Delivery of Care

Measuring annual spending in an $8 billion industry

OHIC convenes a public forum on spending trends, acknowledging that there is a need to spend more money on the workforce, primary care, and outpatient behavioral health

Photo by Richard Asinof

Cory King, Acting R.I. Health Insurance Commissioner, speaking at the public forum on Health Care Spending Trends in Rhode Island, held on Monday, May 8.

By Richard Asinof
Posted 5/15/23
OHIC holds a public forum on health care spending trends, analyzing 2021 and measuring how costs grew against a 3.2 percent annual standard.
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WARWICK – When it comes to health care reporting in Rhode Island, there is what seems to be a huge credibility gap – as well as a knowledge gap.

Despite the best efforts of the R.I. Office of the Health Insurance Commissioner and its current acting commissioner, Cory King, the public forum for the Rhode Island Health Care Spending Trends, held on Monday morning, May 8, at the Crowne Plaza, attracted only one reporter – ConvergenceRI. That was a terrible showing by journalists allegedly covering an annual $8 billion industry in Rhode Island.

The gathering did attract most of the top health care industry leaders in Rhode Island – call them the poobahs, with no disrespect intended.

Most if not all of the top decision-makers and policy gurus were there to take in the latest data analyses, examining health care spending and quality in Rhode Island based on the 2021 performance. The data measurements detailed the performance of the health industry sector in Rhode Island against the target of a 3.2 annual percentage growth rate.

The quality of the analyses during the three-hour session – and the questions and dialogue that followed – were superb, in ConvergenceRI’s opinion.

It was the kind of honest, transparent discussion that is often lacking when key health stakeholders get together and are often more concerned about protecting their turf rather than solving ongoing health industry dilemmas – such as the lack of primary care providers in Rhode Island, the continuing workforce crisis that is afflicting every sector of the industry, and the conundrum regarding fast-rising retail pharmacy costs [which in previous years, had been a major driver of spending increases, but for 2021, was not – an aberration attributed in part to some $420 million in pharmacy rebates.

The other big factor, it turned out, was Medicaid spending reductions in 2021 as measured per member per year; otherwise, the state-level spending trend would have far exceeded the 3.2 percent annual target.

Here is an overview of some of the key trends that were identified:

• Hospital outpatient led spending growth at the state level in 2021.

• While spending for Rhode Island’s commercial trend, at 9.7 percent, was far above the 3.2 percent target, it was significantly below that of neighboring states, such as Connecticut and Massachusetts.

• None of the ACO’s Medicare Advantage products in the market – Coastal Medical, Integra, Lifespan, and Prospect CharterCARE – met the spending target.

• None of the commercial ACOs in the market – Coastal Medical, Integra Community Care Network, Lifespan, and Prospect CharterCare – met the spending target.

• Four of the six Medicaid Accountable Entities met the target – Providence Community Health Centers, Coastal Medical, Integra, and Integrated Healthcare Partners. Two others – Blackstone Valley Community Health Center and Prospect CharterCARE – could not be determined if they met the target performance.

• In terms of “quality” measures, the statewide commercial performance on the ACO core measures, such as for breast cancer screening, comprehensive diabetes care, and developmental screening in the first three years of life, the statewide performance measures exceeded the 90th percentile in eight of nine categories.

• But for the statewide Medicaid Performance on the ACO Care measures, only one out of nine catgories exceeded the 90th percentile.

Insights, transparency, new dashboards, and challenges
Later in the week following the public forum, ConverenceRI spoke with Cory King, the acting OHIC Commissioner.

ConvergenceRI: It was a fascinating session.You had all the poobahs there.
KING: We did. [laughing]. There was a really good panel discussion. We are aware that there are a lot of challenges that the health care system is confronting, particularly of a workforce nature, and we have to navigate that.

But, at the same time, we have to keep our eye on overall cost growth. And to make the investments we need to make. And to manage costs in areas that we can manage. So…

I was pleased over all with the way that the day went. And I was pleased with the turnout and I am really proud of the fact that we have some analysis and particularly some new data tools that are available to the public to create more transparency around health care costs and quality improvement, too.

ConvergenceRI: For a number of previous years, prescription drug costs have been driving the overall increase in costs. It seemed that this year, they fell, perhaps because drug companies had offered $420 million in rebates.
KING: We think that, too. Perhaps, there could have been an uptick in the amount rebated.

There may have been other [factors], too, that impact prescription drug costs, such as the mix of generic and brands that are on the market.

We were only focusing on retail pharmacy trends, There are pharmaceuticals, there are drugs that are included in the hospital outpatient bucket, like physician-administered drugs, and those are not teased out tin the aggregate analysis.

This was a bit of a unique year, in that that prescription drugs were not a core driver of overall cost growth, though I suspect that may be an aberration.

ConvergenceRI: The other big question I had related to the data analysis was this: what’s going on with Medicaid?
KING: In terms of the trends, and the negative growth rate?

ConvergenceRI: Yes. The fact that that was the major reason why costs trends for 2021 were under the 3.2 percent standard, seemed a bit “bizarre” to me.
KING: I will tell you this. While the way we analyzed the data for the state as a whole, and compared to that cost growth target, it’s a little bit different than how we compare costs at the market level.

So, for the state as a whole, there is one thing that is not in the market level analysis. We aggregate what we call the net costs of private health insurance. It was Medicaid and the net cost of private health insurance that had sort of the depressing effect on overall cost growth.

But for Medicaid, frankly, and this is something that I don’t have the specific numbers on it, I feel like Medicaid enrollment has grown a lot in the last two years, and obviously, people have not been taken off the rolls until we started to do that recently.

And, I consider that negative Medicaid spending growth rate as just an artifact of people staying on those Medicaid rolls. [Editor’s Note: In March, there were some 365,000 Rhode Islanders on Medicaid, more than a third of the state’s population., With the end of the federal COVID emergency, al Medicaid members are being recertified.]

And then, they were probably, going and getting private insurance. So, yes, I think I mentioned it during the meeting; but I don’t have a sense of how prevalent that is.

You’d have to look at eligibility tables between private insurance and Medicaid and figure out, who was on Medicaid at any given time, who stayed there, and then who moved to private insurance, or aged onto Medicare.

But as people stayed on the Medicaid rolls, it inflated thee denominator of that spending per person calculation. And, you don’t have any claims that are showing up as Medicaid claims, because their claims would be in the commercial bucket, or Medicare commercial bucket, or Medicare, because that would be their primary [insurer].

If you were to ask me: “Cory, we measured our performance as achieving the cost growth target as a state. Do you think we really achieved that? I would say no.

When you look at the commercial market growth and the Medicare [market growth] they were 9.7 percent and 8 percent, respectively. And those are two areas that would not be impacted by that issue of enrollment being overly inflated and the denominator of that calculation.

ConvergenceRI: Would another potential concern be that the rates for Medicaid are so low? And whether or not that would depress the costs by themselves?
KING: It would certainly impact per member per year costs, in a given year. But when you are looking at changes, year to year, prices would have to go down to have a depressing effect

Another point I made during the panel presentation, and this is an important nuance: there are areas where we need to increase costs. People who need access to behavior health should get that access, and we should see those claims emerging, [as well as] in the areas in the delivery system where we need to make investments.

We need to increase some provider rates. And, if that tips us over a cost-growth target in a given market, that’s fine; we can contextualize that.

ConvergenceRI: Do you have a particular trend to measure behavioral health costs? I am not sure I saw that in the documents.
KING: We don’t have a specific behavioral health category. In the presentation, behavioral health providers would show up under other professionals, and in inpatient and outpatient facilities. In order to flag whether a claim is behavioral health, you have to have a behavioral health diagnosis on the claim. And then, the question is: Is it the primary diagnosis, or is it a secondary, or third, or fourth diagnosis, because there can be multiple diagnoses on a claim. And, how do you quantify that?

At the forum, we also did a presentation of some new data dashboards that OHIC posted on our website. The dashboards take data form the All Payer Claims Database, and one of those new dsahboards is a mental health dashboard, where you can look at mental health spending and utilization by different payer types, by different age and gender categories.

ConvergenceRI: One of the big challenges the health care industry is facing is how to maintain the workforce.
KING: Yes.

ConvergenceRI: If you are not paying your workforce enough money, it becomes harder and harder to find qualified people to fill the positions that you need to maintain the sense of quality within the health care delivery system. And that is tied to how much you pay for these people, and also how you retain that workforce.
KING: Workforce is critical. I think, in tandem with this project, which looks at our growth in health care spending, and how we manage that growth, we also have to think about how we pay to adequately fund the workforce, and that means, in some cases, we’re going to have to increase costs.

And frankly, it might be a short-term increase in costs, but if you don’t have enough primary care providers, if someone can’t find a PCP, and they end going to an emergency room, or they have a hospital admission, that is just not socially efficient. Because primary care is much cheaper than an ED visit or an admission.

I think having a program like this [cost trends project], where we are analyzing health care spending, and making sure that people understand that there are areas where we can reduce costs, we can control costs, the savings from that have to be dedicated to areas where we need to increase investment.

Outpatient behavioral health is one; primary care is another. And, hospitals, we need to have enough nurses working in our hospitals in order to staff beds safely and meet quality standards. It’s all part of the balancing act at the end of the day.

You are totally on point to say that the workforce issues are most critical; that’s something that we’re going to be looking at at OHIC, now that we have this new Medicaid provider rate review fund.

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