where all the money goes, to paraphrase John Prine and his lyrics about Sam Spade – after paying for rent, daycare, car loans, student loans, and groceries, liquor and weed. Not to mention taxes.

The big question, of course, is: How, where, and what was all the money spent on? The answers, in part, can be found in the RI Health Care Cost Trends Project 2020 Cost Growth Target Performance, which was publicly presented on Wednesday morning, April 27, at the Crowne Plaza. The bigger questions, not fully addressed, were these: What was the value of the money being spent? And, how do we measure that value in outcomes?

Translated, if only 10 percent of all health outcomes are the result of a visit to a doctor’s or a nurse’s clinical offices, what is the return on investment?

The church of reason
Attending the public forum discussion around the release on the analysis of the 2020 health care spending in Rhode Island as the only news reporter present was a bit like attending a religious service in the church of reason, when you are the only agnostic.

The other problem, of course, is that belief in the church of reason and in science has been swept away by a wave of irrationality and disinformation that is the grist of our partisan politics today.

For sure, many, if not all of the poobahs of health care were in the room, a veritable who’s who of the health care industry in Rhode Island. After more than a decade spent covering the delivery of health care in Rhode Island, most of the faces were familiar; many were executives that ConvergenceRI had interviewed. Many of the players, it seemed, have remained the same, but all of us, in ConvergenceRI’s opinion, looked older and grayer. It was not just the toll that COVID-19 had taken.

Setting the stage
As ConvergenceRI entered the gathering, 45 minutes late, walking with an unsteady gait, leaning on his trekking poles for support because his legs were no longer responding well to nerve impulses, looking for a seat in the back of the room of the Narragansett Ballroom, there were several nods, brief smiles of acknowledgement and even a wave or two of greetings from those in the crowd: Dr. Elizabeth Lange, pediatrician, and president of the Rhode Island Medical Society; Teresa Paiva Weed, president of the Hospital Association of Rhode Island; Richard Glucksman, senior staff attorney at Blue Cross and Blue Shield of Rhode Island, and Christopher Koller, president of the Milbank Memorial Fund.

Gov. Dan McKee had provided opening remarks – for an event that was not on his public schedule, sharing the stage with R.I. OHIC Commissioner Patrick Tigue.

The introductory panel, “Employer and Consumer Perspectives on Affordability and the Importance of Controlling Cost Trends, featured Al Charbonneau, executive director of the Rhode Island Business Group on Health, Sam Salganik, executive director of Rhode Island Parent Information Network, and David Kastseff, president of MasterCast LTD, a plastics manufacturer in Pawtucket. The session was in mid-stream when ConvergenceRI arrived.

Nuance and context
The public forum had been convened to discuss the findings of the spending trends analysis for 2020 by Bailit Health, conducted at the behest of the R.I. Office of the Health Insurance Commissioner, and released last month. [See link below to ConvergenceRI story, “The bigger disconnect.”]

The gist of the back story goes like this: In December of 2018, a public-private partnership was established to create a compact to try to limit the increase in health care spending to 3.2 percent a year in Rhode Island – a spending cap without calling it a cap. The compact was formalized in an executive order in February of 2019 by then Gov. Gina Raimondo, marked by a ceremony at the School of Public Health at Brown University. [See link below to ConvvergenceRI story, “Annual cap of 3.2 percent put on health care costs in RI.”]

The two previous analyses conducted on health care spending showed that the health care industry had failed to meet the goal of 3.2 percent per capita annual growth cost, with prescription drug costs being the biggest driver of higher costs. [See link below to ConvergenceRI story, “Prescription drugs, not utilization, are driving high health cost in RI.”]

• In 2018, baseline spending in Rhode Island on health care increased by 4.4 percent.

• In 2019, baseline spending in Rhode Island on health care increased by 4.1 percent

Then came the coronavirus pandemic, and whoosh, it disrupted all the assumptions about health care delivery and health care spending. The most recent analysis found that there had been a dramatic decrease in health care spending during 2020, with baseline spending in Rhode Island falling by 2.9 percent.

However, the Bailit Health analysis admitted, the 2020 cost trends analysis would need to have an asterisk and be seen as an anomaly. [And, for that matter, probably 2021 will need a similar asterisk.]

As ConvergenceRI had reported: Any conclusions drawn from the data require a number of caveats. The problem, as the 51-page report acknowledged at the beginning of the document: “The 2020 reporting year was unique because of aberrant health care utilization [emphasis added] and spending due to the global COVID-19 pandemic.”

The ConvergenceRI reporting continued: How steep was the drop in utilization in 2020? OHIC found that inpatient admissions dropped 6.2 percent in 2020 in the commercial insurance market, and as much as 8.1 percent in the individual insurance market, based on last year’s rate filings by health insurers.

Messages and messaging
The April 27 public forum was recorded and taped, no doubt to be preserved in the annals and archives of health care conversations.

In a handout to participants, the R.I. Office of the Health Insurance Commissioner laid out the messages and messaging for the event:

• Reasons for taking actions to address health care cost trends

“Health care costs are growing faster than the Rhode Island economy, consuming a significant and increasing of household income, business revenue, and state and municipal budgets,” the handout said.

As a result, the handout continued, “The positive impacts of employee wage growth and business revenue growth is reduced, and public investments in education, transportation, and economic development outside of the health care sector are diminished.”

• Impact of growing health costs on RI residents is tangible

“Since 2001, Rhode Island worker contributions to employer-sponsored insurance premiums have grown nearly three times faster than personal income,” the handout said.

“As a result of rising premiums and cost sharing, 31 cents of every additional dollar earned by middle-income Rhode Island families between 2017 and 2019 went to health care.,” the handout continued. “As a result, Rhode Island families have fewer resources for investing in daily needs, housing, education, and savings.”

• Rhode Island residents are forgoing care due to cost

Further, the handout claimed, the high costs were creating large gaps in health care. “Despite the high rates of residents that are fully insured, a recent survey finds that tens of thousands of residents delayed or skipped care due to cost between 2015 and 2020.” The handout pointed the finger at the causes: “This reflects the rising cost of co-payments, deductibles, and other cost-sharing that are the result of health care costs.”

Translated, the ever-increasing costs of health care are not sustainable, from an economic or political standpoint. The unstated conclusion, in ConvergenceRI’s opinion, is that, at some point, consumers are going to rebel, upending the status quo.

What comes next?
Whatever the conversations from the podium, the real “news” at the event was the public presentation of a new compact – The Rhode Island Value-Based Payment Compact, composed of what might be called the “usual suspects”; Amica, Blue Cross and Blue Shield Of Rhode Island, Brown University, Care New England, Coastal Medical, CVS Health, Hospital Association of Rhode Island, Hope Health, Lifespan, Neighborhood Health Plan of Rhode Island, Point32 Health, Prospect Health Services of Rhode Island, Rhode Island Business Group on Health, R.I. EOHHS, Rhode Island Foundation, Rhode Island Medical Society, R.I. OHIC, Rhode Island Parent Information Network, Rhode Island Public Expenditure Council, and WellOne.

The goals of the effort were to come up with three such value-based payment models: one for hospital global budgets, a second for prospective payments for high volume and high cost specialty care providers not employed by hospitals; and third, prospective payments for primary care.

The discussion about the new value-based compact was facilitated by Michael Bailit, the principal at Bailit Health, and it featured Commissioner Tigue, Michele Lederberg, executive vice president and chief legal officer at Blue Cross and Blue Shield of Rhode Island, and Dr. G. Alan Kurose, president of Coastal Medical and senior vice president for Primary Care and Population Health at Lifespan [which acquired Coastal Medical in 2021]. Kurose is also the chair of the board of the Rhode Island Foundation.

In the question-and-answer period that followed the presentation, ConvergenceRI did ask the panel how “prevention” became part of the value equation for value-based care, with the ability to make investments in health care that would reduce future health care costs, raising the issue of the current low rates of Medicaid reimbursements for providers of mental health and behavioral health services could be addressed.

The panelists sought to assure ConvergenceRi that such prevention calculations would become part of the cost equation of more holistic health care, moving away from fee-for-service care.

The takeaways
For ConvergenceRI, much of the conversation seemed eerily reminiscent of previous gatherings of health care industry leaders held over the past 13 years. The conversation often seemed to be taking place very high up on the mountain, far removed from consumers. And the participants, all of whom were erudite and eloquent, often seemed to be talking to themselves, about themselves, for themselves.

A paraphrasing of lines from T.S. Eliot’s poem, “The Love Song of J. Alfred Prufrock,” came to ConvergenceRI’s mind, as he jotted down notes:

Let us go the, you and I/
When the evening is spread out against the sky/
Like a patient etherized upon table…

…In the room the medical professionals come and go,
talking of coronavirus…”

Following the public gathering, ConvergenceRI reached out to a number of the participants to get their impressions of the conversation about the cost trends.

Christopher Koller, president of the Milbank Memorial Fund, and the original R.I Health Insurance Commissioner [and who received a shout-out from Dr. Kurose during the discussion about value-based payment plans for Koller’s work in creating affordability standards and investments in primary care], replied to a number of questions.

ConvergenceRI: What were your impressions of the 2020 cost trend analyses?
KOLLER: Money spent on health care is money not available for take home wages and investments in other areas – like education and housing – that can improve our lives.

The easiest way to make health care more affordable for me is to make it more expensive for you. But, improving health care affordability for all of us means looking at system costs, trends and drivers.

That is what the cost trends analysis is doing, and Rhode Island is leading the country. The findings for 2020 show the short-term effects of the pandemic and the persistent long-term challenges in this work.

The biggest challenge is that Medicaid and Medicare set provider rates, and commercial rates are privately negotiated. We need much more consistency.

ConvergenceRI: What steps need to be taken to rein in retail pharmacy costs in Rhode Island?
KOLLER: This requires parallel action at the state and federal levels. In state we can use reference pricing to limit extreme increases and address a few high-priced drugs. This must be accompanied by pressure for federal action in areas like patent-level reforms and stronger Medicare rate setting.

ConvergenceRI: How can investments in prevention be measured in cost calculations as an important cost factor?
KOLLER: Our public health investments are a pittance compared to the spending documented in the cost trends project. The pandemic should have taught us that investments in prevention should not be justified by short-term returns, just like we don’t “invest” in roads or sewers for short-term gains.

ConvergenceRI: How can value-based care be measured in specialty care?
KOLLER: Much has been written about how much of specialty care does not yield valuable diagnostic information or change health status – it does not add value.

As patients, we experience this as lots of testing – and doctor visits that do not change our treatment. Economics are very influential – so long as we pay providers to perform individual services, we will get a lot of services. I also think we need to use insurance benefits and provider payments to encourage everyone to declare a usual source of care – a provider team we know and trust.

ConvergenceRI: How do patients participate in the process?
KOLLER: First of all – we need to take care of ourselves and one another The pandemic has shown us how much we are connected.

More broadly - just like discussions of economics and jobs, we all have a stake in the cost trends work as citizens, not just as patients. This is about good public policy.

We need to care about getting everybody covered with health insurance, and how we can have trustworthy regular sources of care, strong locally governed systems of care and more money in our paychecks. That means supporting public oversight like the cost trends project.

ConvergenceRI also reached out to Teresa Paiiva Weed, the president of the Hospital Association of Rhode Island. Here are her responses.

ConvergenceRI: What were your takeaways from the cost trends report this morning?
PAIVA WEED: HARI supports efforts to identify the cost drivers in health care. Pharmacy continues to be a key driver of costs, even during a pandemic. The short-term impacts of the pandemic on health care was evident.

ConvergenceRI: Was anything missing from the discussion?
PAIVA WEED: Regional comparisons are necessarily a critical part of the discussion, particularly because of the regional competition for workforce.

ConvergenceRI: What is your view of the value based compact?
PAIVA WEED: HARI supports the Compact and the goals set forth therein, providing high quality care, in an appropriate setting at a reasonable cost.

We look forward to continuing to work with OHIC to develop Advanced Value Payment Models that will provide a foundation for a financially stable health care and hospital industry in Rhode Island.

In addition, ConvergenceRI also reached out to R.I. Health Insurance Patrick Tigue, the sponsor and organizer of the April 27 event, to garner his impressions of the conversations t hat occurred.

ConvergenceRI: Were you pleased with the conversations and questions at the meeting? What conversations stood out for you?
TIGUE: The Rhode Island Health Care Cost Trends Public Forum proved to be a unique opportunity to further understand and discuss progress toward solutions to the problem of health care affordability in Rhode Island.

The conversations that occurred were particularly notable and important for putting this problem in the context of overall health system performance.

I felt that the Employer and Consumer Perspectives on Affordability and the Importance of Controlling Cost Trends panel most stood out by emphasizing the impact that unsustainable health care cost growth has on consumers and employers in our state and the difficult tradeoffs this forces for Rhode Islanders. It should remind us all in government and those at payers and providers that we have to do better.

ConvergenceRI: What metrics should be used to evaluate the success of the new initiative launched, RI’s Value-Based Payment Compact?
TIGUE: The ultimate success of the Compact to Accelerate Advanced Value-Based Payment Model Adoption in Rhode Island should be judged in the years to come on whether or not it has supported a transformation in how health care is paid for in Rhode Island, such that Rhode Islanders experience improved affordability while also seeing the reorientation of care delivery to better meet population health needs and improve access, equity, patient experience, and quality. It is an ambitious and urgent effort.

ConvergenceRI: How does prevention become a cost-factor value in the equation for calculating health care costs?
TIGUE: The current fee-for-service [FFS] financing system for health care creates a financial reward for increasing the volume of health care services without consideration of quality, and so it does not support efforts to focus on prevention, which are critical to improving health outcomes.

Shifting payment away from FFS to a prospective budget-based model can support improved affordability, quality of care, and flexibility for providers to care for patients in the right way at the right time – including engaging in activities that do support prevention.

ConvergenceRI: What lessons have been learned about health care costs as we move into the third year of the pandemic?
TIGUE: Specific to health care costs, the coronavirus disease 2019 public health emergency has reinforced the inadequacy of the FFS payment model, because when providers were unable to deliver services in the same volume as previously was the case, their financial viability was fundamentally undermined.

This created enormous risks in the short-term and long-term by threatening the ability of providers to care for patients and keep them healthy. If advanced value-based payment models had been dominant, this risk would have been significantly mitigated.

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