Part III – Spending Growth Targets


This is the third in a four-part series on the Council on Health’s newly released report on healthcare spending and value.Roadmap to actionEach part details one of the four priority areas within the report and provides recommendations on how the United States can take a more prudent approach to mitigate rising healthcare costs while maximizing value. doing. Part 3 will focus on recommendations for setting spending growth targets.Read parts 1 and 2 here and here.

The Health Affairs Council on Health Care Spending and Value hoped the state would become a laboratory for policy experimentation and innovation. One area where Council members have spent time researching and have had presentations from experts at several meetings is the state’s efforts to set spending growth targets. Her two states, Maryland and Massachusetts, in particular lead the way.

Maryland example

Maryland has a long history of setting growth targets, starting in the 1970s when it established all-payer pricing for hospital bills. The Medicare waiver exempted Maryland from certain federal health care regulations in exchange for ensuring that Medicare inpatient payments per hospitalization increased at a rate below the national growth rate. We set a fee for patient services and all third parties paid the same fee. This effort evolved into a global hospital budget that includes inpatient and outpatient hospital services in 2014. Under what has come to be known as the Maryland All Payers Model, the state created a projected annual budget for each hospital based on historical spending trends. The hospital continued to receive per-service payments, but was able to adjust denominations throughout the year to stay within budget.

In considering this revolutionary model, we turned to data. Our group found his 2019 compelling report from his CMS evaluating the Maryland all-payers model. This represented a 2.8% slower growth in Medicare spending than the matched comparator group over five years, saving Medicare about $1 billion (compared to the comparator group spending). Another positive result found by the CMS is that “nearly all hospitals respond to the model with systems of care coordination, discharge planning, social work staffing, patient care transition programs, and patient care plans. We invested in the use of In 2019, Maryland built on its success by moving to a total cost of care model that further expands pricing to non-hospital providers. We are still learning about the implications of this new iteration.

Massachusetts example

In Massachusetts, an independent state agency, the Massachusetts Health Policy Commission (HPC), established by law in 2012, is taking a different approach to curbing healthcare spending. This is to keep up with economic growth across the state. The HPC Commission sets annual healthcare cost growth benchmarks. This includes all medical costs paid to private and public payers, patient cost shares, and private insurance. In addition, the Commission has oversight and enforcement powers to address spending outliers. So far, the state’s results have been mixed, consistently successfully below the national average in growth, but above the benchmark in some years.

One of our council members, David Cutler, a health economist at Harvard University, joined the committee and shared his significant experience with our group.

David tells me: It represents a commitment to keeping healthcare affordable, giving the public clarity on what to expect from the healthcare sector. It also helps governments understand what the health sector needs to cut costs. He continued, “In Massachusetts, we have found that goals and peripheral action inspired by them are essential to curb rising health care costs.”

Report recommendations

Given the state of Maryland and Massachusetts’ rallying action, we reflected the following in our report: Some other states seem to agree. In addition to Maryland and Massachusetts, California, Connecticut, Delaware, Nevada, New Jersey, Oregon, Rhode Island, and Washington are considering or implementing initiatives to control healthcare costs through target setting. We are actively doing this.

The Council, with federal backing, encourages this type of state action and convenes stakeholders to establish, monitor, and implement well-measured health care spending growth targets for the economy. Engage in the necessary data collection, analysis, and discussion that can spur enforcement. growth. This report details four recommendations for realizing this approach.

· Setting spending growth targets backed by data – States are encouraged to develop health care spending growth target rates in line with state goals of equity, affordability, and access, commensurate with the size of their economy. This can be done on an individual basis in conjunction with other states or the federal government, and mechanisms may be through commissions similar to those used in Maryland and Massachusetts, or through other dedicated or existing structures. It can be done. Governance must be multi-stakeholder and publicly transparent. Growth targets can be tied to key economic indicators such as gross state product, household income, wages, and the consumer price index.

· Data-supported monitoring of spending growth – States adopting spending growth targets should develop oversight entities empowered through legislative or executive action to enforce data from stakeholders and track performance against targets. This component is necessary to understand spending variability and high growth rates and their drivers, identify specific stakeholders experiencing high spending or growth, and detect disparities between population subgroups.

· Implement data-backed spending growth targets – Enforcement mechanisms are required for the goal to be effective. Enforcement measures vary by entity (e.g., payer or healthcare system) and desired outcome and may include public reporting of data, public justification of expenditures or prices, performance improvement plans, or direct fines or other penalties. there is. While the Massachusetts Commission has primarily used the “name and sham” strategy as a way to encourage payers and providers to curb abnormal spending, recently the Commission has Implemented a performance improvement plan for a large healthcare system. Enforcement mechanisms may need to be adjusted to deal with different situations, as the Massachusetts experience shows.

· Federal support for data infrastructure – The data infrastructure required to meet your spending growth goals is expensive and requires highly trained staff. Federal support is recommended for states committed to doing this work. The federal government can also provide common data standards and disseminate best practices.

We focused on states because of their existing activity in this area and their ability to implement these policy changes with greater agility, as well as their nuanced understanding of population needs. However, the state-led approach also has its downsides, such as creating an even larger patchwork of disparate data and reporting requirements for payers and providers that exist in multiple states. Also, similar to the expansion of Medicaid, some states choose not to participate, so we see variability in implementation.

There are also areas of healthcare pricing over which states have minimal control, such as self-insured employer and trust behavior and aspects of drug pricing, including federal patents. For these reasons, the Board encourages states engaged in this work to seek federal coordination and interstate interoperability to reduce the reporting burden for multistate stakeholders. .

minority report

These concerns were part of the reason why a subset of council members gave minority views on the state’s spending increase targets that were included in the final Health Issues Report. Due to some doubts as to whether these models would be a good fit for all states, given the wide range of geographic diversity, population size, state budgets, and political climates, the Board as a whole I did not endorse the approach. One segment of the Minority Report Registered Recommendation that I co-signed.

The minority view did not outright dismiss spending growth rates and recommended waiting for more data before encouraging participation from all 50 states. It seems wisest to look to these first movers to generate the evidence needed to support or reject target-setting, as we can learn from.” In some states, 2013 A slow 1% growth rate for the period 2019 to 2019, which may not be suitable for the large scale data infrastructure, staffing and healthcare system investments required to effectively adopt growth targets there is.

They also expressed concern that this approach was inconsistent with some of the other report’s recommendations, namely to reduce administrative costs and avoid price intervention in the highly competitive healthcare market.

Future prospects

As more and more states embark on the challenge of setting spending growth targets, there is an opportunity to learn from massive increases in data collection and monitoring. This will inform medical decisions and allow us to better serve our patient population. Whether adopting growth targets at all states, at the federal level, or strictly as-needed growth targets, this will moderate the growth of exorbitant and systemic health care costs. It is a tool that should be further evaluated when considering methods.

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