A state panel voted Tuesday to recommend several strategies to control health care costs and reshape the way care is delivered.
They included creating a state office to oversee health reform efforts and adopting a controversial payment model under which health care providers could lose money if they don’t hit quality and cost targets when caring for Medicaid patients and state employees.
The Health Care Cabinet also appeared poised to recommend setting a target for health care cost growth in the state, although members did not yet vote on it.
But the group’s discussion of the recommendations to legislators also signaled the challenges many could face in becoming reality. The payment model, for example, is opposed by the state’s Medicaid agency. Another recommendation, to expand the powers of the attorney general’s office to monitor health care market trends, has the support of the office – but can’t be done without additional resources, the office has warned.
Similarly, while some members of the cabinet saw creation of an office to oversee health reform efforts as essential, state budget director Benjamin Barnes voted against it, saying, “I don’t have any money to fund it.”
That discussion prompted Jim Wadleigh, the chief executive of Access Health CT, the state’s health insurance exchange, to make a plea for committing resources to address health care costs, even in an austere budget environment.
“Are we saying that we have a health cost problem in the state of Connecticut? And if we do, how can we be sitting around this table saying we don’t have the money to fix it?” Wadleigh asked.
The cabinet’s work is the result of a wide-ranging 2015 health care law that grew out of legislators’ concerns about growing consolidation in the health care industry and its potential to raise prices at a time when health care costs already strain government, business and household budgets. The law charged the cabinet with recommending ways to monitor and address health care cost growth and price variation, promote cost-effective care and improved outcomes, and insurance mechanisms to promote the use of low-cost, high-quality health care providers.
The cabinet – which includes representatives from state agencies, the health care industry, foundations and others – will hold a meeting Nov. 15 to hear public input before finalizing its recommendations to legislators.
The cabinet’s work was led by Bailit Health Purchasing, a Massachusetts consulting firm. One of the consultants’ most controversial ideas, combining several state agencies that handle health-related issues into one, faced significant opposition from state agency leaders and was taken off the table even before Tuesday’s meeting.
A controversial payment model
After much discussion, the cabinet voted to recommend that Medicaid and the state employee and retiree health plan – which together cover nearly 1 million people – develop a new model for contracting with health care providers.
Under the model, health care providers would form “consumer care organizations,” or CCOs, that offer a wide array of health care services. The CCOs would have a financial stake in controlling the overall cost of their patients’ care, as well as in the quality of care delivered and patients’ ability to access services.
In the early years, the CCOs would be able to share in any savings that occur, but within three years, they also would have to take on risk – that is, they could face financial penalties if they didn’t meet cost and quality targets.
The recommendation comes against the backdrop of other efforts to change health care delivery in the United States from a system that pays by the procedure or service to one that rewards health care providers for better managing patients’ health and keeping down costs. Medicare is increasingly pushing providers toward so-called alternative payment models – including the use of accountable care organizations similar to CCOs. Private insurers also are attempting to use such models. A separate state initiative, the State Innovation Model, or SIM, is trying to coordinate the delivery and payment system shift among Connecticut providers and insurers.
But the new models have drawn intense opposition from some patient advocates in Connecticut, who say tying cost considerations to provider compensation could give physicians bad incentives, making them more likely to avoid recommending costly care or unwilling to treat patients with significant, costly needs.
They’re particularly wary of using risk models in the Medicaid program, saying Medicaid patients already face the possibility of not being able to get care because the program’s payment rates are low. And, they say, Medicaid has had success controlling costs through other mechanisms, such as intensive care management of high-need patients and paying primary care providers a monthly fee to play a bigger role in coordinating patients’ care.
Proponents of the risk models, meanwhile, say some financial risk for providers is key.
“When there’s some risk of financial loss…there’s a stronger motivation to make fundamental changes in care delivery and to reallocate resources,” Bailit Health President Michael Bailit said during a September cabinet meeting.
Bailit acknowledged that a previous move toward that type of payment system, in the 1990s, “failed miserably.” But he said the versions now being considered are different: The financial risk to providers is limited. The new models can limit incentives to avoid sicker patients by adjusting cost expectations based on patients’ health. And they require providers to meet quality and access standards, reducing the risk that providers would save money by skimping on care.
But critics question whether quality measures could accurately determine if patients are being denied care and say many Connecticut providers are not equipped to take on financial risk.
The council that oversees the Medicaid program has urged the cabinet to avoid committing the program to any risk models until “stringent prerequisites of model design and consumer protections” have been reviewed by those that oversee the program. And state Medicaid director Kate McEvoy said Tuesday that, while the CCO model wouldn’t directly conflict with existing Medicaid initiatives, the department could face difficulty balancing staff time and resources if it had to implement the CCO model on top of its other efforts.
The recommendation to develop CCOs passed 13 to 4; two of the no votes came from Barnes and Kathleen Brennan, deputy commissioner of the Department of Social Service, the state’s Medicaid agency.
The recommendation the cabinet endorsed does not spell out a role for private insurance plans, although they could potentially also contract with community care organizations.
Patricia Baker, president and CEO of the Connecticut Health Foundation – one of four foundations funding a portion of Bailit Health’s work for the cabinet – said she viewed the CCO model as a critical way to bring together other payers, such as private insurers.
A target for cost growth – eventually
The cabinet also has explored setting a target for statewide health care cost growth, as a way to try to hold insurers and care providers responsible for keeping down costs. The consultants said a cost growth cap in Massachusetts has become the starting point for negotiations between providers and insurers there and has helped to slow rising costs.
Although the consultants suggested requiring those that don’t meet the target to eventually face sanctions, Lt. Gov. Nancy Wyman, who leads the cabinet, recommended eliminating the sanctions. “I would rather do it with sweetness, rather than a hammer,” she said.
Other cabinet members said the state needs to first develop the infrastructure to properly collect the data to determine reasonable cost growth targets.
“Having a cost goal is great, but you need data, and we’re way behind where a Massachusetts is in terms of the collection of data,” Insurance Commissioner Katharine L. Wade said. “We need to really focus on getting more data to then inform the number, because right now we’re just pulling it out of the air.”
The consultants plan to revise the language of the recommendation before cabinet members vote on it.
Office of Health Strategy
The cabinet also voted to recommend creating an Office of Health Strategy to develop the infrastructure needed for the state’s cost-containment strategies. It would be responsible for, among other things, developing a cost growth target, tracking the adoption of alternative payment models, studying other payment and delivery system models, and studying rising health care costs in the state. The consultants estimated it would have five or six staffers and cost $820,000 per year; because of the state’s tight budget, they recommended that $400,000 come from redirecting existing state staff.
But Barnes, who voted against the recommendation, said he didn’t think there was enough staff available, particularly since he expects to call for more attrition in the upcoming budget.
The cabinet also voted to recommend that the state:
- Develop “community health teams” of care managers, behavioral health clinicians, social workers, pharmacists and community health workers – and possibly others – who would work with primary care providers to help meet the needs of their patients. They would be available regardless of the type of coverage a patient has. The consultants said each team would probably cost at least $500,000 per year and their funding source wasn’t spelled out in the recommendation.
- Set targets for the adoption of alternative payment models.
- Consider seeking funds through a federal program known as the Delivery System Reform Incentive Program, or DSRIP. The consultants said the money could be used to help providers adapt to the new care delivery model, although they said it could also be used for other purposes related to Medicaid.
- Create a committee to use medical evidence on the effectiveness and safety of medical devices, procedures and tests to make recommendations about coverage decisions for Medicaid and the state employee health plan. Bailit said states that have done so have saved money by reducing services that can be both costly and harmful to patients. Some cabinet members said it seemed redundant or unnecessary. Dr. William Handelman, a nephrologist on the panel, said he would only support it if it stopped legislators from proposing mandatory insurance coverage of treatments that haven’t been shown to be effective.