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November 11, 2021
Sustainable Health Care Costs Peterson-Milbank Program for Sustainable Health Care Costs
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This month, Rhode Island became the sixth state to join the Peterson-Milbank Program for Sustainable Health Care Costs, which provides technical assistance to states with health care cost growth target initiatives. These efforts aim to improve the affordability of health care by working with payers, providers, employers, and consumer advocates to track and analyze — and ultimately contain — unsustainable health care spending growth. Patrick Tigue, Rhode Island’s health insurance commissioner, spoke with Milbank about Rhode Island’s progress on cost containment and next steps to enhance transparency, promote collective accountability to the target, and ensure long-term impact.
In 2018, a group of health care stakeholders from the public and private sectors acknowledged two things that led to the establishment of a health care cost growth target. First, the state had made considerable progress in enhancing health care affordability. Second, despite that progress, health care cost growth simply was not sustainable. All of the stakeholders recognized that there was a need to take further action to constrain health care costs because of the effect on the state’s economic wellbeing, on other policy priorities, and, ultimately, on the ability of people to access the health care that they needed to stay healthy.
I think the first primary benefit is the increased transparency that it’s brought not only to health care cost growth overall, but also to the specific drivers of health care cost growth in Rhode Island. That enhanced transparency has really been over and above what was possible prior to establishing the health care cost growth target. As a next step, and something that we are moving toward fairly rapidly, is leveraging that transparency to create more accountability for change.
We’ve done the foundational work and we will have to double down and see it through to produce outcomes related to constraining health care cost growth, and therefore improved affordability. First, as a baseline, we will continue the transparency and provide more robust health care cost growth data. When we release data this spring, we’ll be drilling down to the payer and provider entity level. We’ll be able to see performance by specific provider group or by specific payer group and the drivers that are causing a given organization to either be managing within the target or not.
Second, we have to focus on actions that will produce additional gains in affordability. Probably the most significant initiative is what we’re calling an advanced value-based payment subcommittee. We are looking for stakeholders—most importantly in this case payers and providers—to sign a voluntary compact that will have time-specific commitments to move the state to advanced value-based payment. Advanced value-based payment includes prospective payment, like hospital global budgets, global capitation, primary care sub-capitation, or episode-based payments. We believe that those methodologies can enhance quality while supporting achievement of the health care cost growth target.
Third is piloting accountability mechanisms. Right now, we see that taking the form of (1) public hearings around the cost and cost trend data, particularly with a focus on organizations that are not achieving the health care cost growth target, and (2) being able to issue performance improvement plans for those organizations that are underperforming.
A final priority is achieving a sustainable financing mechanism for this work. We have been funded generously through philanthropic contributions, but it ultimately needs to transition to a public financing mechanism.
The most significant challenge has been persuading many stakeholders, whether it’s members of the health care community or the broader public, of how the health care cost growth target model constrains costs—how we get from transparency and awareness of health care cost growth to taking actions that will have a demonstrable effect on mitigating health care cost growth, and therefore having a positive impact on affordability. Once you move immediately outside the circle of people actively doing the work, we have a real challenge with educating people about the growth target. And that’s why we’re so focused going forward on accountability.
We have a suite of initiatives focused on healthcare affordability in Rhode Island that we see as being complementary to one another. One tool that Rhode Island has on the commercial health insurance side is among the most robust health insurance rate review processes in the country. Here at the State of Rhode Island Office of the Health Insurance Commissioner, we require prior approval of rates in the individual market, small-group market, and large-group market. We have very rigorous standards that we apply to scrutinize rate increases proposed by commercial payers every year that include not just verifying that the rates are actuarily sound and not excessive but also subjecting them to a public interest standard.
We have very rigorous standards that we apply to scrutinize rate increases proposed by commercial payers every year that include not just verifying that the rates are actuarily sound and not excessive but also subjecting them to a public interest standard.
A second initiative is our Affordability Standards, which are requirements for commercial health insurers. They have to take very specific actions to enhance the affordability of health care and health insurance for individuals and employers. Probably the single most effective thing that the state has done to enhance health care affordability is our hospital rate cap, which limits the rate increases that commercial payers can grant hospitals on an annual basis to a measure of inflation plus 1%.
If you take rate review, the Affordability Standards, and other initiatives, adding the health care cost growth target is a way to create shared or symmetrical accountability across all the stakeholders in the system for health care cost growth management. Frankly, right now we have a very high degree of accountability for payers and government, but we have less accountability for providers.
We have the sustained engagement of a diverse group of stakeholders. Our steering committee, which is our governance body, involves constituencies such as consumer advocates, employers, payers, providers, government, as well as others. Those groups are all engaged at the highest level. We have leaders not only actively participating in the work but lending their expertise.
As you’re setting out to do this work, getting the buy-in from that diverse array of health care stakeholders is absolutely critical. You have to build that from the ground up through ongoing dialogue. It’s something that government has to play a foundational leadership role in, but it can’t stop with government. It has to extend outward toward to, first and foremost, the payers and providers. The voice of employers and consumer advocates is also incredibly important. Additionally, you need to think early on about the accountability mechanisms. What will the transparency around health care cost growth and the establishment of the target produce over the short-, medium-, and long-term in terms of greater affordability? Establishing the accountability model and getting buy-in — and communicating clearly about it — will not only make the work more effective, but also help you garner a wider array of supporters, because they’ll more clearly see the value in it. I think defining accountability is as important as defining the target at the outset.
At our office, we have explicit priorities that further diversity, equity, and inclusion. For the health care cost growth target initiative specifically, we think about representation, for example, on the steering committee to make sure the perspectives of communities of color and others are represented at that table. We are also thinking about how we prioritize and engage with those communities that historically have been disproportionately negatively impacted by health care costs. I think we all recognize there’s a lot more that we need to do here.
I hope to benefit from the experience of states that are at different points in the trajectory. Everyone is trying to think through this whole suite of issues to make cost containment work successful. Similarly, I hope to share the lessons from where we’ve been effective and where we’ve had challenges, so that other states can leverage our experience.
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