2022 -- S 2994

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LC006093

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2022

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A N   A C T

RELATING TO STATE AFFAIRS AND GOVERNMENT

     Introduced By: Senators Pearson, and DiPalma

     Date Introduced: June 03, 2022

     Referred To: Senate Finance

     It is enacted by the General Assembly as follows:

     SECTION 1. Title 42 of the General Laws entitled "STATE AFFAIRS AND

GOVERNMENT" is hereby amended by adding thereto the following chapters:

CHAPTER 7.5

THE HEALTH SPENDING ACCOUNTABILITY AND TRANSPARENCY ACT

     42-7.5-1. Short title.

     This chapter shall be known and may be cited as “The Health Spending Accountability and

Transparency Act.”

     42-7.5-2. Purpose.

     (a) The purpose of the health spending accountability and transparency act is to promote

accountability for health care spending by health insurers and health care providers.

     (b) To ensure accountability for health care spending, it is necessary for agencies of the

executive branch, health insurers, health care providers, and other interested parties to:

     (1) Analyze health care spending data to identify the drivers of health care spending;

     (2) Measure the specific performance of health care entities on measures of spending,

efficiency, and quality;

     (3) Adopt a health care cost growth target as a benchmark to compare the performance of

health care entities on measures of health care spending growth; and

     (4) Develop actionable interventions and policies to address health care spending growth

while ensuring health care access, equity, and a high quality of care for patients.

     42-7.5-3. Definitions.

     As used in this chapter the following words and phrases shall have the following meanings:

     (1) “Government entity” means agencies of the executive branch of Rhode Island

government, including, but not limited to, the executive office of health and human services, the

department of behavioral healthcare, developmental disabilities and hospitals and the department

of administration, and the federal Centers for Medicare and Medicaid Services.

     (2) “Health care entity” means an insurer or a health care provider entity organized as an

accountable care organization or accountable entity under the Rhode Island Medicaid program that

assumes accountability for the total or near total cost of care for a defined population.

     (3) “Insurer" means all persons offering, administering, and/or insuring healthcare services,

including, but not limited to:

     (i) Policies of accident and sickness insurance, as defined by chapter 18 of title 27:

     (ii) Nonprofit hospital or medical-service plans, as defined by chapters 19 and 20 of title

27;

     (iii) Any person whose primary function is to provide diagnostic, therapeutic, or preventive

services to a defined population on the basis of a periodic premium;

     (iv) All domestic, foreign, or alien insurance companies, mutual associations, and

organizations;

     (v) Health maintenance organizations, as defined by chapter 41 of title 27;

     (vi) All persons providing health benefits coverage on a self-insurance basis;

     (vii) All third-party administrators described in chapter 20.7 of title 27;

     (viii) All persons providing health benefit coverage under Title XIX of the Social Security

Act (Medicaid) as a Medicaid managed care organization offering managed Medicaid; and

     (ix) All persons providing health benefit coverage through Medicare Advantage.

     (x) "Insurer" shall not include any nonprofit dental service corporation as defined in § 27-

20.1-2.

     (4) "Person" means any individual, corporation, company, association, partnership, limited

liability company, firm, state governmental corporations, districts, and agencies, joint stock

associations, trusts, and the legal successor thereof.

     42-7.5-4. Health spending accountability and transparency program.

     (a) The health spending accountability and transparency program (“program”) is hereby

created to utilize health care expenditure data collected from insurers and government entities to

facilitate transparency into the causes of health care spending growth, the distributive burden of

health care spending on consumers, businesses, and taxpayers, and to ensure accountability for

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health care spending growth and quality performance by health care entities.

     (b) The program shall be administered by the health insurance commissioner who is hereby

directed to:

     (1) Set and maintain an annual health care cost growth target that shall be used as a

benchmark to assess the performance of health care entities on measures of health care spending

growth;

     (2) Convene a steering committee comprised of health care providers, health insurers,

consumer advocates, businesses, and other parties with relevant expertise to meet at least quarterly

and advise the health insurance commissioner on direction of the program;

     (3) Use data to identify the factors that are causing increased health spending in the state,

to create actionable analysis to drive changes in policy and practice, and to develop and recommend

cost reduction strategies for health care entities; and

     (4) Require health care entities whose annual health care spending growth exceeds the

health care cost growth target to file a written explanation of the reasons for exceeding the target

with the health insurance commissioner following a form and manner determined by the health

insurance commissioner. The health insurance commissioner shall review and provide a written

assessment of the explanation provided by the health care entity which shall be posted on the health

insurance commissioner’s website and submitted with the annual report to the general assembly as

described under § 42-7.5-5.

     42-7.5-5. Annual reports and public meetings.

     (a) The health insurance commissioner shall prepare an annual report and convene a public

meeting concerning health care spending and health care spending growth. The report shall be

submitted to the general assembly annually on or before May 1 of each year, commencing on May

1, 2023.

     (b) The report shall include, but may not be limited to, the following analyses:

     (1) An analysis of the absolute value and rate of growth of total health care spending for

the state as a whole;

     (2) An analysis of the absolute value and rate of growth of health care spending by market,

including the commercial market, which shall be inclusive of health care expenditures made by

third-party insurers acting on behalf of self-insured employer groups in addition to fully insured

plans, the Medicaid managed care market, and the Medicare managed care market;

     (3) An analysis of health care spending growth by health care entity compared to the health

care cost growth target. Health care entities shall be specifically identified in the report;

     (4) An analysis of health care quality performance by health care entities based on a suite

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of health care quality measures selected by the health insurance commissioner; and

     (5) An analysis of the drivers of health care spending growth by service category, as well

as the relative contribution of utilization and price on the rate of growth.

     42-7.5-6. Regulations.

     The health insurance commissioner shall promulgate all necessary and proper rules and

regulations to implement this chapter.

     SECTION 2. Title 42 of the General Laws entitled "STATE AFFAIRS AND

GOVERNMENT" is hereby amended by adding thereto the following chapter:

CHAPTER 14.7

THE RHODE ISLAND ALL-PAYER HEALTH CARE PAYMENT REFORM ACT

     42-14.7-1. Short title.

     This chapter shall be known and may be cited as “The Rhode Island All-Payer Health Care

Payment Reform Act.”

     42-14.7-2. Legislative findings, intent, and purpose.

     The general assembly hereby finds and declares as follows:

     (1) Health care providers are stewards of critical health care resources and deliver services

that are necessary to support the health and wellbeing of Rhode Islanders and the communities in

which they live.

     (2) The structure and terms of health care payment significantly influences the allocation

of resources within the health care system by creating a system of incentives that influence the

behavior of health care providers and health care purchasers.

     (3) The prevailing system of fee-for-service payment creates a financial incentive for

increasing the volume of health care services and acts as a barrier to meaningful systemic

transformations in health care delivery that would promote more affordable and predictable cost

growth, improved financial stability for health care providers, and technical innovation in care

delivery to support population health and quality excellence.

     (4) The coronavirus disease 2019 public health emergency heightened the faults of the

prevailing system of fee-for-service payment. The sharp reduction in service volume caused by the

suspension of elective procedures, combined with increasing marginal costs borne by health care

providers to institute infection control measures, necessitated the appropriation and disbursement

of hundreds of millions of dollars by the State of Rhode Island and the federal government in the

form of economic stabilization and revenue replacement funds for health care providers. The

aggregate value of these economic stabilization and revenue replacement funds was largely

distributed to hospitals and hospital systems, which account for the highest share of total health

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care spending.

     (5) The fragmented organization of health care purchasing activity between multiple public

and private payers, acting principally through competing health insurance companies, precludes

meaningful efforts to align the structure and terms of health care payment in the absence of

government intervention and creates administrative burdens for health care providers.

     (6) Government, as health care purchaser and regulator, possesses a unique role as a

convener and facilitator of discussions between health care providers and health insurers, acting on

behalf of health care purchasers, to reform the structure and terms of health care payment as a

means to improve operating efficiency, improve health care quality, reduce administrative burden,

and serve the public interest in healthy people and equitable health outcomes.

     (7) Payment reform, defined as the restructuring of the terms of health care payment

through the development and implementation of advanced value-based payment models, is

necessary to achieve the goals of affordable and predictable cost growth, improved financial

stability for health care providers, and technical innovation in care delivery to support population

health and quality excellence.

     (8) The general assembly recognizes that on April 13, 2022, Rhode Island health care

leaders entered into a compact to accelerate advanced value-based payment model adoption,

finding that transforming payment away from fee-for-service to a prospective budget-based model

can support improved health care affordability and reorient health care delivery to focus on how

best to organize health care resources to meet population needs, and improve access, equity, patient

experience, and quality.

     (9) The benefits of payment reform are maximized when advanced value-based payment

models enjoy the participation of all payers, public and private. Rhode Island has a successful track

record of all-payer health care reforms. This includes the patient-centered medical home program

for primary care endorsed by the general assembly under chapter 14.6 of title 42, the ("Rhode Island

All-Payer Patient-Centered Medical Home Act").

     (10) It is the intent of the general assembly to endorse and support the efforts of health care

providers and health insurers, acting on behalf of health care purchasers, to increase the adoption

of advanced value-based payment models in Rhode Island. Furthermore, the general assembly

endorses the findings and efforts articulated by health care leaders in the April 13, 2022, Compact

to Accelerate Advanced Value-Based Payment Model Adoption in Rhode Island. It is the purpose

of this chapter to provide policy direction and resources to support the development and

implementation of all-payer advanced value-based payment models in Rhode Island.

     42-14.7-3. Definitions.

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     As used in this chapter, the following terms shall have the following meanings:

     (1) “Advanced value-based payment model” means a prospective budget-based payment

model with quality-linked financial implications that is defined for a specific patient population

and/or set of services.

     (2) "Health insurer" means all entities licensed, or required to be licensed, in this state that

offer health benefit plans in Rhode Island including, but not limited to, nonprofit hospital service

corporations and nonprofit medical-service corporations established pursuant to chapters 19 and 20

of title 27, and health maintenance organizations established pursuant to chapter 41 of title 27 or as

defined in chapter 62 of this title 42, a fraternal benefit society or any other entity subject to state

insurance regulation that provides medical care on the basis of a periodic premium, paid directly

or through an association, trust or other intermediary, and issued, renewed, or delivered within or

without Rhode Island.

     (3) "Health insurance plan" means any individual, general, blanket or group policy of

health, accident and sickness insurance issued by a health insurer as herein defined.

     Health insurance plan shall not include insurance coverage providing benefits for:

     (i) Hospital confinement indemnity;

     (ii) Disability income;

     (iii) Accident only;

     (iv) Long-term care;

     (v) Medicare supplement;

     (vi) Limited benefit health;

     (vii) Specified disease indemnity;

     (viii) Sickness or bodily injury or death by accident or both; and

     (ix) Other limited benefit policies.

     42-14.7-4. Promotion of all-payer health care payment reform.

     (a) All-payer payment reform convening and payment model development shall be

implemented as set forth herein.

     (1) The health insurance commissioner and the Medicaid director shall convene an all-

payer payment reform working group comprised of health care providers, including hospitals,

ambulatory care providers, and clinicians, health insurers, businesses, consumer advocates, and

other parties with relevant expertise and interest in all-payer adoption of advanced value-based

payment models. The health insurance commissioner and the Medicaid director, in consultation

with the working group, shall be charged with developing the structure and terms of advanced

value-based payment models for use by all-payers. The health insurance commissioner and the

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Medicaid director may exercise discretion in the selection and sequencing of payment model

development by provider type but, at minimum, shall develop recommendations for the design of

hospital global budgets for facility and employed clinician professional services and prospective

payment for at least two (2) professional provider types. The health insurance commissioner and

the Medicaid director may form subgroups of the working group to develop recommendations for

the design of specific all-payer advanced value-based payment models.

     (b) All-payer payment reform reports shall be provided as set forth herein.

     (1) The health insurance commissioner and the Medicaid director, in consultation with the

working group described under subsection (a) of this section, shall develop the following reports

to supply information necessary to develop and implement advanced value-based payment models.

These reports shall be submitted to the general assembly by the dates indicated in each subsection

below as follows:

     (i) By July 1, 2024, the health insurance commissioner and the Medicaid director shall

complete a report examining the cost structure and financial performance of hospitals licensed in

Rhode Island. The report shall examine, at minimum, hospital operating costs, fixed costs and

variable costs, costs related to the provision of patient care, costs unrelated to the provision of

patient care, net patient revenues, the relative prices received by hospitals from different payers,

other income and operating expenses, profitability, and operating margins by payer type. The

hospitals included in the report may have up to thirty (30) days to review the draft report prior to it

being finalized;

     (ii) By July 1, 2024, the health insurance commissioner and the Medicaid director shall

complete a report examining the cost-shifting phenomenon between payers. The report shall also

examine the fiscal and economic impact of changes to Medicaid reimbursement rates for hospital

services; and

     (iii) By January 1, 2025, the health insurance commissioner and the Medicaid director shall

submit finished recommendations around payment model design for hospital global budgets for

facility and employed clinician professional services and prospective payment for at least two (2)

professional provider types.

     (2) The health insurance commissioner and the Medicaid director shall procure necessary

technical assistance and consulting services to prepare the payment model recommendations under

subsection (a) of this section and the reports enumerated under subsection (b)(1) of this section.

     (c) Engagement of the centers for Medicare and Medicaid services shall be undertaken as

set forth herein.

     (1) The health insurance commissioner, in consultation with the Medicaid director, shall

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engage the federal Centers for Medicare and Medicaid Services to explore opportunities to secure

federal participation in advanced value-based payment models through the Medicare program. The

health insurance commissioner, for commercial and Medicare, and the Medicaid director, for

Medicaid, are authorized to negotiate the terms of any necessary waivers under Section 1115(A) of

the Social Security Act to secure federal participation in advanced value-based payment models in

Rhode Island.

     42-14.7-5. Annual reports on administration and implementation.

     The health insurance commissioner and the Medicaid director shall report to the general

assembly annually on or before March 1 of every year, commencing on March 1, 2023, on the

implementation of advanced value-based payment models and the work performed by the all-payer

payment reform working group described under § 42-14.7-4(a)(1). The annual report shall include

recommendations and draft legislative language for adoption by the general assembly, if necessary,

to ensure continued progress toward implementation of advanced value-based payment models in

Rhode Island.

     42-14.7-6. Regulations.

     The health insurance commissioner and the Medicaid director shall promulgate all

necessary and proper rules and regulations to implement this chapter.

     SECTION 3. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO STATE AFFAIRS AND GOVERNMENT

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     This act would establish the Health Spending Accountability and Transparency Act to

promote accountability for health care spending by health insurers and health care providers. This

act would also establish the Rhode Island All-Payer Health Care Payment Reform Act to provide

policy direction and resources to support the development and implementation of all-payer

advanced value-based payment models in Rhode Island.

     This act would take effect upon passage.

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LC006093

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