Health Care Cabinet – RI, MA reforms reviewed, hospitals’ response to price presentation

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Today’s Health Care Cabinet meeting was as fascinating as last month’s. We heard again from the consultants working with the Cabinet to develop a plan to reform CT’s health care system. This time they focused on reforms in Rhode Island and Massachusetts. Rhode Island is also facing hospital consolidation, but with more geographic overlap than CT, so they may not face the anti-competitive concerns we do. Rhode Island focused their reforms on increasing primary care spending (not just rates), PCMH expansion (as has been very successful for CT’s Medicaid program), support for HIT, alternative payment models, and hospital reform, most specifically a cap on cost increases. Unfortunately the reforms haven’t yet resulted in controlling costs. RI is also behind in building consumer protections for their reforms; something CT cannot afford to put off given our history and culture. The key to Rhode Island’s success is a visionary leader who was very transparent, inclusive policymaking, aggressive and respectful stakeholder engagement, and a commitment to evidence-based standards. Massachusetts also has a long history of diverse reforms; some worked and some didn’t. Massachusetts is wisely focusing price transparency on markets rather than consumers. While getting price information to consumers is important, to expect that alone to reduce costs is not realistic. Their latest iteration is movement toward global payments (similar to capitation), which are gaining momentum. It seems global payments have saved money, increasing primary care use, but overall annual health cost increases exceeded the benchmark in2013 o 2014 (the latest year). One of Massachusetts’s most effective tools is the ability to regulate the market, especially blocking provider market consolidation that could drive up prices. Next month we will hear about Maryland and Oregon.

We also heard from a panel of CT hospital representativesresponding to last month’s presentation on hospital spending  — the impact of consolidation on prices and the lack of correlation between government and commercial plan prices. The hospitals mainly complained about the state’s Medicaid cuts, suggesting that they are driving up prices for commercial plans. However research does not support the cost shifting theory. It was pointed out that Medicaid is working better now than anytime in recent memory, and that in times when the state was very generous with hospitals’ Medicaid payments, there is no evidence that commercial prices were reduced.