2022 -- S 2994 SUBSTITUTE A | |
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LC006093/SUB A | |
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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 -- THE RHODE ISLAND ALL- | |
PAYER HEALTH CARE PAYMENT REFORM ACT | |
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Introduced By: Senators Pearson, and DiPalma | |
Date Introduced: June 03, 2022 | |
Referred To: Senate Finance | |
It is enacted by the General Assembly as follows: | |
1 | SECTION 1. Title 42 of the General Laws entitled "STATE AFFAIRS AND |
2 | GOVERNMENT" is hereby amended by adding thereto the following chapters: |
3 | CHAPTER 14.7 |
4 | THE RHODE ISLAND ALL-PAYER HEALTH CARE PAYMENT REFORM ACT |
5 | 42-14.7-1. Short title. |
6 | This chapter shall be known and may be cited as “The Rhode Island All-Payer Health Care |
7 | Payment Reform Act.” |
8 | 42-14.7-2. Legislative findings, intent, and purpose. |
9 | The general assembly hereby finds and declares as follows: |
10 | (1) Health care providers are stewards of critical health care resources and deliver services |
11 | that are necessary to support the health and wellbeing of Rhode Islanders and the communities in |
12 | which they live. |
13 | (2) The structure and terms of health care payment significantly influences the allocation |
14 | of resources within the health care system by creating a system of incentives that influence the |
15 | behavior of health care providers and health care purchasers. |
16 | (3) The prevailing system of fee-for-service payment creates a financial incentive for |
17 | increasing the volume of health care services and acts as a barrier to meaningful systemic |
18 | transformations in health care delivery that would promote more affordable and predictable cost |
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1 | growth, improved financial stability for health care providers, and technical innovation in care |
2 | delivery to support population health and quality excellence. |
3 | (4) The coronavirus disease 2019 public health emergency heightened the faults of the |
4 | prevailing system of fee-for-service payment. The sharp reduction in service volume caused by the |
5 | suspension of elective procedures, combined with increasing marginal costs borne by health care |
6 | providers to institute infection control measures, necessitated the appropriation and disbursement |
7 | of hundreds of millions of dollars by the State of Rhode Island and the federal government in the |
8 | form of economic stabilization and revenue replacement funds for health care providers. The |
9 | aggregate value of these economic stabilization and revenue replacement funds was largely |
10 | distributed to hospitals and hospital systems, which account for the highest share of total health |
11 | care spending. |
12 | (5) The fragmented organization of health care purchasing activity between multiple public |
13 | and private payers, acting principally through competing health insurance companies, precludes |
14 | meaningful efforts to align the structure and terms of health care payment in the absence of |
15 | government intervention and creates administrative burdens for health care providers. |
16 | (6) Government, as health care purchaser and regulator, possesses a unique role as a |
17 | convener and facilitator of discussions between health care providers and health insurers, acting on |
18 | behalf of health care purchasers, to reform the structure and terms of health care payment as a |
19 | means to improve operating efficiency, improve health care quality, reduce administrative burden, |
20 | and serve the public interest in healthy people and equitable health outcomes. |
21 | (7) Payment reform, defined as the restructuring of the terms of health care payment |
22 | through the development and implementation of advanced value-based payment models, is |
23 | necessary to achieve the goals of affordable and predictable cost growth, improved financial |
24 | stability for health care providers, and technical innovation in care delivery to support population |
25 | health and quality excellence. |
26 | (8) The general assembly recognizes that on April 13, 2022, Rhode Island health care |
27 | leaders entered into a compact to accelerate advanced value-based payment model adoption, |
28 | finding that transforming payment away from fee-for-service to a prospective budget-based model |
29 | can support improved health care affordability and reorient health care delivery to focus on how |
30 | best to organize health care resources to meet population needs, and improve access, equity, patient |
31 | experience, and quality. |
32 | (9) The benefits of payment reform are maximized when advanced value-based payment |
33 | models enjoy the participation of all payers, public and private. Rhode Island has a successful track |
34 | record of all-payer health care reforms. This includes the patient-centered medical home program |
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1 | for primary care endorsed by the general assembly under chapter 14.6 of title 42, the ("Rhode Island |
2 | All-Payer Patient-Centered Medical Home Act"). |
3 | (10) It is the intent of the general assembly to endorse and support the efforts of health care |
4 | providers and health insurers, acting on behalf of health care purchasers, to increase the adoption |
5 | of advanced value-based payment models in Rhode Island. Furthermore, the general assembly |
6 | endorses the findings and efforts articulated by health care leaders in the April 13, 2022, Compact |
7 | to Accelerate Advanced Value-Based Payment Model Adoption in Rhode Island. It is the purpose |
8 | of this chapter to provide policy direction and resources to support the development and |
9 | implementation of all-payer advanced value-based payment models in Rhode Island. |
10 | 42-14.7-3. Definitions. |
11 | As used in this chapter, the following terms shall have the following meanings: |
12 | (1) “Advanced value-based payment model” means a prospective budget-based payment |
13 | model with quality-linked financial implications that is defined for a specific patient population |
14 | and/or set of services. |
15 | (2) "Health insurer" means all entities licensed, or required to be licensed, in this state that |
16 | offer health benefit plans in Rhode Island including, but not limited to, nonprofit hospital service |
17 | corporations and nonprofit medical-service corporations established pursuant to chapters 19 and 20 |
18 | of title 27, and health maintenance organizations established pursuant to chapter 41 of title 27 or as |
19 | defined in chapter 62 of this title 42, a fraternal benefit society or any other entity subject to state |
20 | insurance regulation that provides medical care on the basis of a periodic premium, paid directly |
21 | or through an association, trust or other intermediary, and issued, renewed, or delivered within or |
22 | without Rhode Island. |
23 | (3) "Health insurance plan" means any individual, general, blanket or group policy of |
24 | health, accident and sickness insurance issued by a health insurer as herein defined. Health |
25 | insurance plan shall not include insurance coverage providing benefits for: |
26 | (i) Hospital confinement indemnity; |
27 | (ii) Disability income; |
28 | (iii) Accident only; |
29 | (iv) Long-term care; |
30 | (v) Medicare supplement; |
31 | (vi) Limited benefit health; |
32 | (vii) Specified disease indemnity; |
33 | (viii) Sickness or bodily injury or death by accident or both; and |
34 | (ix) Other limited benefit policies. |
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1 | 42-14.7-4. Promotion of all-payer health care payment reform. |
2 | (a) All-payer payment reform convening and payment model development shall be |
3 | implemented as set forth herein. |
4 | (1) The health insurance commissioner and the Medicaid director shall convene an all- |
5 | payer payment reform working group comprised of health care providers, including hospitals, |
6 | ambulatory care providers, and clinicians, health insurers, businesses, consumer advocates, and |
7 | other parties with relevant expertise and interest in all-payer adoption of advanced value-based |
8 | payment models. The health insurance commissioner and the Medicaid director, in consultation |
9 | with the working group, shall be charged with developing the structure and terms of advanced |
10 | value-based payment models for use by all-payers. The health insurance commissioner and the |
11 | Medicaid director may exercise discretion in the selection and sequencing of payment model |
12 | development by provider type but, at minimum, shall develop recommendations for the design of |
13 | hospital global budgets for facility and employed clinician professional services and prospective |
14 | payment for at least two (2) professional provider types. The health insurance commissioner and |
15 | the Medicaid director may form subgroups of the working group to develop recommendations for |
16 | the design of specific all-payer advanced value-based payment models. |
17 | (b) All-payer payment reform reports shall be provided as set forth herein. |
18 | (1) The health insurance commissioner and the Medicaid director, in consultation with the |
19 | working group described under subsection (a) of this section, shall develop the following reports |
20 | to supply information necessary to develop and implement advanced value-based payment models. |
21 | These reports shall be submitted to the general assembly by the dates indicated in each subsection |
22 | below as follows: |
23 | (i) By July 1, 2024, the health insurance commissioner and the Medicaid director shall |
24 | complete a report examining the cost structure and financial performance of hospitals licensed in |
25 | Rhode Island. The report shall examine, at minimum, hospital operating costs, fixed costs and |
26 | variable costs, costs related to the provision of patient care, costs unrelated to the provision of |
27 | patient care, net patient revenues, the relative prices received by hospitals from different payers, |
28 | other income and operating expenses, profitability, and operating margins by payer type. The |
29 | hospitals included in the report may have up to thirty (30) days to review the draft report prior to it |
30 | being finalized; |
31 | (ii) By July 1, 2024, the health insurance commissioner and the Medicaid director shall |
32 | complete a report examining the cost-shifting phenomenon between payers. The report shall also |
33 | examine the fiscal and economic impact of changes to Medicaid reimbursement rates for hospital |
34 | services; and |
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1 | (iii) By January 1, 2025, the health insurance commissioner and the Medicaid director shall |
2 | submit finished recommendations around payment model design for hospital global budgets for |
3 | facility and employed clinician professional services and prospective payment for at least two (2) |
4 | professional provider types. |
5 | (2) The health insurance commissioner and the Medicaid director shall procure necessary |
6 | technical assistance and consulting services to prepare the payment model recommendations under |
7 | subsection (a) of this section and the reports enumerated under subsection (b)(1) of this section. |
8 | (c) Engagement of the centers for Medicare and Medicaid services shall be undertaken as |
9 | set forth herein. |
10 | (1) The health insurance commissioner, in consultation with the Medicaid director, shall |
11 | engage the federal Centers for Medicare and Medicaid Services to explore opportunities to secure |
12 | federal participation in advanced value-based payment models through the Medicare program. The |
13 | health insurance commissioner, for commercial and Medicare, and the Medicaid director, for |
14 | Medicaid, are authorized to negotiate the terms of any necessary waivers under Section 1115(A) of |
15 | the Social Security Act to secure federal participation in advanced value-based payment models in |
16 | Rhode Island. |
17 | 42-14.7-5. Annual reports on administration and implementation. |
18 | The health insurance commissioner and the Medicaid director shall report to the general |
19 | assembly annually on or before March 1, commencing on March 1, 2023, on the implementation |
20 | of advanced value-based payment models and the work performed by the all-payer payment reform |
21 | working group described under § 42-14.7-4(a)(1). The annual report shall include |
22 | recommendations and draft legislative language for adoption by the general assembly, if necessary, |
23 | to ensure continued progress toward implementation of advanced value-based payment models in |
24 | Rhode Island. |
25 | 42-14.7-6. Regulations. |
26 | The health insurance commissioner and the Medicaid director shall promulgate all |
27 | necessary and proper rules and regulations to implement this chapter. |
28 | SECTION 2. This act shall take effect upon passage. |
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LC006093/SUB A | |
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EXPLANATION | |
BY THE LEGISLATIVE COUNCIL | |
OF | |
A N A C T | |
RELATING TO STATE AFFAIRS AND GOVERNMENT -- THE RHODE ISLAND ALL- | |
PAYER HEALTH CARE PAYMENT REFORM ACT | |
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1 | This act would establish "The Rhode Island All-Payer Health Care Payment Reform Act." |
2 | This act would provide that the health insurance commissioner and the Medicaid director would |
3 | convene an all-payer payment reform working group which would be charged with developing the |
4 | structure and terms of advanced value-based payment models for use by all-payer. Annual reports |
5 | are to be provided every March 1 to the general assembly. |
6 | This act would take effect upon passage. |
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LC006093/SUB A | |
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