Minnesota: Health Care Affordability Board

Minnesota: Health Care Affordability Board

Upshot

• Two companion bills were introduced (S.F. 4353 and H.F. 4307) that would establish a Health Care Affordability Board by January 1, 2023 to monitor health care costs and set total state health care spending growth targets.

• An Advisory Council would be appointed by the governor to advise the Board. The Board would also establish the Office of Patient Protection to advise the state government on ways to make health care more affordable and accessible for consumers.

• The text was included in the Minnesota House’s omnibus health financing package (HF 4706). An omnibus health and human services bill eventually did pass and was enacted, but it did not include the Health Care Affordability Board. The two original bills died when the legislature adjourned on May 23, 2022.

Background

Minnesota’s health care system includes a state-based Marketplace, reinsurance program, and a BHP which provide many coverage options for residents. In October 2021, the Minnesota Department of Health submitted a statutorily mandated report to the state legislature on health care spending estimates and ten-year projections. The Department found that 2021 was the third consecutive year which exhibited growth in health care spending over five percent in Minnesota, driven mostly by private health care spending.

According to a 2019 report, the Department of Health found that hospital spending was the single largest spending category at 33 percent and accounted for $1.1 billion of the $2.9 billion spending increase from 2018 to 2019. The report projected an increase in state health care spending from $56.6 billion in 2019 to $104.2 billion in 2029.

Sponsors of this legislation note that several other states have implemented health care affordability boards and spending targets, and that Massachusetts saved $9 billion in health care costs over five years as a result of its affordability board. However, Republicans in Minnesota are concerned about imposing cost growth on health care entities.

Summary

The two companion bills would establish three new entities within the Department of Health: 1) a Health Care Affordability Board; 2) a Health Care Affordability Council; and 3) an Office of Patient Protection. Additional detail on these three entities is provided below.

• Health Care Affordability Board: This proposal would establish a Health Care Affordability Board to examine health care cost trends and causes, set spending growth targets, and develop recommendations to lower the rate of spending growth. The Board would consist of 13 members with expertise in health care finance, health care management or administration, consumer advocacy, health benefits administration, health care delivery, addressing health disparities, or representing the health care workforce. The Board would, importantly, set health care spending growth targets for the state and engage in other monitoring activities regarding cost, quality, and equity. This work would culminate in recommendations to lower the rate of growth in commercial health care costs and public health care spending and improve the quality and value of care.

• Health Care Affordability Council: The bill would direct the Governor to appoint a Health Care Affordability Advisory Council to advise the Board on health care costs and access issues. Members would be appointed based on their knowledge of health care delivery, ensuring access for diverse populations, public health, patient perspectives, health care cost trends and drivers, research, and health care benefits management. Specifically, the council would provide recommendations on issues such as metrics related to setting health care spending growth targets; appropriate data sources; and how to assess the impacts of setting spending growth targets on marginalized communities.

• Office of Patient Protection: The Board would be required to establish the Office of Patient Protection to assist consumers and advise the legislature on ways to reduce consumer health care spending and reduce complexity.

California: Office of Health Care Affordability

California: Office of Health Care Affordability

Upshot

• Democrats proposed the California Health Care Quality and Affordability Act, A.B. 1130, which would establish the Office of Health Care Affordability and the Health Care Affordability Board to monitor trends and drivers of health care costs and set and enforce spending growth targets.

• Gov. Newsom included funding to establish the office in the three most recent budget proposals. The proposal passed the California Assembly and was considered in the Senate but did not pass.

• The bill was introduced on February 18, 2022, and passed the Assembly on June 3, 2022. It was then considered in the Senate Committee on Health but did not move out of committee and died when the legislative session ended on August 31, 2022.

Background

California has a variety of programs to improve health care affordability and coverage. The state operates a state-based Marketplace with 12 plans that enrolled approximately 1.8 million people during the 2022 open enrollment period.

In this bill, the legislature argues that health care affordability has reached a “crisis point” with growing costs that are being driven by high prices and market conditions especially in areas with a lack of competition due to consolidation, market power, venture capital activity, or other market failures. The legislature is concerned that employers are increasingly shifting the cost of premiums and deductibles to employees which has impacted wage growth. The sponsors note that one in four people in California report problems paying or being unable to pay their medical bills, and two-thirds cut back on basic household items to pay those bills. The Commonwealth Fund found that 9.2 percent of Californians had to forgo medical care because of the cost.

Gov. Gavin Newsom first proposed the Office of Health Care Affordability (OHCA) in the 2020-2021 budget proposal and has continued to support its establishment. The 2022-2023 budget proposal included a one-time sum of $30 million to establish the office over three years. The California Health Care Quality and Affordability Act was submitted alongside the budget proposal as a “trailer bill” to formally establish the OHCA. Opposition to the proposal has focused on the heavy administrative burden of the data collection and reporting requirements. Some are also concerned the potential for financial strain on hospitals would impact clinician salaries and quality of care. Additionally, the California Hospital Association expressed concern that the OHCA may not be able to distinguish between effective or high-value spending and low-value spending.

Summary

The bill would establish the new OHCA. This entity would examine spending trends across the health care system to inform potential reforms intended to reduce the overall rate of growth in health care costs while maintaining quality of care. Specifically, the Office would examine issues such as ways to increase cost transparency, establish a statewide health care cost target; analyze pharmaceutical drug costs, and advance the adoption of VBP models, among others. Lawmakers also plan to incorporate strategies to reduce racial and ethnic disparities in health care by addressing health care costs and cost trends.

After collecting data on various drivers of health care costs, the Office would then issue annual reports beginning in 2024 that examine total health care expenditures in the state and any progress made towards achieving the state’s health care costs target. The Office would also develop a retrospective report in 2023 that provides detail on historical state spending on health care. Importantly, the Office would be directed to provide a summary of best practices for improving affordability while maintaining access, quality, and equity of care and any concerns regarding impacts on the health care work force’s stability and training needs.

Additional responsibilities of the Office would include:

• APMs: The Office would also convene payers and organize an alternative payment model working group to set statewide goals for the adoption of alternative payment models.

• Primary Care and Behavioral Health Investments: The Office would measure and promote a system-wide investment in primary care and behavioral health by measuring the percentage of total health expenditure allocated to primary care and behavioral health and setting spending benchmarks. The spending benchmarks would be intended to shift greater health care resources and investments away from specialty care and toward supporting innovation and care improvement in primary care and behavioral health.

• Health Care Market Trends: The OHCA would set standards for health care metrics, including quality and equity, alternative payment models, primary care, primary care and behavioral health investments, and health care workforce stability. The office would also be required to monitor health care mergers, acquisitions, corporate affiliations, or other transactions with material changes to ownership, operations, or governance of health care service plans, insurers, hospitals, physician organizations, pharmacy benefit managers, or other health care entities.

• COVID: The bill would also specifically require payers to submit aggregate data on health care expenditures for 2019, 2020, and 2021 by July 1, 2023.  the Office would then develop a report on the impact of COVID-19 on health care spending.

Beyond establishing the OHCA, the bill would also implement various other provisions to drive down health care costs. For example, the bill would establish a Health Care Affordability Board, which would approve methodologies for setting state health care cost targets, spending benchmarks, and statewide goals for the adoption of VBP models. The Board would be required to establish health care cost targets by 2025 and annually thereafter.

Last, the legislation would establish the Health Care Affordability Fund to receive and expend any revenue collected through implementation of the bill. This could include public or private resources leveraged to provide technical assistance.

Washington: Addressing Anticompetitive Contracting

Washington: Addressing Anticompetitive Contracting

Upshot

• H.B. 1741 includes two provisions that are intended to address high health care costs in Washington. The first is to institute regulations to prevent some anticompetitive provider contracting practices. The second is to study ways other states are improving health care affordability.

• The sponsors developed the bill in response to increased hospital consolidation nationwide and within the state, which they say is contributing to higher health care costs according to a MedPAC report.

• The bill was introduced on January 10, 2022 by Democrats in the state legislature and was discussed in the Health Care and Wellness and Appropriations Committees. However, it died when the legislative session ended on March 10, 2022.

Background

Washington operates a robust state-based Marketplace with 120 plans offered by twelve insurers.  Washington also provides a public option as of 2021 and has a state subsidy program for individuals with incomes up to 250 percent FPL who enroll in silver or gold metal tier public option or standardized plans.

In the bill, the legislature expresses concern about health care costs and the rise in health care spending. The authors cite the aforementioned Millbank Memorial Fund issue brief and MedPAC report to support reforming provider contracting practices to reduce consolidation. The five largest hospital systems in Washington had 30 hospitals in 2010 – a value which has grown to 49 hospitals in 2021. The legislature also notes that nearly 40 percent of patient care physicians are employed directly by a hospital and 72 percent of hospitals are affiliated with a hospital system.

Summary

This legislation would establish guardrails for provider contracts between hospitals and health carriers intended to curb anticompetitive practices and lower the cost of health care services. Beginning January 1, 2023, provider contracts would be barred from including:

• An all-or-nothing clause, which requires an insurer contract with all facilities in a health system rather than select facilities;

• An antisteering clause, which restricts a carrier or health plan from encouraging an enrollee to obtain services from a competitor of the hospital or health system;

• An antitiering clause, which prohibits a health plan from placing providers associated with a hospital system in a preferred tier or at the lowest cost-sharing rate; or

• Any clause that sets provider compensation agreements or other terms for affiliates of the hospitals that will not be included as participating providers in the agreement.

These changes would not prohibit a health carrier from contracting with other hospitals owned or controlled by the same single entity, but the carrier must file an attestation with the Office of the Insurance Commissioner. The new policy would also not prevent a hospital, provider, or health carrier from participating in:

• A state-sponsored health care program, federally funded health care program, or state or federal grant; or

• ·A VBP arrangement intended to reduce utilization, improve outcomes, and contain health care costs.

Additionally, the Insurance Commissioner would be directed to study regulatory approaches other than traditional rate reviews used by other states to address the affordability of health plan rates. For each state, the study would include:

• The statutory and regulatory authority for the state’s affordability activities;

• A description of the activities and processes developed by the state; and

• Any available research or other findings related to the impact or outcomes of the affordability activities.

Rhode Island: Value-Based Payment

Rhode Island: Value-Based Payment

Upshot

• The Rhode Island All-Payer Health Care Payment Reform Act, S 2994, would establish a workgroup to provide recommendations on adopting advanced value-based payment models.

• ·The Workgroup would recommend hospital global budgets for at least two provider types.

• On April 13, 2022, Rhode Island health care leaders entered into a compact to accelerate the adoption of advanced value-based payment models. The compact may have contributed to the bill not moving during the legislative session because the industry is already taking initiative to move towards value-based payment.

Background

Rhode Island currently operates a state-based Marketplace with two carriers. The state also expanded Medicaid and implemented an individual mandate in 2020, meaning all residents must have health care coverage.

The sponsors of this bill assert that the current FFS payment structure creates a financial incentive for increasing the volume of health care services and prevents systemic changes to health care delivery that would promote more affordable and predictable cost growth, improve financial stability, and promote technical innovation. The intent of the general assembly through this bill is to endorse and support the efforts of providers and insurers to increase the adoption of value-based payment models.

On April 13, 2022, Rhode Island health care leaders entered into a compact to develop a detailed plan on how to accelerate the adoption of advanced value-based payment models. The efforts have been led by the Rhode Island Health Care Cost Trends Steering Committee, which is comprised of a variety of stakeholders. The Committee measures trends in health care costs, which the Committee notes grew by about four percent during 2018 and 2019 but decreased in 2020 due to COVID-19. The compact does not detail the types of value-based payment that could be considered, though the following principles will guide their work:

• Quality-linked prospective budget-based payment should be used whenever feasible;

• If prospective budget-based payment is not possible, other options could include adjusted FFS payment or retrospectively reconciled budget-based fee-for-service payment;

• Models should support a financially stable delivery system that supports population health and quality excellence;

• Payers should provide a common menu of advanced value-based payment arrangements for providers to consider;

• Robust primary care is essential but specialty care providers should be incorporated;

• Cross-organizational provider relationships should be encouraged; and

• Models for child health should have different financing and specific quality measures.

Summary

This legislation would require the Health Insurance Commissioner and the Medicaid Director of Rhode Island to convene an all-payer payment reform working group to develop the structure and terms of advanced all-payer VBP models to be described in reports that would be delivered in 2024 and 2025.

• Membership: The Workgroup would be comprised of health care providers, health insurers, businesses, consumer advocates, and other stakeholders to work on adoption of advance VBP models. The Health Insurance Commissioner and Medicaid Director could exercise discretion in the selection and sequencing of models by provider type, but must at least develop recommendations for the design of hospital global budgets for at least two provider types.

• Reports: The Health Insurance Commissioner and Medicaid Director would also be required to submit a series of reports on the following:

• CMS: The bill also directs the workgroup to engage CMS to explore opportunities for federal financial participation in value-based payment models through Medicare.