In September of 2012, The State of Rhode Island Office of the Health Insurance Commissioner issued a report on their Primary Care Spend Standard- a standard which directs insures towards improving quality and affordability by investing more in primary care. You can read their full report here. Below is a Q&A style distillation of the report, and what it means for RI small employers. Feel free to email us any questions you may have.
Understanding the State of Rhode Island Office of the Health Insurance Commissioner’s Primary Care Spend Standard
Why is the State of Rhode Island Office of the Health Insurance Commissioner (OHIC) Investing Time and Energy in Increasing Access to Primary Care in Rhode Island?
OHIC cites research showing that primary care is the only part of the medical system where an increased supply is associated with lower community health care costs and better health care quality. At the same time, the office notes that experts acknowledge that the fee for service (FFS) payment system (payments based on how many services doctors provide) encourages procedures, discourages prevention, and vastly underpays for primary care. Therefore, here in Rhode Island, OHIC is trying to change that. Under OHIC’s leadership, health insurers are paying more and differently for excellent primary care.
What is the Primary Care Spend Standard?
In 2010, OHIC directed insurers to comply with a set of four criteria (together called the Affordability Standards) aimed at improving the affordability of health care in Rhode Island. As a part of this work, OHIC set a primary care spend standard requiring insurers to increase their share of total medical payments made to primary care by 1% each year from 2010 to 2014. Since 2010, OHIC has required the state’s three largest insurers to report how much money they spend on primary care.
Under to the primary care spend standard, insurers can’t just increase their spending on primary care by paying more only through traditional FFS payments. They need to be more creative than that—paying for new kinds of systems that pay doctors based on how healthy they keep their patients. And they also can’t raise their premiums to pay for this increased spending on primary care—instead, they have work with what they have and shift more money toward primary care.
The primary care spend standard was set as part of a strategy to change the health care delivery system in Rhode Island. Its goal is to increase the supply of primary care providers and promote more efficient, affordable health care.
Why is the Primary Care Spend Standard Important to Small Employers?
Insurers are increasing their primary care spending on creative health care delivery methods that are showing promising results—improving quality of care while lowering the costs of care over the long-term. OHIC recognizes that moving away from the traditional FFS payment system to one that rewards comprehensive and coordinated patient care will lead to better health outcomes and a decreased number of medical visits. Fewer visits to the doctor means fewer employee claims submitted which should, in turn, result in lower insurance rates for small employers at the end of the day.
Doctors and care teams that are paid a flat fee per patient per month have an incentive to keep the patient healthy and out of their offices. These doctors and care teams are working more closely with their patients and each other to improve patient health. Proper care coordination among primary care doctors and their care teams can eliminate duplicated or unnecessary procedures, can keep people from returning to the hospital once they’ve been discharged, and cut other types of medical waste.
Are Rhode Island Insurers Meeting Their Primary Care Spend Targets?
Yes. According, to OHIC, primary care spending in Rhode Island has increased 52% since 2007, moving from 5.4% to 8% of all medical spending by insurers. In 2010 and 2011, the insurers met their primary care spend target by spending at least 1% more on primary care than the previous year. Tufts Health Plan is a new insurer in Rhode Island, so doesn’t yet have a primary care spend target. However, Tufts’ proportion of primary care spending is about equal to Blue Cross Blue Shield Rhode Island’s and United Healthcare’s.
In 2012, almost 9% of all insured health care dollars will be spent on primary care services, including internal medicine, family practice, and other preventive and basic health services. As described above, more health care dollars spent on primary care now should lead to fewer claims and lower insurance rates in the future.
What Does the Future of Primary Care Spending Look Like?
Under OHIC’s primary care spend standard, insurers will have spent an additional $65 million on primary care services from 2010 to 2014. As insurers continue to prioritize non-FFS primary care spending and primary care spending continues to increase, our state’s health care system will continue to change into a higher quality, more affordable system of care that holds down costs.
Looking forward, primary care spending which prioritizes non-FFS approaches will be one of the most important drivers of health care reform. It is critical for OHIC to continue to require insurers to meet their primary care spending targets as well as to enforce all four Affordability Standards to guide system reform.
The key policy question in looking ahead to 2013 and 2014 is which non-FFS approaches should be prioritized by insurers in order to ensure that Rhode Island continues on the path toward a system that is both higher quality and more affordable.