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RI Rate Review: A First Step for Affordable Health Insurance. State Coverage Initiatives National Meeting August, 2010 Deborah Faulkner Faulkner Consulting Group RI Affordability Project Lead. Background: RI Office of Health Insurance Commissioner.
State Coverage Initiatives National Meeting
Faulkner Consulting GroupRI Affordability Project Lead
History: New Cabinet-level position as of June 2004
Response to BCBSRI misconduct
Frustration by employers and providers over costs of health care, reimbursement system, inability to engage health plans on larger issues
Statutory Responsibility: Four Areas
Fair Treatment of Providers
Direct Health Plans towards system improvement
Efforts in RI to Address Underlying Cost Trend
1. Health Plan Rate Review
2. OHIC Affordability Standards
Health Plans in RI have unique standard: “Policies to promote affordability”
Use rate factor review to educate public, align interests of health plans to get at underlying cost drivers.
Annual review of large and small group rate factors.
Public disclosure of information.
Process (SmG + LgG)
45-60 Day Annual Process
Preliminary Internal Review
Internal Actuarial and Substantive Review
Propose Approved, Modified or Rejected Rate Factors to Carriers
* 2010 rate requests were received with highly publicized/ front page community reaction. OHIC called on carriers to withdraw requests. All three insurers withdrew, refiled six months later. Rates shown are for Q3/4 only.
** 2011 Rates were approved with six additional conditions, specifying hospital/health plan contract terms
More scrutiny of insurers
More public education.
Good way to get the attention of Insurers:
Opportunity to squeeze admin costs, profits (cost shift back to self-insured)
Opportunity to push harder on payment reform.
Greater politicization of process.
Potential for unpredictable, non-rational decisions.
Low rate factors now may mean big jumps later.
Only indirect influence on consumers and providers
Rate review, by itself, will not address the underlying cost of care in Rhode Island.
All health plan/hospital contracts must:
Utilize efficiency based units of payment for hospital services (other than fee for service)
Limit annual maximum price increase for inpatient and outpatient services to CMS hospital price index
Include performance incentives based on no less than three nationally accepted clinical quality, service quality or efficiency-based measures
Include mutual obligations for greater administrative efficiencies
Include terms that promote and measure improved clinical communication between the hospital and other providers
Include terms that relinquish the right to contest the public release of these terms by state officials
Delivery system reform is needed – rate review is not enough
Health Plans are statutorily required to have policies that promote affordability, quality and access. Previous efforts unsatisfactory
Carriers can do some but coordinated, multi-payor efforts are required
OHIC’s Health Insurance Advisory Council.
Grant-funded consulting staff, expert opinion and health services research.
Off line work with health insurers
Result : “Affordability Standards”
Consequences tied to rate factor review -- rate factor review process as the affordability “gate”.
Achieve alignment between plans and priorities in the community
Health plans will increase the proportion of their medical expenses spent on primary care by five percentage points over the next five years. This money is to be an investment in improved capacity and care coordination, rather than a simple shift in fee schedules.
As part of the increased primary care spend, health plans will promote the expansion of the CSI-Rhode Island project or an alternative all payer medical home model with a chronic care focus by at least 25 physicians in the coming yearand
Health plans will promote EMR incentive programs that meet or exceed a minimum value.
Health plans commit to participation in a broader payment reform initiative as convened by public officials in the future.
Incremental Value of Increase (beyond inflation): >$150 million over five years
Defining Investment PrioritiesWhere do we want to spend it? How much direction to give the carriers
Monitoring Plan InvestmentsHow best to hold carriers accountable to the targets?
Evaluation: System OutcomesInpatient Readmissions, ER visits, Primary Care Supply and System Costs
VisibilityHow to increase statewide visibility of standards?
Total ($) Portion Category
$5.0 M 46% Patient Centered Medical Home
$1.2 M 11% Electronic Medical Records Incentives
$0.8 M 8% FFS Fee Improvements
$0.6 M 5% Loan Repayment
$3.4 M 31% Other, carrier-specific investments
$11.0 M 100% Total Year 1 Planned Investment, 2010
A Moving TargetRevised 2010 Spend Requirements to account for membership loss (Combined, both carriers)
Based on 2009 actual spend data, as reported by the carriers in April, 2010
We estimated that achieving 6.6% Primary Care Spend in 2010 required carriers to invest $11M in Primary Care
After adjusting for 2009 base data, achieving 6.6% Primary Care Spend in 2010 only required carriers to invest $8M in Primary Care, mostly due to the substantial, one-time decline in enrollment
Challenge # 2. Monitoring Plan Investments
UHCNERequired Investment $1.5 M
BCBSRI Required Investment $6.5 M
Oct. 09 Fcast
June 2010 Forecast
Patient Centered Med.Home
(all-payor and plan specific)
Electronic Medical Records
FFS Fee Improvements
Other, carrier specific investments
* OHIC estimates based on carrier reporting and discussions. Highly preliminary estimates.
Case Mix Adjusted Inpatient Med/Surg Payments, Indexed to percent of Medicare fee fpr service BCBSRI and UHCNE Fully Insured Payments, CY 2008
Lifespan Care New England Unaffiliated
Any Questions: Contact Deb Faulkner, firstname.lastname@example.org, 401-486-3700
or go to
Rate factor review:
Documented Standards: http://www.ohic.ri.gov/Committees_HealthInsuranceAdvisoryCouncil_%20Materials%202009.php
Issue Brief: http://www.ohic.ri.gov/documents/Committees/HealthInsuranceAdvisoryCouncil/affordability%202009%20/6_Issue%20Brief.pdf
The Providence Journal on rate review conditionshttp://www.projo.com/news/content/CURB_HOSPITAL_COSTS_07-08-10_MNJ4HCV_v21.13150d4.html
Press release on rate review conditionshttp://www.ohic.ri.gov/documents/Insurers/Regulatory%20Actions/2010_July_Rate_Decision/1_Press%20Release%20Rate%20Factors%202011.pdf
Conditions of rate approval, 2011http://www.ohic.ri.gov/documents/Insurers/Regulatory%20Actions/2010_July_Rate_Decision/2_%20Conditions%20Summary.pdf
Health Affairs article: Affordability standardshttp://www.ohic.ri.gov/documents/Committees/HealthInsuranceAdvisoryCouncil/affordability%202010/HEALTH%20AFFAIRS%20ARTICLE%20-%20May%202010.pdf
Issue brief: Affordability standardshttp://www.ohic.ri.gov/documents/Committees/HealthInsuranceAdvisoryCouncil/affordability%202009%20/6_Issue%20Brief.pdf