Rhode Island Pursues Health Reforms in Public and Private Sectors

In August 2008, Rhode Island Governor Donald Carcieri submitted the Rhode Island Consumer Choice Global Compact Waiver application to CMS. The Governor reported that it was approved by the agency on December 22, 2008. The state legislature has 30 days to review and reject the plan otherwise it is deemed approved. Rhode Island’s global waiver application would give the state significant authority to make changes to its Medicaid program in exchange for a cap on federal funding of the program.

 

The proposal calls for the state to operate its Medicaid program under a Section 1115(a) demonstration waiver and would limit total Medicaid spending (state and federal) over the waiver period. CMS approved a $12.075 billion spending cap through 2013, about $350 million less that the state requested. 

 

In exchange for the spending cap, the state would gain significant flexibility to change eligibility levels, services, and cost sharing. The waiver would use global budgeting as the funding mechanism for all Medicaid populations in the state across all settings. The state’s Medicaid reform plan focuses on three elements. First, the state would seek to enhance the availability of home- and community-based programs as alternatives to long-term care institutional settings. Second, the state would build on current programs such as Rite Care to manage care approaches across all Medicaid populations. Third, the state would adopt approaches that link reimbursement to performance and quality-of-care improvements. The waiver application also proposed greater care management across all Medicaid populations to ensure better coordination of care and to establish Healthy Choice Accounts to encourage preventive care and healthy lifestyles. Rhode Island estimates that the waiver would save the state $358 million over five years, including savings that the state is already counting on to help close its FY 2009 budget gap of $430 million.

 

Rhode Island’s waiver proposal has drawn its share of criticism from both federal legislators and advocacy groups. Lawmakers, including the entire Rhode Island Congressional delegation, have expressed alarm over an apparent lack of transparency in negotiations between Governor Carcieri’s administration and CMS. Senate Finance Committee Chair Max Baucus (D-MT) and Senator Jay Rockefeller (D-WV) raised concern that the waiver “could hurt” people and that the “federal guarantee of health benefits for those in need” should not be “negotiated away.”^[i] Advocacy groups are concerned that Rhode Island’s waiver could lead to reduced access to institutional long-term care and raise out-of-pocket costs for some beneficiaries. 

 

Rhode Island is not the first state to seek a global Medicaid waiver that allows for greater flexibility in exchange for a cap on Medicaid spending. In 2005, Vermont won approval for a Section 1115 waiver known as the Global Commitment to Health Waiver, which allowed the state to restructure its Medicaid program in exchange for a five-year, $4.7 billion cap on Medicaid spending. The state is financially at risk for keeping expenditures below the target. The federal government pays 60 percent of the costs over the life of the program.

 

Under its global waiver, Vermont established itself as a managed care organization, paying itself a premium for each Medicaid beneficiary served. In addition, Vermont has the flexibility to use federal funds for non–Medicaid health services and programs. Now that the waiver is in its third year, state officials believe that it has been extremely helpful in providing the flexibility needed to pursue financial and organizational reforms. It has allowed Vermont to maintain its expansion programs and to continue investing in other health-related programs essential to the state. In the face of some of the same criticisms leveled against Rhode Island, the state acknowledges that the waiver has not limited access or affected beneficiaries adversely. 

 

Like Rhode Island, Vermont’s Global Commitment to Health Waiver contains some elements of a block grant approach and waives some federal rules related to benefits and cost-sharing. Policymakers view the level of Vermont’s federal funding cap as relatively generous, making the program difficult to evaluate in terms of an alternative approach to Medicaid’s traditional funding structure.^[ii] In contrast, the proposed cap on Medicaid spending in Rhode Island’s global waiver application has come under considerable scrutiny for fear that it is insufficient.

 

 

While pursuing its global waiver application, Rhode Island is also embarking on three initiatives to improve the value and quality of health care services in the state.^[iii]

 

        HEALTHpact plans are a new alternative to high premiums, high deductibles, or reduced health coverage faced by small businesses. All Rhode Island carriers offer HEALTHpact plans based on product specifications outlined in regulations developed by the Office of the Health Insurance Commissioner. The plans offer wellness incentives to employees with cost consequences by targeting five behaviors related to self-management. The plans are available to all Rhode Island small businesses (1 to 50 employees) and their workers at premiums 15 to 20 percent less than comparable products.

Even though New Hampshire and Florida have already emulated HEALTHpact’s program design, uptake of the plan in Rhode Island has been slow in the first year. Rhode Island has commissioned an evaluation of the program to assess its impact and make recommendations for expanding its reach. The initial assessment indicates that marketing has been a challenge given the various actors involved in health plan decisions in the small group market, including carriers, brokers, employers, and employees.
 

      The Chronic Care Sustainability Initiative is a collaboration among health plans and providers that builds on national and local chronic care models and medical home efforts. The initiative targets five primary care pilot sites for a two-year pilot starting on October 1, 2008. Under the pilot, participating providers must agree to become certified as a Patient-Centered Medical Home per National Committee for Quality Assurance (NCQA) standards. The providers must also participate in collaborative training (funded by the Department of Health and Quality Partners of Rhode Island) and self-report on three chronic care conditions. In return, participating health plans agree to pay a supplemental fee per member per month, fund a portion of a nurse care manager, and provide the providers with consistent enrollment and utilization reporting. 

 

        Rhode Island is revising its approach to rate factor review. The Office of the Health Insurance Commissioner (OHIC) is authorized by statute to perform an annual review of the rates that insurers propose to charge small and large employers. Beginning in 2005, this authority was expanded to consider four key factors: 1) solvency and soundness; 2) consumer protection; 3) fair treatment of providers; and 4) improving affordability, quality, and accessibility of medical care. Under its broadened authority, OHIC must evaluate whether the rate factors proposed by the health plans are built on sufficient efforts to improve the affordability, quality, and accessibility of medical care. OHIC is working to define the standards of evaluation to be used in the rate review process for assessing the health plans’ affordability efforts. With the evaluation, OHIC will establish a relationship between premium rate approvals and expected system improvement priorities on the part of health plans, such as investment in health information technologies and efforts to encourage the use of primary care through payment reform and delivery system redesign.

 

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