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2022 State of the State Addresses Reflect Realities of Health, Economic Recovery
/in Health Coverage and Access Blogs Chronic and Complex Populations, Cost, Payment, and Delivery Reform, Featured Policy Home, Health Coverage and Access, Health System Costs, Maternal, Child, and Adolescent Health, Population Health, Prescription Drug Pricing /by Allie Atkeson, Anita Cardwell, Clare Cartheuser, Rebecca Cooper, Gia Gould and Elinor HigginsGovernors use their annual state-of-the-state addresses to showcase successes and accomplishments over the past year and to define their policy priorities for the year ahead. This year 36 states will hold gubernatorial elections, so many governors use their state-of-the-state addresses to build their case for reelection and visions for the future. By late February, 41 governors had delivered speeches outlining plans to address a wide variety of health and economic related issues in the coming year, as the immediate health-related emergency of the COVID-19 pandemic has faded. Most governors reflected on the incredible response from frontline responders and public health agencies’ ability to meet the needs of the crisis but focused their future plans on how to emerge from the pandemic and respond to the economic and mental health crises that remain.
View a map highlighting governors’ goals on a variety of health-related policies here.
Priorities diverged from their 2021 health care and social determinants priorities. While many governors continued to address social drivers of health, citing affordable housing and access to healthy food and the environment as key levers to improve health, more highlighted livable wages, support for the workforce and business, and education. Notably, in comparison to last year, many more governors highlighted the need to address health care workforce shortages that have been exacerbated by the COVID-19 crisis. Governors also mentioned their priorities for investing American Rescue Plan Act (ARPA) funding.
These issues do not exist in isolation; many of these topics, including mental health, education, workforce, and equity, are woven throughout the speeches and require a whole-of-government approach to address. Below are highlights from key themes that the governors addressed.
Behavioral Health
Twenty-eight governors discussed behavioral health in their speeches this year, up from 22 last year. With an increased focus on crisis services, substance use disorder services and school-based mental health care as a result of COVID-19, governors addressed the need for investments in behavioral health services and workforce.
Fourteen governors mentioned making significant investments in behavioral health in their state-of-the- state addresses. In Idaho, Gov. Little proposed accelerating the implementation of the Behavioral Health Council’s recommendations, including a $50 million dollar investment in behavioral health care. In the executive budget, Gov. Lujan Grisham of New Mexico is proposing “tens of millions of dollars into new behavioral health services, expanding access to treatment for substance abuse, suicide interventions and more. New Mexicans call me about this issue more than almost any other, and we will answer that call.”
Ten governors mentioned substance use disorder, including the opioid epidemic and recent rises in overdoses over the past year. New Jersey Gov. Murphy discussed the state’s data driven approach to the opioid-use epidemic and expansion of harm reduction centers and naloxone.
In Delaware and Tennessee, governors discussed their executive branch efforts to combat the opioid epidemic. In Delaware, the Behavioral Health Consortium is led by Lt. Gov. Hall-Long, and the state was one of a few to see a decrease in the rate of overdose deaths. In Tennessee, Attorney General Slatery is working to deploy funding from the $26 billion dollar suit against pharmaceutical companies. Governors in Alaska and Missouri discussed providing behavioral health services to individuals in the criminal justice system.
Nine governors referenced youth behavioral health and school-based services now that children are back in the classroom. In Alabama, Michigan, Vermont, Washington, and Wisconsin, governors proposed additional school mental health supports. Gov. McMaster in South Carolina stated, “we must also recognize that a mental health crisis exists in South Carolina, especially among our young people who have weathered two years of disruptions, virtual instruction, isolation, and constant changes to normal routines.” He also directed the Health and Human Services Director to study the state’s behavioral health system as 60 percent of South Carolina children are enrolled in Medicaid. In Washington, Gov. Inslee’s budget will increase the number of school counselors, nurses, psychologists, and social workers in schools.
Six governors discussed strengthening the crisis system of care in their states through outreach services, mobile unitsand new centers. Gov. Ivey of Alabama proposed funding for two new mental health crisis centers and in New Hampshire, Gov. Sununu discussed mobile crisis support and a new 24/7 crisis call center. Alaska Gov. Dunleavy announced reopening the unit that serves adolescents in crisis, and additional funding for staffed beds.
Six governors also discussed supporting the behavioral health workforce through crosscutting investments. Massachusetts Gov. Baker discussed working with the legislature to address “enormous staff and clinician shortages in exactly the areas of care that we need most.” In Michigan, Gov. Whitmer stated, “40 percent of Michiganders do not get treatment for their mental illness. We will address this shortfall by expanding Michigan’s Loan Repayment Program for mental health professionals. And we will make a historic investment to retain and recruit hundreds more mental health workers.”
Broadband
This year, 17 governors discussed broadband in their state-of-the-state speeches, down from 30 in 2021. Governors in four states, Alabama, Delaware, Hawai’i and Maine proposed leveraging ARPA funding to support broadband efforts in their states. Other themes included broadband connectivity to support remote work and education and the creation of statewide authorities for broadband. Missouri Gov. Parson requested a “$34 million dollar investment in rural communities to increase access to telehealth and telemedicine services.”
Five governors identified broadband as critical for supporting remote work and education. According to Kansas Gov. Kelly, hotspots were deployed to students in low-income households to continue their education remotely. Gov. Dunleavy in Alaska stated that broadband “…unlocks the opportunity for us to live anywhere and work from anywhere in this Great State.”
Additionally, governors in Kansas and Maine are establishing statewide broadband authorities, In Kansas, the Office of Broadband Development has expanded internet access to over 50,000 new households and businesses. The Maine Connectivity Authority is “a new entity charged with achieving universal internet access.”
COVID-19
In 2021, 34 governors addressed COVID-19 in their state-of-the-state speeches, emphasizing vaccine distribution and economic recovery. In 2022, 17 governors mentioned COVID-19 with a focus on COVID-19 mandates, return to school, testing and vaccines.
The continued rollout of vaccines and testing as a strategy to mitigate the spread of COVID-19 were discussed by 12 governors. Gov. Sununu in New Hampshire emphasized the importance of data guiding the state’s approach. In South Dakota, Gov. Noem mentioned the state’s free at-home test program and announced an additional 1 million new tests to be delivered throughout the state.
Four governors spoke against COVID-19 mandates, including vaccines and masking. Gov. Dunleavy of Alaskastated his administration, “will continue to defend Alaskans’ rights to make their own medical decisions about vaccines and therapeutics for themselves and their families in consultation with their doctors and pharmacists.” Similarly, Gov. Parson of Missouri said, “when it comes to COVID-19 mandates, I firmly believe that the people should have say through their local elected representatives and not be dictated by needless executive action or any one person.”
Return to in-person instruction and masks in schools were discussed by three governors. Recently elected Gov. Youngkin of Virginia signed an executive order that allows parents to opt out of mask mandates in schools. In Kentucky, Gov. Beshear discussed the strategy to prioritize vaccines for educators and the state’s ability to return to in-person instruction in every school district early on.
Education
Thirty-seven governors discussed education this year and the impacts of COVID-19 were present throughout the speeches. Major themes included teacher recruitment and retention, addressing learning loss, and affordability of higher education. There was a marked decrease compared to last year in the number of governors that talked about expanding access to early education. Twenty-three governors proposed generalized investment in schools and students, and five governors emphasized the importance of keeping children in the classroom. Gov. Ige of Hawai’iemphasized the importance of in-person learning, but also announced the launch of the Hawai’i Virtual Learning Network—a virtual classroom network that can supplement in-person classes.
Eighteen governors talked about recruiting and retaining qualified teachers, with a major focus on increasing teacher salaries and recognizing the difficulties that educators have faced over the past two years. Gov. DeSantis of Florida proposed increases in teacher salaries in addition to $1000 bonuses for the second year in a row. Some governors also mentioned other types of support for teachers. For example, Gov. Hochul of New York proposed more “effective training and support, faster and easier certification, and stronger career pipelines and ladders”.
Sixteen governors proposed targeted investments in improving the quality of education in their states by enhancing literacy levels and meeting benchmarks, supporting greater investment in STEM education, or by making up learning loss sustained during the COVID-19 pandemic. Gov. Burgum of North Dakota talked about setting computer science and cyber science graduation standards for K-12 students, undergraduate students, and graduate students. Indiana Gov. Holcomb talked about the continued investment in accelerated learning programs to support students who fell behind during the pandemic.
Many governors also focused on opportunities following K-12 education, whether entering the workforce, enrolling at a community college, or attending a four-year university. Ten governors talked about apprenticeship programs and adult education opportunities, fourteen proposed investments in higher education, with nine of those focusing specifically on community college investments, and sixteen governors proposed higher education affordability measures like tuition freezes, scholarships, or loan forgiveness programs.
Ten governors also emphasized parental choices and roles in education, through vouchers, school choice programs, charter schools, or more parental involvement in curriculum. Idaho Gov. Little proposed an investment in Empowering Parents grants, which would cover “computers, tutoring, internet connectivity and other needs so students have the best chance for success.”
Equity
COVID-19 clearly shone a light on racial and ethnic health and economic-related disparities that existed prior to the pandemic, and in 2022, 9 governors highlighted the connection to equity in their plans, down from 21 governors in 2021. Three governors discussed the connection and disproportionate impact of the environment on low-income communities and communities of color. Oregon Gov. Brown used an equity lens to set the tone of her speech. She noted that she is “…most proud of is how Oregon approaches … challenges––through an equity lens. With a focus on our communities hardest hit by climate change: rural communities, people with low incomes, and people of color.”
Delaware Gov. Carney announced that the state, with federal support, will invest more than $400 million in Delaware’s clean water infrastructure, focusing on underserved communities. New York’s Gov. Hochul also proposed work to fix longstanding problems that disproportionately impact communities of color, including reconnecting neighborhoods that were cut off by highways, and directing the Metropolitan Transit Authority (MTA) to conduct an environmental review, to ensure no further harm is done.
Three governors also considered the intersection of poverty and communities of color and developed strategies to mitigate economic impacts.
Health Care Costs
Seven governors addressed increasing health care costs— emphasizing the need to alleviate the burden of rising healthcare costs on both individuals and state budgets. Notable state efforts to lower costs across the health care system include:
– New Jersey Gov. Murphy committed to lowering healthcare and prescription drug costs through a cost growth benchmark and additional transparency requirements throughout the prescription drug supply chain to identify cost drivers.
– Nevada Gov. Sisolak announced that the state will join the Northwest Prescription Drug Consortium with Washington and Oregon to leverage collective purchasing power to lower the cost of prescription drugs.
– Gov. Cox of Utah asked legislators to support the newly established Utah Sustainable Health Collaborative tasked with developing strategies to lower health care costs while improving outcomes.
Virginia Gov. Youngkin expressed support for legislation to extend access to association health plans, providing small business owners with a lower cost coverage option for their employees. Three governors celebrated successful state reforms which have lowered health insurance costs in the individual and small group market.
– Colorado Gov. Polis shared that the state reinsurance program reduced healthcare premiums by 24 percent on the individual market, with even more significant cost savings in the western region of the state.
– Following last year’s launch of a state-based marketplace, New Jersey Gov. Murphy shared that enrollment in the individual marketplace increased by more than 25 percent.
– Nevada Gov. Sisolak touted last year’s adoption of a public option to increase affordability and expand coverage options.
Five governors addressed the issue of rising prescription drug costs, with the majority focusing on the prohibitively high cost of insulin. Governors in Michigan and Colorado aim to improve insulin affordability through monthly price caps and Gov. Whitmer of Michigan announced that the state’s Attorney General would launch an investigation into one of the largest producers of insulin for excessive pricing.
Health Care Workforce
This year, against the backdrop of ongoing COVID-19 hospitalizations and concerns about burnout, 20 governors talked about their plans to address workforce shortages and bolster the health care workforce. In 2021, only eight governors mentioned plans to support or bolster the healthcare workforce. Recruitment was the overarching theme this year, with fifteen governors talking about how to successfully train more nurses, doctors, or emergency responders, how to use scholarships or loan forgiveness programs to incentivize entry into the health care field, and how to bring more health care providers into the state from elsewhere. Governors of New York, South Dakota, and Vermont talked about recognizing out of state licenses to attract qualified providers to their states. In Alaska, Georgia, Hawai’i, Maine, New Mexico, and Oklahoma, governors talked about expanding education programs to train more nurses and other health care providers. These proposals included plans for adding faculty to existing programs, opening new educational programs, and admitting more students to increase the number of graduates. Gov. Reynolds of Iowa announced a new apprenticeship program for high school students that would allow them to become certified nursing assistants before graduating high school. And governors in Iowa, Illinois, Rhode Island,and New York mentioned plans to offer additional scholarships, tuition reimbursement, or loan forgiveness for students training to enter the health care workforce—particularly if they stay in-state after graduating.
In addition to recruitment, nine governors also focused on strategies to retain the existing workforce—particularly those individuals who are experiencing the exhaustion of the COVID-19 pandemic. In Alabama, Colorado, Maine, New York, and Wisconsin, governors talked about increased compensation for those in the healthcare field, through pay raises, higher Medicaid reimbursement rates, or bonuses. Gov. Polis of Colorado and Gov. Pritzker of Illinoismentioned plans to wave licensing fees for healthcare providers in their states.
Housing and Homelessness
Sixteen governors addressed housing and homelessness in their state of the state speeches. Highlighting the impact of the COVID-19 pandemic, governors concentrated on the need to increase the supply of affordable housing, strategies to reduce homelessness, and rent and mortgage assistance. In her speech, Gov. Brown in Oregon made the connection between housing and homelessness stating, “there is no avoiding the fact that these two issues are undeniably linked –– a lack of affordable housing and some of the highest rates of people experiencing homelessness. In Oregon, today, missing one paycheck can be the difference between going to bed in a home with heat and running water, or sleeping unsheltered.”
Eleven governors spoke for the need to increase the housing stock with an emphasis on affordable housing. Gov. Mills of Maine referenced the Maine Jobs and Recovery Plan which will invest $50 million to “increase the number of energy-efficient, affordable homes for working Maine people.” In Colorado, Gov. Polis announced 14,000 units of affordable housing have been developed in the past year, saving families more than $72 million annually.
Governors in Delaware, New Mexico and Oregon discussed providing rent and mortgage assistance to residents, and governors in Colorado, Delaware and New Hampshire addressed using ARPA funding to support their housing programs. New Mexico Gov. Lujan Grisham said, “in the next 12 months your state government is going to deliver an additional $230 million in rent and utility assistance to the New Mexicans who need it most.”
In addition to increasing the housing supply, five governors discussed reducing homelessness in their states, proposing models such as permanent supportive housing. In Colorado, Gov. Polis proposed several interventions to address homelessness including “affordable and transitional housing, substance use treatment and recovery care, related residential programs, and permanent housing with wrap-around support services, and recipients of funds need to be held accountable for actually reducing homelessness.” Gov. Hochul of New York identified root causes of homelessness in her speech—poverty, addiction and housing insecurity—and announced a five-year housing plan to preserve 100,000 affordable homes with supportive services in 10,000 units.
Jobs/Livable Wages
The topic of employment, workforce investments, livable wages and the need to support overall economic growth was mentioned by a total of 38 governors, which is an increase from last year when 28 governors focused on this topic.
The most common theme was planned investments to promote workforce development through new training initiatives. Governors in Maine, Oklahoma, South Carolina, Tennessee and Vermont specifically mentioned apprenticeship opportunities and career development for adolescents and young adults, and Vermont’s Gov. Scott placed an emphasis on trades training, in particular to help grow the number of nurses and other healthcare workers in the state. Oregon’s Gov. Brown discussed plans to build upon Future Ready Oregon, a workforce training initiative focused on jobs in health care, technology, manufacturing, and construction. She also mentioned plans to incorporate support services to help individuals advance from an entry-level job such as a certified nursing assistant to a health care administrator. Governors in Delaware, Michigan, Mississippi, and South Carolina shared plans to invest recently allocated federal funds to support workforce skills training initiatives, and Hawai’i’s Gov. Ige highlighted the launch of an online hub designed to connect unemployed individuals with career and training opportunities.
Governors also focused on the issue of supporting overall economic development. Delaware’s governor highlighted the state’s focus on championing small businesses to bolster job growth, including both “mom-and-pop” small businesses as well as cutting-edge technology companies, and Gov. Murphy of New Jersey commented similarly about supporting both technology start-ups and traditional small businesses. Other governors spoke about the role of planned tax cuts with the intention of supporting job creation, with governors in Colorado, Idaho, and Indiana mentioning this issue.
Some governors also focused on the issue of wages and highlighted plans to increase pay rates for state employees, such as law enforcement and teachers. The governors of Alabama, Kentucky and Missouri announced pay raises for all state workers, and Gov. McMaster commented that while overall compensation for South Carolina state employees should be reevaluated, salary increases should be determined by merit-based performance incentives rather than an across-the-board pay raise. Proposals to increase salaries for teachers specifically were raised by the governors in Alabama, Florida, Georgia, Mississippi, Oklahoma, South Carolina, and Tennessee. Additionally, the governors of both Delaware and Pennsylvania advocated for an increase in the overall minimum wage in their states. Gov. Wolf noted that when factoring in inflation, minimum wage workers in Pennsylvania actually experienced a $2 pay reduction.
Medicaid, Coverage and Access
Despite the significant growth in state Medicaid programs during the pandemic, only five governors mentioned Medicaid in their speeches.
Several governors proposed Medicaid coverage and benefit expansions. In response to rising maternal mortality rates, governors in Georgia and Rhode Island advocated for extending postpartum Medicaid coverage from 60 days to 12 months to provide coverage continuity during the critical postpartum period. Rhode Island Gov. McKeeintroduced a proposal to cover all kids regardless of immigration status through the state’s Medicaid program. Tennessee Gov. Lee announced a $25 million dollar investment to broaden access to dental services for over 600,000 Medicaid recipients as well as an additional $55 million to support the Medicaid Pathways to Independence program.
Only Kansas Gov. Kelly advocated for adoption of Medicaid expansion, providing the economic argument that, “Medicaid expansion won’t just protect small towns and their residents, it will keep health care professionals from moving to neighboring states… (without Medicaid expansion) we are sabotaging our rural communities and their efforts to recruit new jobs and residents”.
The broader topic of health coverage and access was mentioned by governors in six states — a significant decline from last year when 17 governors addressed these issues. Governors were largely focused on the need to improve rural health care access:
– New Mexico Gov. Lujan Grisham proposed the creation of a Rural Health Care Delivery Fund to provide support for health systems in counties with fewer than 100,000 residents. The fund would provide financial support for newly constructed hospitals in rural areas to compensate for operating losses incurred during the first five years of operation.
– South Dakota Gov. Noem aims to improve health care options for rural communities by extending telehealth flexibilities to emergency responders.
– Wyoming Gov. Gordon committed to improving care accessibility through improvements to the state’s Emergency Medical System.
– Gov. Evers of Wisconsin will invest $20 million to provide rural communities with flexible funding to increase staffing support and provide additional training to first responders.
Gov. Pritzker of Illinois commented on the state’s recent $3.8 billion dollar investment in hospitals serving high proportions of Medicaid patients to improve care in underserved communities.
Other health-related issues
Below is a snapshot of some of the other health-related topics that governors mentioned:
- Aging: Four governors mentioned issues related to the elderly population in their speeches. Mills of Maine announced plans to establish a Silver Cabinet (similar to the state’s Children’s Cabinet) to promote interagency action on long-term care issues. New Mexico’s governor proposed an initiative called New Mexi-Care to expand an existing state program that supports and reimburses caregivers for the care they provide to elderly family members, regardless of Medicaid eligibility. Also, although New York’s Gov. Hochul did not mention the topic of aging in her speech, in an accompanying document she outlined intentions to develop a state master plan for aging.
- Child Care and Family Supports: Nine governors commented on proposals to support the needs of families, such as Delaware’s Gov. Carney advocating for paid leave in the private sector as well as other governors promoting increased access to high-quality and affordable child care. Maine’s Gov. Mills noted plans to include $12 million in the state’s supplemental budget to increase child care workers’ wages, and also highlighted the use of American Rescue Plan Act funds to strengthen the state’s child care system, which includes stipends for child care workers as well as investments in child care facilities and early childhood education programs. Iowa’s Gov. Reynolds announced an expansion of the state’s Childcare Challenge, which is designed to increase access to child care options for families, and commented on progress in implementing recommendations from the state’s Child Care Task Force. North Dakota’s Gov. Burgum highlighted a new initiative that will be launched in the spring to help employers offer child care benefits to their employees and a soon-to-be finalized comprehensive state strategy for increasing access to high-quality, affordable child care. Utah’s Gov. Cox proposed creating a new government position to address the needs of parents and children, which will focus on parental leave, increased access to child care, and mentoring opportunities for parents. Also, Tennessee’s Gov. Lee highlighted recent funding for the state’s Healthy Starts Initiative, which focuses on maternal health and holistic care for both mothers and children.
- Child Welfare: Eight governors spoke about the child welfare system, including the governors of Arizona, Florida, Georgia, and Tennessee who mentioned potential new investments to support caregivers. Ducey in Arizona mentioned plans to provide resources to extended family members caring for children who would otherwise be in the foster care system, and Georgia’s governor proposed a 10 percent provider rate increase for all foster parents, relative caregivers, and child caring and placing agencies. In Washington, Gov. Inslee said that his budget would include $80 million to support foster care youth with complex needs and help them transition out of foster care. Gov. Kelly noted that Kansas was one of the first states to implement the Family First Prevention Services Act and the recent creation of the Division of the Child Advocate to help ensure that youth in the child welfare system are healthier and safer.
- Environmental Actions: Seventeen governors discussed their plans to protect the environment, including plans to address climate resiliency and ensuring clean air and water for residents. Ten governors discussed plans to improve water quality. Kansas shared the state’s new water plan, a five-year blueprint to ensure the state has a reliable, quality water supply to support the needs of Kansas communities, including their farming economy. Ten governors discussed their plans to address climate change and promote climate resiliency. Delaware’ Gov. Carney announced the state’s new Climate Action Plan. Six governors discussed actions to reduce carbon emissions or become carbon neutral, and four governors noted deadlines by which this must occur. Ige reflected that Hawai’i was the first state to commit to a net-negative goal by 2045 and re-committed to doubling down on this effort.
- Food Access: Eight governors commented on the issue of food security, distribution, and production. Alaska’s Gov. Dunleavy spoke about plans to create a Food Security Task Force to help promote the state’s agriculture and mariculture industries and minimize disruptions in the food supply chain by supporting state-grown products. In response to rising food costs, governors in both Illinois and Kansas advocated that their state’s grocery taxes should be suspended, and Utah’s governor proposed a $160 million grocery tax credit for families. Maine’s Gov. Mills announced that her proposed budget will include plans to fund universal free meals in schools and promote school and community gardens.
- Public Health: Three governors addressed the topic of public health, with the governor of Indiana mentioning a number of public health issues, including that the state’s Public Health Commission will be publishing recommendations on ways to modernize and strengthen the state’s overall public health system. Also, given that the state ranks 46th in obesity, 46th in smoking, and 40th in childhood immunizations, he emphasized the importance of investing in preventive measures to minimize future costly health complications. Additionally, he noted plans to continue focusing on reducing infant mortality and strengthening childhood lead screening efforts. Nebraska’s Gov. Ricketts highlighted plans to use $200 million from the American Rescue Plan Act for public health emergency response efforts. South Carolina’s governor also noted plans to use federal funds for investments in upgrading water and sewer systems and commented on how these enhancements can improve the overall public health of communities.
- Transportation: Seven governors spoke about transportation infrastructure investments from a health-focused perspective. Five governors mentioned initiatives to support clean transportation, with Delaware’s Gov. Carney and Michigan’s Gov. Whitmer highlighting plans to dedicate resources to support electric vehicles and Washington’s Gov. Inslee proposing to invest nearly $1 billion to fund a range of transportation programs that reduce pollution. Additionally, Indiana’s Gov. Holcomb spoke about investing in commuter rail projects as well as committing $150 million to expand the state’s walking, hiking, and biking trails.
- Violence Prevention: Thirteen governors commented on the issue of violence prevention. The governors of Delaware, Maryland, New Jersey, and New York emphasized the importance of gun violence prevention, and the governors of both Colorado and Illinois focused on community-based violence prevention initiatives. Alaska’s Gov. Dunleavy requested state legislators to fund the People First Initiative, which includes addressing the issues of domestic violence and sexual assault, human trafficking, and missing and murdered Indigenous individuals.
Conclusion
As the United States enters the third year of the pandemic, governors’ 2022 state-of-the-state speeches reflect the realities of health and economic recovery. Compared to 2021, states have access to additional resources through ARPA, and their priorities remain centered on addressing the lasting impacts of the COVID-19 pandemic with an emphasis on behavioral health, education and jobs and wages. As state legislatures convene and enact budgets, the National Academy for State Health Policy will continue to track many of these topics in the coming months.
A Model Act for State Oversight of Proposed Health Care Mergers
/in Health System Costs, Model Legislation and Resources, Policy Consumer Affordability, Health System Costs, Hospital/Health System Oversight, Making the Case for Action /by NASHP StaffSection 1: Definitions.
(A) As used in [this Act], the following words shall have the following meanings:
- “Health care entity” means a health care provider, health care facility, or provider organization.
- “Health care facility” means a licensed institution providing health care services or a health care setting, including, but not limited to, hospitals and other licensed inpatient facilities, ambulatory surgical or treatment centers, skilled nursing facilities, residential treatment centers, diagnostic, laboratory and imaging centers, imaging centers, free-standing emergency facilities, outpatient clinics, and rehabilitation and other therapeutic health settings.
- “Health care provider” means any person, corporation, partnership, governmental unit, state institution or any other entity qualified or licensed under state law to perform or provide health care services.
- “Health care services” means supplies, care, and services of medical, behavioral health, substance use disorder, mental health, surgical, optometric, dental, podiatric, chiropractic, psychiatric, therapeutic, diagnostic, preventative, rehabilitative, supportive or geriatric nature.
- “Material change transaction” means any of the following, occurring during a single transaction or in a series of related transactions [within a consecutive 12-month period]:
a. A corporate merger including one or more health care entities;
b. An acquisition of one or more health care entities, including insolvent health care entities. For the purposes of [this Act], “acquisition” means the direct or indirect purchase in any manner, including, but not limited to, lease, transfer, exchange, option, receipt of a conveyance, creation of a joint venture, or any other manner of purchase, such as by a health care system, private equity group, hedge fund, of a material amount of the assets or operations of a health care provider;
[Note: States may have a statutory definition of the word “material”. If not, policymakers may consider defining it in regulation.]
c. Any affiliation, arrangement, or contract that results in a change of control for a health care entity. For the purposes of [this Act], “change of control” means an arrangement in which any other person, corporation, partnership, or any other entity acquires direct or indirect control over the operations of a health care facility or provider in whole or in substantial part. For purposes of this section, an “arrangement” shall include any agreement, association, partnership, joint venture, or other arrangement that results in a change of governance or control for a health care entity;
d. The formation of a partnership, joint venture, accountable care organization, parent organization or management services organization for the purpose of administering contracts with carriers, third party administrators, pharmacy benefit managers or providers;
e. A sale, purchase, lease, affiliation or transfer of control of a board of directors that involves a hospital.
6. “Material change transaction” does not include any of the following:
a. A clinical affiliation of health care entities formed for the purpose of collaborating on clinical trials; or
b. Graduate medical education programs; or
c. The mere offer of employment to, or hiring of, a physician.
7. “Provider organization” means any corporation, partnership, business trust, association or organized group of persons, which is in the business of health care delivery or management, whether incorporated or not that represents 1 or more health care providers in contracting with carriers for the payments of heath care services; provided, that ”provider organization” shall include, but not be limited to, physician organizations, physician-hospital organizations, independent practice associations, provider networks, accountable care organizations and any other organization that contracts with carriers for payment for health care services.
Section 2: Notice.
(A) Any health care entity shall, before consummating any material change transaction, submit written notice to the Attorney General, state Department of Health, [and the state cost commission] not fewer than [60 days] before the date of the proposed material change transaction.
(B) Written notice shall include and contain the information the Attorney General [or the Department of Health or state cost commission] determines is required. The health care entity may include any additional information supporting the written notice of the material change transaction.
(C) Within [10 days] of receiving written notice of a material change transaction, the Attorney General shall post to the Attorney General’s website information about the material change transaction including:
- A summary of the proposed transaction;
- An explanation of the groups or individuals likely to be impacted by the transaction;
- Information about services currently provided by the health care entity, commitments by the health care entity to continue such services and any services that will be reduced or eliminated;
- Details about any public hearings and how to submit comments;
- The notice and other materials submitted by the health care entity, except for materials that the Attorney General determines would cause public harm.
Section 3: Preliminary Review
(A) Within [30 days] after receiving a notice described in [Section 2 of this Act], the Attorney General shall do one of the following:
- Approve the material change transaction and notify the health care entity in writing that a comprehensive review is not required for the material change transaction;
- Approve the material change transaction subject to conditions set by the Attorney General and notify the health care entity in writing of the conditions under which the transaction may be completed; OR
- Notify the health care entity [and state cost commission] in writing that the transaction is subject to a comprehensive review. The Attorney General may request additional information necessary to perform a comprehensive review under [Section 4 of this Act].
(B) A comprehensive review is required when any of the following apply to the material change transaction:
- Will result in the transfer of assets valued above [$2 million];
- Occurs in a highly consolidated market for any line of services offered by any party to the material change transaction;
- Will cause a significant change in market share, such that any resulting health care entity possesses market power upon completion;
- If either party to the material change transaction possesses market power prior to the transaction;
- If the Attorney General, at the Attorney General’s sole discretion, determines that the material change transaction is likely to have a material impact on the cost, quality, or access to health care services in any region in the state.
(C) For purposes of [this section], “market power” means possessing 30% or more market share in any line of service in the relevant geographic area or under other criteria that the Attorney General may define by regulation
[Note: Policymakers may need to define some of these terms and specify how they are to be calculated in regulation. States may also use regulation to specify additional criteria that trigger comprehensive review. Additionally, the market power thresholds may not capture vertical or cross-market mergers, so policymakers may want to specify when non-horizontal mergers should trigger comprehensive review in regulation based on market conditions in the state.]
(D) Nothing in this section limits or infringes upon the existing authority of any state agency including the Department of Health, Department of Insurance, [state cost commission], or the Attorney General to review any transactions.
[Note: This clause is intented to preserve existing review processes in a state by a Certificate of Need program, the Department of Health, and or by the Attorney General for transactions involving charitable trust concerns for non-profit transactions.]Section 4: Comprehensive Review Process
(A) No later than [30 days] after determining a transaction is subject to a comprehensive review, the Attorney General shall:
-
- Conduct one or more public meetings, one of which shall be in the county in which the health care entity is located, to hear comments from interested parties; and
- [Notify the state cost commission of the determination under Section 3 of the proposed material change or contract with consultants to] produce a cost and market impact review (CMIR) report.
(B) The CMIR report may examine factors relating to the proposed transaction, transacting parties, and their relative market position, including, but not limited to:
- The market share of any transacting party;
- Any previous transaction involving either transacting party, including, but not limited to acquisitions or mergers of similar health care providers;
- The prices charged by either of the transacting parties for services, including its relative price compared to other providers for the same services in the same geographic area;
- The quality of the services provided by any health care provider(s) party to the transaction, including patient experience;
- The cost and cost trends of the health care provider in comparison to total health care expenditures statewide;
- The availability and accessibility of services similar to those provided, or proposed to be provided, through the provider or provider organization within its primary service areas and dispersed service areas;
- The impact of the material change transaction on competing options for the delivery of health care services within its primary service areas and dispersed service areas;
- The role of the transacting parties in serving at-risk, underserved, and government payer patient populations;
- The role of the transacting parties in providing low margin or negative margin services within its primary service areas and dispersed service areas;
- Consumer concerns, including but not limited to, complaints or other allegations that the provider or provider organization has engaged in any unfair method of competition or any unfair or deceptive act or practice; and
- Any other factors that the Attorney General or the [state cost commission or consultant] determines to be in the public interest.
(C) The Attorney General [or state cost commission] may request additional information or documents from the transacting parties necessary to conduct a CMIR. Failure to respond or insufficient responses to requests for information by transacting parties may result in the extension of the deadline for the Attorney General or state cost commission to complete the CMIR, the imposition of conditions for approval, or the disapproval of the material change transaction.
(D) The Attorney General [and state cost commission] shall keep confidential all nonpublic information and documents obtained under [this section] and shall not disclose the confidential information or documents to any person without the consent of the party that produced the confidential information or documents, except that the Attorney General may disclose any information to an expert or consultant under contract with the office of the Attorney General to review the proposed transaction, provided that the expert or consultant is bound by the same confidentiality requirements as the office of the Attorney General. The confidential information and documents shall not be public records and shall be exempt from [state open records act].
(E) In addition to commissioning a CMIR report, the Attorney General may, in his or her sole discretion:
-
- Contract with, consult, and receive advice from any state agency [including the Department of Health, Department of Insurance, or any other state agency] on those terms and conditions that the Attorney General deems appropriate.
- Contract with experts or consultants to assist in reviewing the proposed agreement or transaction.
(F) Not more that [185 days] after receiving written notice from the Attorney General that the transaction is subject to a comprehensive review under [Section 4], the [state cost commission or consultant] shall submit to the Attorney General a CMIR report; provided that the health care entity has complied with the Attorney General’s [or state cost commission’s] requests for information or documents pursuant [this section] within [21 days] of the request or by a later date set by mutual agreement of the health care entity and the Attorney General [or state cost commission].
[Note: Nothing in this section prevents policymakers from creating a streamlined process in regulation to conduct a smaller CMIR with reduced timelines to review smaller transactions with few competitive concerns.](G) The Attorney General [and state cost commission] shall be entitled to [charge costs to or receive reimbursement from] the transacting parties for all actual, reasonable, direct costs incurred in reviewing, evaluating, and making the determination referred to in [this section], including administrative costs.
[Note: Lawmakers should follow existing state law regarding procurement practices when drafting this section to determine whether the Attorney General should be reimbursed or whether the transacting parties should be billed directly. The Attorney General should maintain complete discretion in choosing consultants or experts to review the transaction.]Section 5: Approval Authority
(A) The Attorney General shall have discretion to approve, conditionally approve, or disapprove of any material change transaction for which the Attorney General receives notice under [Section 2 of this Act].
(B) The Attorney General shall inform the health care entity of the determination within [30 days of notice under Section 2], or in the case of comprehensive review, within [30 days of the Attorney General’s receipt of the CMIR]. No proposed material change transaction may be completed before the Attorney General has informed the health care entity of the Attorney General’s determination.
(C) In making the determination, the Attorney General may consider any factors that the Attorney General deems relevant, including, but not limited to:
- The likely impact, as described in the CMIR report where applicable, of the material change on:
a. The growth in patient costs;
b. The availability or accessibility of health care services to the affected community;
c. Provider cost trends and containment of total state health care spending;
d. Access to services in medically underserved areas;
e. Rectifying historical and contemporary factors contributing to a lack of health equities or access to services;
f. The functioning of the markets for healthcare and health insurance;
g. The potential for the material change transaction to affect health outcomes or health equity for residents of this state; or
h. the potential loss or change in access to essential services.
2. Whether the material change transaction is proper under [state antitrust laws];
3. Whether the benefits of the transaction are likely to outweigh the anticompetitive effects from the transaction;
4. If the transaction is in the public interest.
[Note: Lawmakers should tailor this non-exhaustive list of factors to state priorities. Lawmakers may want to list specific services in Section 5 (C)(i)(g) or choose to define “essential services” in regulation and to help define when transactions are in the public interest. As above, lawmakers should note if their state has a statutory definition of “public interest” and if that definition is appropriate here. ](D) This section does not limit or alter any existing authority of the Attorney General or any state agency to enforce any other law including state or federal antitrust law or to review non-profit transactions.
Section 6: Post-transaction Oversight
(A) The Attorney General may enforce conditions imposed by a conditional approval pursuant to [Section 5] to the fullest extent provided by law. In addition to any legal remedies the Attorney General may have, the Attorney General shall be entitled to specific performance, injunctive relief, and other equitable remedies a court deems appropriate for breach of any of the conditions and shall be entitled to recover its attorney’s fees and costs incurred in remedying each violation.
(B) In order to monitor effectively ongoing compliance with the terms and conditions of any transaction, the Attorney General may, in his or her sole discretion, contract with experts and consultants to assist in this regard.
(C) One year, two years, and five years after the completion of the material change transaction approved or conditionally approved by the Attorney General after a comprehensive review under [Section 4], the health care entity or the person, corporation, partnership, or any other entity that acquired direct or indirect control over the health care entity must submit reports to the Attorney General that:
- Demonstrate compliance with conditions placed on the transaction, if any; and
- Analyze cost trends and cost growth trends of the parties to the transactions.
(D) The Attorney General shall be entitled to [charge costs to or receive reimbursement from] the transacting parties for all actual, reasonable, and direct costs incurred in monitoring ongoing compliance with the terms and conditions of the sale or transfer of assets, including contract and administrative costs.
[Note: Lawmakers should follow existing state law regarding procurement practices when drafting this section to determine whether the Attorney General should be reimbursed or whether the transacting parties should be billed directly. The Attorney General should maintain complete discretion in choosing consultants or experts to review the transaction.](E) Contract costs shall not exceed an amount that is reasonable and necessary to conduct the review and evaluation. The transacting parties shall pay the Attorney General promptly for all contract costs.
Section 7: Regulations
(A) The Attorney General [or state cost commission] may adopt regulations implementing [this Act].
COVID-19 Federal Funding Earmarked for Hospitals, Providers, and States
/in COVID-19 State Action Center Charts, Featured News Home Health System Costs, Hospital/Health System Oversight, Making the Case for Action, Relief and Recovery /by NASHP StaffWhat’s New in NASHP’s Updated Hospital Cost Calculator?
/in Policy Blogs, Featured News Home Consumer Affordability, Health System Costs, Hospital/Health System Oversight, Making the Case for Action, Total Cost of Care Benchmark /by Adney Rakotoniaina and Marilyn BartlettConfronted with Overdoses, Rhode Island’s Emergency Departments Employ Peer Services to Promote Treatment
/in Policy Featured News Home, Reports Behavioral/Mental Health and SUD, Care Coordination, Chronic and Complex Populations, Maternal Health and Mortality, Maternal, Child, and Adolescent Health, Physical and Behavioral Health Integration /by Jodi Manz and Kitty PuringtonDrug overdose deaths nationwide have continued to rise during the COVID-19 pandemic, exceeding 88,000 between August 2019 and August 2020, signaling a critical need for substance use disorder (SUD) treatment services and the workforce to provide them. Non-fatal overdoses, which are a predictor of future fatal overdoses, also rose, leading to an increase in opioid-related emergency department (ED) visits even as overall ED visits declined during the pandemic.
While overdose-related ED incidents are traumatizing to individuals and costly to payers – especially state Medicaid programs – Rhode Island has found that hospital emergency rooms can be low-barrier and successful access points to SUD treatment with the right crisis response – including peer services – in place.
Background
Peer recovery services for substance use disorder (SUD) have been demonstrated to help individuals stay in treatment, increase satisfaction with treatment experiences, and reduce rates of return to use.
Responding to existing and projected behavioral health workforce shortages, states are building capacity for SUD treatment by developing certification pathways and reimbursement structures for peers as a non-licensed, supportive workforce.
Rhode Island, and 38 other states, have integrated the use of peers as care team members who can provide Medicaid-reimbursable, non-clinical treatment and recovery support services. In 2014, the state developed an innovative model, AnchorED, that introduced peers into hospital EDs to link patients who experienced overdoses with treatment and recovery. This program is the result of cross-agency collaboration among Rhode Island’s Department of Health (RIDOH), Department of Behavioral Health, Developmental Disabilities and Hospitals (BHDDH), the Providence Center (a community behavioral health provider), and Anchor Recovery Community Centers.
Currently, post-overdose peer services are accessible at all hospitals in the state – with the exception of a Veterans’ Affairs hospital – and peers who provide services are available 24 hours a day, seven days a week. Early evaluation of AnchorED showed that in the program’s first year, peers had contact with 1,329 patients. Among those patients, 88.7 percent were trained to use naloxone and 86.8 percent agreed to engage with a peer after hospital discharge. Further evaluation showed that ED providers consulted with peers in over 85 percent of overdose cases, and referral to treatment upon discharge increased from 9 to nearly 21 percent.
Building Blocks for Rhode Island’s AnchorED Program
State Leadership
State leadership ensures that peer services are recognized as a valuable component of opioid/substance use disorder (OUD/SUD) systems in Rhode Island. The Rhode Island Governor’s Overdose Prevention and Intervention Task Force, established through an Executive Order in 2015, provides a forum for consistent communication related to all SUD-related initiatives and has been important in promoting the peer workforce. This group, composed of stakeholders as well as state policy leaders, is co-chaired by the directors of the RIDOH and BHDDH, the two agencies that were instrumental in implementing policy for peer services in hospital EDs. In 2017, the governor signed another Executive Order making additional policy actions in response to the needs of the state emerging from the task force, including several initiatives supporting peer services that align to the task force’s Action Plan. Outcomes, including data on the number of peer recovery specialists (PRS) in the state and the number of services they provide, are reported on regularly updated public dashboards.
Data for 2020 showed an increase in the number of newly trained PRS, which reached 958 by September, and new client enrollments in services, which has increased steadily from a low point in April, 2020, likely related to the COVID-19 pandemic. The task force, which continues to hold open monthly meetings, recently issued an updated strategic plan that includes goals to further expand and enhance the peer recovery workforce. Task force meeting notes and presentation archives are also publicly posted.
Rhode Island state leaders were also engaged in concurrent efforts on workforce development as a component of their State Innovation Model (SIM) project. The state’s Health System Transformation Program published a Healthcare Workforce Transformation report that advocated expanding the role of peers as members of integrated behavioral health teams. The report recommended providing a pathway for state certification for peers as a strategy to build behavioral health workforce capacity with non-clinical team members in supportive roles.
Infrastructure
Rhode Island, through a number of policy actions, has created a regulatory framework that supports delivery of peer services in hospital EDs. In 2016, the state passed legislation that requires hospitals to submit comprehensive discharge plans to its health department director and outlines specific requirements for post-overdose patient care. Aligning with this statute, RIDOH and BHDDH developed standards for hospital EDs, requiring integration of peer services into ED overdose response across all state hospitals, as well as Freestanding Emergency Care Facilities (FECF) that provide emergency services outside of a hospital’s structure. The agencies delineated these standards in the Levels of Care for Rhode Island Emergency Departments and Hospitals for Treating Overdose and Opioid Use Disorder, creating three levels of certification for EDs across the state. In order to gain certification at any of these levels, hospitals and EDs are required to complete and submit a self-assessment that reviews where each facility falls on the continuum of services identified in the standards.
Rhode Island Hospital Levels of Care Standards
| Level 3: Minimum standards – indicating readiness and capacity to: | Level 2: These certified facilities must meet Level 3 criteria, and also show capacity to: | Level 1 In addition to meeting levels 1 and 2 criteria, these certified facilities must: |
| 1. Offer peer recovery support services in their emergency departments.
2. Follow the discharge planning standards as stated in current law. 3. Administer standardized substance use disorder screening to all patients. 4. Educate all patients who are prescribed opioids on safe storage and disposal. 5. Dispense naloxone for patients who are at risk, according to a clear protocol. 6. Provide active referral to appropriate community provider(s). 7. Comply with requirements to report overdoses within 48 hours to RIDOH. 8. Perform laboratory drug screening that includes fentanyl on patients who overdose. |
1. Conduct comprehensive standardized substance use assessments.
2. Maintain capacity for evaluation and treatment of opioid use disorder using support from addiction specialty services. |
1. Maintain a Center of Excellence or comparable arrangement for initiating, stabilizing, and re-stabilizing patients on medication-assisted treatment:
· Evaluate and manage medication assisted treatment, and · Ensure transitioning to/from community care to facilitate recovery. |
These standards for EDs also inform licensing regulations for both hospitals and Freestanding Emergency Care Facilities (FECF) in Rhode Island. Those regulations require that overdose patients and/or patients who are evaluated and found to have SUD are informed of available treatment services and that those patients are offered an opportunity to speak with a PRS. RIDOH also encourages hospitals in Rhode Island to use the BHDDS model consent form language for peer services, facilitating patient consent to both peer and medical services simultaneously. This approach to incorporating peer services into hospital consent forms was mandated by the legislature in 2018.
At this time, the standards are currently under revision by a workgroup of state leaders and stakeholders to identify and address gaps in alignment between the standards and the provider experience. These revisions, however, are not expected to lead to changes in the regulations.
Workforce Development
As officials developed certification requirements for peers, members of the peer community and people in recovery from SUD explained that being paid to help others conflicted with an important tenet of their personal journeys, which is to give freely of their time helping others with SUD and “pay it forward.”
The state began laying the groundwork for peer certification in 2012 when BHDDH began trainings for mental health peer recovery specialists through certification planning developed as part of the Substance Abuse and Mental Health Services Administration’s (SAMHSA) Transformation Transfer Initiative (TTI). In 2014, the Rhode Island Certification Board (RICB) – not a state entity – began certifying SUD peer recovery specialists as well, this led to BHDDH ultimately integrating mental health and SUD peer recovery trainings after the state brought together stakeholders through SAMHSA’s Bringing Recovery Supports to Scale Technical Assistance Center Strategy (BRSS TACS) program.
Peer certification in Rhode Island begins with the state’s integrated peer recovery and mental health training provided through Anchor Recovery. Requirements include:
- 46 hours of didactic learning across four domains (advocacy, mentoring/education, recovery/wellness support, and ethical responsibility)
- 500 internship hours, including or in addition to 25 supervised hours.
- Evidence of passing the International Certification and Reciprocity Consortium (IC&RC) peer recovery certification exam. To prepare for the exam, IC&RC provides a Candidate Guide, and BHDDH contracted with JSI International to develop the Rhode Island Peer Recovery Specialist Certification Study Guide.
Peers delivering services in Rhode Island must receive ongoing supervision from either licensed health care practitioners or certified peers who provided peer services for at least two years. Supervisors must also complete BHDDH-approved core competency training provided through a contract with Anchor Recovery. Agencies providing peer services must maintain a ratio of 1 supervisor for every 10 peer full-time-equivalents, and document provision of supervision totaling at least two hours per month or 30 minutes per week. Agencies must also provide at least a monthly opportunity for group meetings for working peers. In order to deliver services, these agencies must also be certified by BHDDH as Peer Based Recovery Support Services (PBRSS) providers and can use the PBRSS Provider Billing Manual to bill for services.
State Investment and Resources
Initial grant funding. Peers initially began meeting with overdose patients in hospital EDs as a volunteer engagement opportunity supported by Providence Center’s Anchor Recovery, a community recovery organization established in 2010 and funded through the state’s Substance Abuse Prevention and Treatment (SAPT) block grant.
Direct patient crisis response in partnership with a community organization was a familiar approach for the first Rhode Island hospital site to provide SUD peer services. The hospital already had an agreement with a local intimate partner violence organization that allowed volunteers to connect with patients in the ED. The hospital also maintained an agreement with the Providence Center to provide a clinician to triage and assess patients who came into the ED indicating mental health and SUD-related needs. Initial grant funding and existing relationships helped to facilitate development of peer integration.
Medicaid reimbursement. In the long term, paying for peers meant developing a source of sustainable funding for the program, and Rhode Island’s health policy leaders saw an opportunity to reimburse for peer services in Medicaid. While states have a variety of authority options to cover recovery support services in Medicaid, including health home models and 1915(b) and 1915(c) waivers, Rhode Island is one of nine states to provide these services under an 1115 demonstration waiver, submitted to the Centers for Medicare & Medicaid Services (CMS) in 2016 and approved in 2018. The waiver specifies that reimbursable services under the authorized Recovery Navigation Program (RNP) and Peer Recovery Specialist (PRS) Program include “an array of interventions that promote socialization, long-term recovery, wellness, self-advocacy, and connections in the community,” delivered as part of a care team.
Rhode Island’s waiver requires the state to credential peers using the International Certification & Reciprocity Consortium (IC&RC) exam and to develop standards for peer supervisors, as outlined in the previous section. The Rhode Island waiver created a bundled payment, which incorporates services provided by peer recovery specialists as part of the Recovery Navigation Programs. Services outside of such programs, which include those provided in EDs, are billed by the Medicaid-enrolled provider organization employing the PRS and are paid as a flat fee – peer services are reimbursed by Medicaid at rates of $13.50/15 minute unit for one-on-one services and $4/15 minute unit for up to 10 participants for group services.
Reporting and Outcomes
State regulations require that hospitals must report all opioid overdoses to RIDOH within 48 hours through a case report form that captures information about the patient and the overdose event. Additionally, AnchorED captures and reports on each unique patient contact, including data describing whether peer or other counseling services were accepted by the patient. Patients may also be referred to outpatient MOUD treatment, admitted to detox, or refuse engagement altoghter. This data is reported to the state by each hospital as de-identified, aggregate demographic and incident data. This is used to inform state leaders about who is seeking services and what factors may be leading to overdose, and how services are being initiated by PRS.
Anchor Recovery peer specialist services include:
- Linking individuals to treatment and recovery resources;
- Educating about overdose, prevention, and how to obtain naloxone, a drug that reverses the effects of an opioid overdose when administered quickly;
- Providing additional resources to individuals and family members; and
- Contacting the individual after release from the ED with a follow-up phone call.
Source: Anchor Recovery
AnchorED reports:
- Average minutes between contact and team connection to a patient;
- Whether naloxone training was done;
- Whether an individual agreed to see a PRS;
- Whether an individual agrees to a treatment referral; and
- Whether an individual agrees to initiating MOUD that day.
State agencies use these data sets to track outcomes and understand how hospitals are engaging individuals after an overdose to ensure connections to treatment are made. Rhode Island’s overall SUD response strategy includes collection and analysis of treatment and recovery data, and the state uses its Prevent Overdose RI website as a platform to publicly report on measures. ED overdose visits are reported publicly on a monthly basis, along with location and naloxone provision data, and the AnchorED outcomes of patient engagement. Reports include quarterly numbers showing total ED visits, as well as post-overdose counseling, which was accepted by 26 percent of overdose patients in the most recent data reported for the fourth quarter of 2020. Data for that time period also shows that of a total 267 overdose patients, with 45 percent receiving naloxone before being discharged from the hospital.
Challenges and Considerations in Maximizing Peer Workforce
Engage stakeholders. Peer stakeholders have been engaged with policymakers since the inception of the AnchorED program. These relationships helped to develop the policies that support the program, particularly for peer certification requirements. Stakeholder and cross-agency communication continues to drive policy in Rhode Island; regular informal communication through weekly calls among PRS contractors/peer recovery organizations, ED providers, law enforcement, detox centers, and state agencies has been key to identifying emerging trends and resulting needs.
Build workforce diversity. Several state leaders and stakeholders noted that diversity is lacking in the existing peer workforce and suggested that targeted recruitment of peers who are people of color, are bilingual, and/or identify as LGBTQ may help better meet the state population’s needs. A February 2021 update to the Governor’s Task Force – which has recently created a Racial Equity Workgroup – prioritizes this as a goal for the state’s recovery work, listing recruitment and training of people of color and those who speak languages other than English as a short-term recommendation.
Delineate peer roles. While the goals of peer engagement include patient retention and continuity of care, ED providers and stakeholders repeatedly stressed that connecting overdose patients to medications to treat opioid use disorder (MOUD) was the most important intervention to reduce overdose death. Providers noted concern regarding peers advocating for patients to choose either MOUD or abstinence-based recovery, a clinical decision that may test role definition and boundaries. While they emphasized that most peer-to-patient interactions are not clinical in nature and do not include discussions of medical interventions, there have been occasions when providers felt that peers may be overstepping in their roles by dissuading overdose patients from initiating MOUD. Providers and peers alike are mindful of existing tension in the recovery community regarding the use of medications. Abstinence-based recovery programming sometimes discourages medications, though this perspective is far from universal. In the most recent Governor’s Task Force strategic plan update, Rhode Island included a goal to develop PRS who focus on supporting patients in MOUD treatment, and to integrate these specialty PRS into services across the SUD continuum of care.
Identify hiring barriers. When Rhode Island first shifted toward employing peers to work within the hospital, leaders within the recovery organization and the hospital system had to decide whether peers would need to go through hospital system human resources checks and procedures, which may have posed barriers to peers being able to work in the hospital environment due to felony backgrounds or other prior issues. Rhode Island determined that the best course of action was to have peer candidates evaluated as part of the the recovery organization’s human resources to avoid this. Within some health systems, internal hospital policies can prevent the hiring of individuals with felony records, a challenge for some people in recovery who had past convictions. To mitigate this, states can consider approaches in which peers are hired by the organizations that bill for peer services rather than directly by hospitals.
Conclusion
The importance of relationships across systems and among team members in developing and integrating peer services in EDs was a dominant theme in interviews with state leaders and stakeholders. Relationships between the recovery community and hospital clinicians were already in place before AnchorED became a Medicaid-reimbursable model, and leaning on those relationships was key to licensure and Medicaid policy creation. Further, the relationships that develop between team members when providing peer services in the ED help to reduce stigma. As one peer leader said, integrating “education along the way” by talking with providers about the realities of active use and the fears that emerge from it helped humanize recovery for ED providers. Rhode Island’s leaders routinely pointed to the small size of the state and the opportunity that affords them to develop such relationships across systems. While the state’s small size is a unique factor that cannot be replicated, it suggests that states can support regional relationships among community behavioral health, community recovery organizations, and hospital systems through formal regional networks and activities.
Acknowledgements: This brief was supported by the Health Resources and Services Administration (HRSA) of the US Department of Health and Human Services (HHS) as part of a financial assistance award under the National Organizations of State and Local Officials cooperative agreement. The contents are those of the authors and do not necessarily represent the official views of, nor an endorsement, by HRSA/HHS, or the US government. The authors would like to thank HRSA project officer Diba Rab for her support and guidance. Further, the authors would like to acknowledge the dedication, leadership, and input of Rhode Island state agency leaders and staff, as well as providers, stakeholders, and peers who contributed to this brief.
A Tool for States to Address Health Care Consolidation: Prohibiting Anticompetitive Health Plan Contracts
/in Policy Featured News Home, Reports Consumer Affordability, Health System Costs, Hospital/Health System Oversight, Making the Case for Action, State Employee Health Plans /by Katherine L. Gudiksen, PhD, MS, Erin Fuse Brown, JD, MPH and Johanna ButlerRampant consolidation in nearly every state has created dominant health care systems that can use anticompetitive contracting practices to charge supracompetitive prices, especially to commercial insurance plans.
Read or download NASHP’s new model law, Prohibiting Anticompetitive Contract Terms in Health Care Contracts.
With COVID-19 expected to accelerate the consolidation of health care providers, state policymakers are searching for tools to curtail the abuse of market power by dominant health providers. To create a more level playing field for negotiations, the National Academy for State Health Policy has developed a new model law that bans anticompetitive contract terms using states’ consumer protection and antitrust laws. This report describes how the model act can give states essential tools to help them rein in rising health care costs.
Overview
Rising health care costs from provider consolidation represent a critical financial challenge for states. High health care costs present states with policy tradeoffs – leaving costs unchecked means fewer state resources to invest in other priorities, such as social determinants of health, health equity, and other, non-health areas such as education and infrastructure. Private-sector employers and individuals who purchase insurance reel under increased premiums driven in large part by rising hospital costs. Without effective tools to slow the growth of health care costs, health spending will continue to threaten public and private resources in every other area.
A primary driver of rising health care costs is the wave of health care consolidation that gives consolidated providers market leverage to raise prices unhampered by competitive forces.[1] Nearly all major metropolitan hospital markets are highly concentrated.[2] Nationwide, as of 2018, more than half of all physicians and 72 percent of hospitals were affiliated with a health system.[3] Evidence suggests that provider consolidation leads to higher hospital and physician prices and higher total expenditures – all while having little to no impact on improving quality of care, reducing utilization, or improving efficiency.[4]
Rampant consolidation has created dominant health systems that can use anticompetitive contracting practices to charge supracompetitive prices, especially to commercial insurance plans.[5] As the COVID-19 pandemic will likely accelerate consolidation of health care providers with strained resources,[6] policymakers are searching for ways to limit the impact of increased provider market power on health care costs. In many states, it is not enough to try to prevent consolidation from occurring through pre-merger review because most state and metropolitan markets are already highly concentrated. In these already consolidated markets, states need tools to curtail the abuse of market power by dominant health providers.
Although state attorneys general may be able to prosecute anticompetitive behavior — such as the use of anticompetitive contracting provisions by dominant systems — under current antitrust authority, legislation prohibiting these contract clauses is necessary to improve state enforcement authority and disrupt the distorted bargaining dynamic between health insurers and powerful providers. State officials have routinely heard that insurers lack proper leverage to negotiate contract terms to reduce hospital and physician costs. To address the harms from anticompetitive contract provisions and create a more level playing field for negotiations, the National Academy for State Health Policy (NASHP) has developed a model act, Prohibiting Anticompetitive Contract Terms in Health Care Contracts. The model act prohibits four common anticompetitive contract terms, making the use of these provisions presumptively unlawful under a state’s consumer protection and antitrust laws.
Anticompetitive Contracting Practices by Consolidated Entities
One of the primary ways that dominant providers raise prices is through anticompetitive health plan contracting,[7] in which powerful provider groups and health systems exploit their market power to demand terms in their contracts with health insurance plans. When health care markets become consolidated, a dominant health system may control multiple hospitals, multi-specialty physician practices, clinics, and ancillary service providers. Due to network adequacy laws, some services or providers are considered “must-haves,” such as a hospital with a neonatal intensive care unit or trauma facility, for a health plan to offer a commercially viable provider network. Health plans must ensure their provider networks are robust enough for their members to have access to essential services.
Insurers typically have two options for containing costs in competitive contracting:
- Exclude high-cost, low-value providers from the network, or
- Give consumers an incentive to choose more cost-effective alternatives.[8]
Consolidated health systems leverage their market power in negotiations with insurers because the insurer cannot afford to exclude must-have providers from its network. Dominant health systems can use all-or-nothing negotiations to raise prices for all of their affiliated providers by threatening to prevent any of their providers from participating in the insurer’s network unless the insurer accepts the prices and terms set by the health system. These types of distorted negotiations between providers and insurers directly contribute to higher costs for states, employers, and patients. The four contracting practices that have raised the most concern among antitrust enforcers and lawmakers, and those that are targeted in the NASHP model act, are: (1) all-or-nothing contracting; (2) anti-tiering or anti-steering clauses; (3) most-favored-nation clauses; and (4) gag clauses.
All-or-nothing contracting: Health systems may use all-or-nothing provisions to leverage the status of their must-have providers or facilities in highly concentrated markets to demand higher payment rates for the entire system, including those providers in more competitive locations and specialties.[9] An all-or-nothing provision requires the health plan to contract with all providers in that system or none of them. The insurer then faces a difficult choice – include all of the health systems’ facilities and providers in the network (even those of lower value or where there are other competitive choices) or lose all of them, which means the plan will not have a commercially viable provider network anywhere the health system has a must-have provider. By bargaining on behalf of all its affiliates, a powerful health system can thus raise the prices for its less desirable providers by tying them to must-have providers.
Anti-tiering or anti-steering clauses: Tiered networks and steering incentives are cost-saving strategies used by insurers to encourage patients to seek higher value care. When using tiered networks, insurers place providers into tiers based on price and quality and then offer patients financial incentives, typically through lower cost-sharing, to choose providers from a higher-value tier. When health systems use anti-tiering, they require a health plan to place that system’s facilities or providers in the most preferred tier, even if the health system’s providers do not meet the insurers’ cost or quality standards for the highest-value tier. In the case of anti-steering provisions, the health system may forbid the insurer from using cost-sharing incentives to steer patients to other providers, even if they offer better value. Dominant health systems use anti-tiering or anti-steering provisions to stop health plans from implementing these cost-control measures and thereby avoid competition.
Gag clauses: Gag clauses may prevent either party in a contract from disclosing terms of that agreement, including prices, to a third party. While many states have laws requiring insurers to disclose out-of-pocket costs to enrollees, only a few states have laws allowing patients, plan sponsors (such as an employer), or even state regulators to obtain negotiated price or quality information.[10] As a result, patients and employers may be unable to access necessary information to make informed choices between providers, both for individual health care services and network inclusion. The lack of transparency from gag clauses and the mistaken notion that prices are trade secrets:[11]
- Undermine price transparency tools for consumers;
- Decrease plan sponsors’ ability to push back on rising prices; and
- Make it more difficult for policymakers to understand how health care markets are operating in their state.
Gag clauses may be especially insidious when used in conjunction with other anticompetitive contract terms. For example, they may be used to hide the magnitude of variation in provider rates and therefore obscure the effects of an anti-steering clause.
Most-favored-nation (MFN) clauses: Unlike the other contract clauses included in the NASHP model, most-favored-nation clauses are typically used by a dominant insurer, sometimes in concert with a dominant health system. MFN clauses, sometimes called “pricing parity” or “price protection” clauses, are contractual agreements in which a provider or health system agrees not to offer lower prices to any other insurer. Dominant insurers thus ensure that they are getting the best prices. At first glance, these terms may appear to be pro-competitive because the health system is agreeing to lower their contracted prices with the insurer if the health system accepts a lower price from one of its competitors. Effectively, however, MFNs ensure that no rival insurer can negotiate with the health system to offer a novel insurance product (e.g., a narrow network) at lower rates. In addition, MFNs may allow insurers and providers to collude to raise prices. Insurers can accept an anticompetitive price increase from a dominant provider without competitive disadvantage because the insurer can pass the increase through to consumers in the form of higher premiums, as long as they know all competitors must also pay the same or higher rates.[12]
State Antitrust Enforcement: A Resource-Intensive, Insufficient Solution
Recent lawsuits by state and federal antitrust enforcers and private plaintiffs have exposed how dominant health systems use contracting practices to increase prices and limit the ability of payers to control costs.[13] High-profile cases by then-California Attorney General Xavier Becerra against Sutter Health[14] and North Carolina Attorney General Josh Stein against Atrium Health[15] targeted those dominant health systems’ use of anticompetitive terms in their health plan contracts, including all-or-nothing bargaining, anti-tiering, and anti-steering clauses that prevented private health plans from using financial incentives to encourage patients to choose lower-cost providers, and gag clauses that barred health plans from sharing price and quality information with patients.
While state attorneys general can use existing antitrust enforcement authority to address the anticompetitive contracting, bringing a case is resource-intensive, lengthy, and can be difficult to prove. Even if a settlement imposes conduct remedies and monetary penalties against the dominant health system, settlements avoid trial and do not establish legal precedent for future enforcement actions.[16] As Emilio Varanini, deputy attorney general in the antitrust section of the California Department of Justice, has argued, “while litigation can blaze the way for addressing such anticompetitive conduct, ultimately legislation may be a far more effective tool for carrying out competition as a policy goal.”[17] Beyond easing enforcement, in states that have passed legislation curtailing one or more of these contracting practices, one of the key benefits is that it alters the bargaining dynamic between powerful providers and health insurers by strengthening the ability of insurers’ to resist providers’ anticompetitive terms (and less-powerful providers’ ability to resist dominant insurers’ most-favored nation terms). NASHP’s model act builds on lessons learned from these recent, high-profile legal cases and gives states a tool to prohibit anticompetitive contract clauses through legislation.
Prohibiting Anticompetitive Contracting through NASHP’s Model Act
The NASHP model act also prohibits health care providers, health insurers, and plan administrators from demanding, soliciting, or agreeing to any health care contract that contains anticompetitive contract terms. The model specifically prohibits all-or-nothing, anti-steering, or anti-tiering, MFNs, and gag clauses, however it gives a state’s insurance commissioner or attorney general the ability to add other clauses through regulation that may result in anticompetitive effects. This flexibility is important as dominant health care entities’ contracting strategies may evolve to protect their market share and raise prices in response to these prohibitions. The model renders these prohibited contract clauses null and void and presumptively unlawful.
Although there is growing evidence that these health care contract provisions are used anticompetitively and pose a serious threat to competition, there could be pro-competitive uses of these clauses and, in some specific cases in health care markets, they may be used to lower costs.[18] To allow for potential pro-competitive uses of these contract provisions, the model act does include a waiver process where the attorney general or insurance commissioner could approve the use of these contract terms if the benefits outweigh the harms. The regulating state agency is authorized to promulgate rules on which arrangements may be eligible for waivers, such as accountable care organizations, value-based payment arrangements, or those involving rural or other safety-net providers.
The NASHP model is designed to give enforcement authority to both the attorney general and the insurance commissioner in order to ensure broad enforcement and oversight of health system behavior and health care contracts. The attorney general and the insurance commissioner would have the authority to investigate, audit, and review any documents to ensure compliance with the law and to impose penalties for violations under state Unfair and Deceptive Acts or Practices (UDAP) laws. Importantly, the model also includes a private right of action to allow parties injured by these contract clauses to recover damages.
Conclusion
In highly consolidated markets, dominant health systems use their market power to demand anticompetitive terms in their contracts with health insurers, thus increasing prices and thwarting health insurers’ cost-containment efforts. In the post-pandemic world, state policymakers face limited state resources and rising health care consolidation. The NASHP model act provides policymakers with a tool to prevent already consolidated entities from further exploiting their market power to raise prices and restrict competition. A legislative ban will ease antitrust enforcement and eliminate the resource-intensive, fact-specific determination of harm in litigation. Legislation prohibiting anticompetitive contract terms will level the playing field between health insurers and dominant health systems, giving insurers the bargaining leverage to resist price demands of dominant systems and to direct patients to higher-value options. The NASHP model is an important step in state efforts to mitigate the harms that result from the significant consolidation in provider and insurer markets over the past decades, while also preparing states for the expected rise in consolidation after the pandemic.
Notes
- Erin C. Fuse Brown, State Strategies to Address Rising Prices Caused by Health Care Consolidations, NASHP (Sept. 2017), https://www.oldsite.nashp.org/wp-content/uploads/2017/09/Consolidation-Report.pdf; Erin C. Fuse Brown, State Policies to Address Vertical Consolidation in Health Care, NASHP (Aug. 7, 2020), https://www.oldsite.nashp.org/state-policies-to-address-vertical-consolidation-in-health-care/.
- Brent Fulton, Health Care Market Concentration Trends In The United States: Evidence And Policy Responses, 36 Health Aff. 1530 (2017).
- Michael F. Furukawa et al., Consolidation of Providers Into Health Systems Increased Substantially, 2016–18, 39 Health Affairs 1321 (Aug. 2020).
- Vertical Integration: Hospital Ownership of Physician Practices Is Associated with Higher Prices and Spending, 33 Health Aff. 756, 760 (2014); The Effect of Hospital Acquisitions of Physician Practices on Prices and Spending, 59 J. Health Econ. 139 (2018); Total Expenditures per Patient in Hospital-Owned and Physician-Owned Physician Organizations in California, 312 JAMA 1663 (2014); Association of Financial Integration Between Physicians and Hospitals With Commercial Health Care Prices, 175 JAMA Internal Med. 1932, 1937 (2015)
- Zack Cooper et al., The Price Ain’t Right? Hospital Prices and Health Spending on the Privately Insured, 134 Q. J. Econ. 51 (Feb. 2019); Cory Capps and David Dranove, Hospital Consolidation and Negotiated PPO Prices, 23 Health Affairs 175 (Mar 2004); MedPac. Congressional Request on Health Care Provider Consolidation. March 2020. http://www.medpac.gov/docs/default-source/reports/mar20_medpac_ch15_sec.pdf?sfvrsn=0.
- Laura Tollen and Elizabeth Keating, COVID-19, Market Consolidation, And Price Growth, Health Affairs Blog, August 3, 2020. DOI: 10.1377/hblog20200728.592180.
- Katherine L. Gudiksen, et al., Preventing Anticompetitive Contracting Practices in Healthcare Markets, The Source on Healthcare Price & Competition (Sept. 2020), https://sourceonhealthcare.org/profile/preventing-anticompetitive-contracting-practices-in-healthcare-markets/?portfolioCats=1165%2C1166%2C1167.
- James C. Robinson, Hospital Tiers in Health Insurance: Balancing Consumer Choice with Financial Motives, 22 Health Aff. W3-135 (2003); Dennis P. Scanlon, Richard C. Lindrooth & Jon B. Christianson, Steering Patients to Safer Hospitals? The Effect of a Tiered Hospital Network on Hospital Admissions. 43 Health Serv. Research 1849 (2008); Matthew B. Frank, John Hsu, Mary Beth Landrum & Michael E. Chernew, The Impact of a Tiered Network on Hospital Choice, 50 Health Serv. Research 1628 (2015).
- Robert A. Berenson, Paul B. Ginsburg, Jon B. Christianson & Tracy Yee, The Growing Power of Some Provider to Win Steep Payment Increases from Insurers Suggests Policy Remedies May Be Needed, 31 HEALTH AFF. 973 (2012).
- Cal. Health & Safety Code §§ 1367.49, 1367.50; Conn Gen. Stat. § 38a-477f(a), (b); Ind. Code § 27-1-37-7; Mass. Gen. Laws ch. 176O, § 9A(d), (e); Minn. Stat. § 62J.81.
- Robin Feldman and Charles Graves, Naked Price and Pharmaceutical Trade Secret Overreach, 22 Yale J. L. & Tech. 61 (2020); Katherine Gudiksen, Samuel L. Chang & Jaime S. King, The Secret of Health Care Prices: Why Transparency is in the Public Interest, Cal. Health Care Found. (July 16, 2019), https://www.chcf.org/publication/secret-health-care-prices/.
- Scott Allen & Marcella Bombardieri, A Handshake That Made Healthcare History, Boston Globe (December 28, 2008), https://www.bostonglobe.com/specials/2008/12/28/handshake-that-made-healthcare- history/QiWbywqb8olJsA3IZ11o1H/story.html.
- United States v. Charlotte-Mecklenburg Hosp. Auth., 248 F. Supp. 3d 720 (W.D.N.C. 2017), UFCW & Employers Benefit Trust, et al. v. Sutter Health, et al., No. CGC 14-538451 (Cal. Super. Ct. S.F. City and Cnty. 2019), People of the State of California ex rel Xaviar Becerra v. Sutter Health., CGC 18-565398 (Cal. Super. Ct. S.F. City and Cnty. 2019), and Sidibe v. Sutter Health, 4 F.Supp 3d 1160 (N.D. Cal. 2013) (No. C 12–04854 LB).
- Becerra Complaint, People of the State of California ex rel Xavier Becerra v. Sutter Health., CGC 18-565398 (Cal. Super. Ct. S.F. City and Cnty. 2019).
- United States v. Charlotte-Mecklenburg Hosp. Auth., 248 F. Supp. 3d 720 (W.D.N.C. 2017).
- Robert Berenson, Jaime S. King, Katherine L. Gudiksen, Roslyn Murray, Adele Shartzer, Urban Institute Research Report: Addressing Health Care Market Consolidation and High Prices 37-39 (Jan. 2020), https://www.urban.org/research/publication/addressing-health-care-market-consolidation-and-high-prices.
- Emilio Varanini, Competition as Policy Reform: The Use of Vigorous Antitrust Enforcement, Market Governance Rules, and Incentives in Health Care, 11 St. Louis U. J. Health L. & Pol’Y 69, 86 (2018).
- Proposed Final Judgment, United States v. Charlotte-Mecklenburg Hosp. Auth., 248 F. Supp. 3d 720, 724 (W.D.N.C. 2017).
Katherine L. Gudiksen, MS, PhD is a senior health policy researcher at The Source for Healthcare Price and Competition. Erin C. Fuse Brown, JD, MPH, is the Cathy C. Henson Associate Professor of Law and director of the Center for Law, Health & Society at Georgia State University College of Law. Both Gudiksen and Fuse Brown produced this policy brief as consultants to the National Academy for State Health Policy (NASHP). Johanna Butler, BA, is a policy associate at NASHP.
This policy brief and the accompanying model legislation were produced with support from Arnold Ventures.
NASHP Model Act to Address Anticompetitive Terms in Health Insurance Contracts
/in Policy Consumer Affordability, Health System Costs, Hospital/Health System Oversight, Making the Case for Action /by NASHP StaffModel Act Summary:
This model legislation targets health insurance contract terms that have been used by health systems to impede competition and increase prices. In particular, this model act prohibits the use of most-favored-nation clauses, anti-steering clauses, anti-tiering clauses, all-or-nothing clauses, and gag clauses in contracts between health insurers and health care providers. The prohibition on these anticompetitive contract terms would be enforceable via administrative penalties by the State Insurance Department, civil penalties and antitrust remedies by the State Attorney General, and a private cause of action under the state’s unfair and deceptive acts or practices statute.
Section 1. [Section 1] is inserted in [State Insurance Code] to read as follows:
(A) Definitions: As used in this section:
i. “Enrollee” means an individual who is entitled to receive health care services under the terms of a health benefit plan.
ii. “Health care contract” means a contract, agreement, or understanding, either orally or in writing, entered into, amended, restated, or renewed between a health care provider and a health insurance carrier, health plan administrator, plan sponsor, or its contractors or agents for the delivery of health care services to an enrollee of a health benefit plan.
iii. “Health care provider” means an entity, corporation, or organization, parent corporation, member, affiliate, subsidiary, or entity under common ownership, whether for-profit or nonprofit, that is or whose members are licensed or otherwise authorized by this state to furnish, bill, or receive payment for health care service delivery in the normal course of business, and includes, without limitation, health systems, hospitals, hospital-based facilities, freestanding emergency facilities, imaging centers, large physician groups with eight [8] or more physicians, physician staffing organizations, and urgent care clinics.
[Commentary: States may want to define “large physician groups” separately or examine their physician market to define the numeric cutoff for a large physician group. The idea is to exclude the small practices that do not tend to exert market power in their health plan contract negotiations.]
iv. “Health insurance carrier” means an entity subject to the insurance laws and regulations of this state or subject to the jurisdiction of the [Insurance Commissioner] that offers health insurance, health benefits, or contracts for health care services, including prescription drug coverage, to large groups, small groups, or individuals on or outside the [Marketplace].
v. “Health benefit plan” means a plan, policy, contract, certificate, or agreement entered into, offered, or issued by a health insurance carrier or health plan administrator acting on behalf of a plan sponsor to provide, deliver, arrange for, pay for, or reimburse any of the costs of health care services and includes nonfederal governmental plans as defined in 29 U.S.C. § 1002(32).
[Commentary: States may already have a definition of “health benefit plan” or “health insurance carrier” in their statutes that can be referenced instead of adopting a new definition here. NASHP recommends defining “health benefit plan” broadly to include third-party administrators working on behalf of a plan sponsor, including self-funded employers and labor unions. States may choose to exclude long-term care plans, disability plans, and dental or vision plans.]
vi. “Health plan administrator” means a third-party administrator who acts on behalf of a plan sponsor to administer a health benefit plan.
vii. “Network plan” means a health benefit plan that either requires enrollees to use, or creates incentives, including financial incentives, for enrollees to use certain health care providers managed, owned, affiliated, under contract with, or employed by a health insurance carrier, a health plan administrator, or plan sponsor. Network plans include health maintenance organization (HMO) plans, preferred provider organization (PPO) plans, and exclusive provider organization (EPO) plans.
viii. “Tiered network plan” means a health benefit plan that sorts some or all types of health care providers into specific groups to which different provider reimbursement, enrollee cost sharing, or provider access requirements, or any combination thereof, are applied for the same services.
ix. “Anti-steering clause” means a provision of a health care contract that restricts the ability of the health insurance carrier or health plan administrator from encouraging an enrollee to obtain a health care service from a competitor of the hospital or health system, including offering incentives to encourage enrollees to utilize specific health care providers.
x. An “anti-tiering clause” means a provision in a health care contract that:
a. Restricts the ability of the health insurance carrier or health plan administrator to introduce or modify a tiered network plan or assign health care providers into tiers; or
b. Requires the health insurance carrier or health plan administrator to place all members of a health care provider in the same tier of a tiered network plan.
xi. An “all-or-nothing clause” means a provision of a health care contract that:
a. Requires the health insurance carrier or health plan administrator to include all members of a health care provider in a network plan; or
b. Requires the health insurance carrier or health plan administrator to enter into any additional contract with an affiliate of the health care provider as a condition of entering into a contract with such health care provider.
xii. A “most-favored-nations clause” means a provision of a health care contract that:
a. Prohibits or grants a health insurance carrier or health plan administrator an option to prohibit a participating health care provider from contracting with another contracting entity to provide health care services at the same or lower price than the payment specified in the health care contract;
b. Requires or grants a health insurance carrier or health plan administrator an option to require a participating health care provider to accept a lower payment in the event the participating health care provider agrees to provide health care services to another contracting entity at a lower price;
c. Requires or grants a health insurance carrier or health plan administrator an option to require termination or renegotiation of an existing health care contract if a participating health care provider agrees to provide health care services to another contracting entity at the same or lower price; or
d. Restricts other health insurance carriers or health plan administrators, not party to the contract, from paying the same or lower rates for items or services than the contracting health insurance carrier or health plan administrator pays for such items or services.
xiii. A “gag clause” means a provision of a health care contract that:
a. Restricts the ability of either the health insurance carrier, health plan administrator, or the provider to disclose any price or quality information, including the allowed amount, negotiated rates or discounts, any fees for services, or any other claim-related financial obligations included in the provider contract, to a governmental entity as authorized by law or its contractors or agents, any enrollee, treating provider of an enrollee, plan sponsor, or potential eligible enrollees and plan sponsors; or
b. Restricts the ability of either the health insurance carrier, health plan administrator, or the provider to disclose out-of-pocket costs to an enrollee.
(B) Limits on Anticompetitive Contract Terms.
i. Except as provided in [subsection 1(B)(iii)], no health insurance carrier, health care provider, health plan administrator, or any agents or other entities that contract on behalf of a health care provider, a health insurance carrier, or a health plan administrator may offer, solicit, request, amend, renew, or enter into a health care contract that would directly or indirectly include any of the following provisions:
a. A most-favored-nations clause;
b. An anti-steering clause;
c. An anti-tiering clause;
d. An all-or-nothing clause;
e. A gag clause; or
f. Any other clause that results or intends to result in anticompetitive effects as specified by the [Insurance Commissioner or State Attorney General] through regulation.
ii. Except as provided in [subsection 1(B)(iii)], a violation of this section constitutes an unfair or deceptive act under [insert state code section] and be presumptively unlawful under [reference state or federal antitrust laws], subject to enforcement by the State Attorney General.
[Commentary: Some states have a code section in their insurance or business codes defining unfair and deceptive acts or practices (UDAP) in the business of insurance, but NASHP recommends that states declare violations of this section as a violation of general UDAP laws so as not to limit enforcement actions to the Insurance Department and enable enforcement against health care providers and health systems for violations of this section by the State Attorney General.]iii. Application for a waiver:
a. A party to a health care contract, which contains a provision specified in [subsection 1(B)(i)], may submit the health care contract to the [Attorney General or Insurance Commissioner] for a waiver. The health care contract must be accompanied by the following information:
I. The name and business address of each party to the health care contract;
II. An identification of each location at which any party to the agreement or policy provides health care services; and
III. Any information required to demonstrate that the proposed agreement or policy results in an increase in the welfare of consumers in this State that could not have been accomplished through alternative means that are less restrictive.
b. The [Attorney General or Insurance Commissioner] shall approve or deny any waiver application in writing within 60 days.
c. The [Attorney General or Insurance Commissioner] may approve a waiver to allow a contract to include a provision specified in [subsection 1(B)(i)] if the [Attorney General or Insurance Commissioner] determines:
I. The agreement or policy results in an increase in the welfare of consumers in this State such that the procompetitive benefits of including the provision outweigh the harms to competition;
II. Such increase in the welfare could not have been accomplished through alternative means that are less restrictive; and
III. The agreement or policy does not otherwise constitute a contract, combination or conspiracy in restraint of trade under [state or federal antitrust laws].
d. The [Attorney General or Insurance Commissioner] may promulgate rules under this section to identify allowable conduct, agreements, or arrangements for which waivers may be granted.
iv. Except for contracts granted a waiver under [Section 1(B)(iii)] by the [Attorney General or Insurance Commissioner], any provision of a health care contract described in [Section 1(B)] in violation of this section is null and void and unenforceable. The remaining provisions of the health care contract, excluding any provision in violation of this section, remain in effect and are enforceable.
[Commentary: This section allows the State Attorney General or Insurance Commissioner to review and approve contracts with a provision specified in [subsection 1(B)(i)] if the contract increases the public welfare, e.g., if the procompetitive benefits outweigh the anticompetitive harms. It also allows the State Attorney General or Insurance Commissioner to promulgate rules to define specific conditions under which the agency finds health care contracts are procompetitive, e.g., in specific types of accountable care organizations or other advanced payment models.](C) Enforcement.
i. Enforcement by State Attorney General
a. The Attorney General may subpoena any records necessary to enforce any provisions of [this Act] or to investigate suspected violations of any provisions of [this Act].
b. The Attorney General may institute proceedings on behalf of [the state, its agencies or municipal corporations] or as parens patriae of the persons residing in the state for:
I. Injunctive relief to prevent and restrain a violation of any provision of this chapter including, without limitation, a temporary restraining order, preliminary injunction, or permanent injunction;
II. Civil penalties for violations of the provisions of [Section 1(B)];
III. Criminal penalties for violations of the provisions of [Section 1(B)]; or
IV. Other equitable relief for violations of the provisions of [this Act] including, without limitation, disgorgement or restitution.
ii. Enforcement by Insurance Commissioner
a. All records and papers of health insurance carriers pertaining to health benefit plans or negotiations between the health insurance carrier and any health care provider shall be subject to inspection by the [Insurance Commissioner] or by any agent he or she may designate for that purpose. The Insurance Commissioner may require any health insurance carrier to produce a list of all health care contracts, transactions, or pricing arrangements entered into within the preceding twelve (12) months.
b. Except for contracts granted a waiver under [Section 1(B)(iii)], the Insurance Commissioner may impose an administrative penalty of up to $5,000 upon a health insurance carrier per day for each day that a contract in violation of [Section 1(B)] is in effect.
c. The Insurance Commissioner may, under section [state rate review section] deny the sale of any health insurance plan where the contract between the health insurance carrier and any health care provider is in violation of [Section 1(B)].
d. The Insurance Commissioner may refer any health care contract subject to this section to the Attorney General to review the contract for compliance with this Act. The referral of any health care contract by the Insurance Commissioner to the Attorney General does not constitute a violation of any confidentiality agreement between the health insurance carrier and the Insurance Commissioner that may exist under [state rate filing laws]. The authority of the Attorney General to prosecute violations of antitrust or consumer protection requirements and shall not be narrowed, abrogated, or otherwise altered by this section.
iii. Private right of action.
a. Any party that suffers a loss as a result of the violation of [this Act] shall be entitled to initiate an action pursuant to [reference to state UDAP law] and seek all remedies, damages, costs, and fees available under [reference to state UDAP law].
(D) Construction.
i. Nothing in this section shall modify, reduce, or eliminate the existing privacy protections and standards provided by reason of State and Federal law, including the federal Health Insurance Portability and Accountability Act (HIPAA) (Pub. L.104-191), the federal Genetic Information Nondiscrimination Act of 2008 (GINA) (Pub. L. 110–233), and required confidentiality provisions of the Americans with Disabilities Act of 1990 (ADA) (P.L. 110-325).
ii. Nothing in this section shall be construed to limit network design or cost or quality initiatives by a group health plan, health insurance carrier, or administrators working on behalf of a plan sponsor, including accountable care organizations, exclusive provider organizations, networks that tier providers by cost or quality or steer enrollees to centers of excellence, or other pay-for-performance programs.
[Commentary: The data privacy provision is included to ensure that the ban on gag clauses does not allow data protected by HIPAA or other privacy laws to be disclosed to employers or plan sponsors. The network provision provides assurances that the anti-steering and anti-tiering provisions do not limit insurers or administrators working on behalf of a plan sponsor from using other methods to direct patients to higher-value care. The network provision also expresses the intent of the legislature to allow health systems to create accountable care organizations or use other risk-based payment models to control costs.]
(E) Regulatory Authorization. The [Insurance Commissioner] and the [State Attorney General] may promulgate regulations necessary to implement, impose penalties, and ensure compliance with this section.
(F) Effective Date. This section shall apply with to any contract entered into or amended after the date of enactment of [this Act].
Section 2. Severability and Savings-Construction Clauses
(A) Every provision in [this Act] and every application of the provisions in [this Act] are severable from each other as a matter of state law. If any application of any provision in [this Act] to any person or group of persons or circumstances is found by a court to be invalid, the remainder of [this Act] and the application of the Act’s provisions to all other persons and circumstances may not be affected. All constitutionally valid applications of [this Act] shall be severed from any applications that a court finds to be invalid, leaving the valid applications in force, because it is the legislature’s intent and priority that the valid applications be allowed to stand alone. Even if a reviewing court finds a provision of [this Act] invalid in a large or substantial fraction of relevant cases, the remaining valid applications shall be severed and allowed to remain in force.
(B) [This Act] shall be construed, as a matter of state law, to be enforceable up to but no further than the maximum possible extent consistent with federal law and constitutional requirements, even if that construction is not readily apparent, as such constructions are authorized only to the extent necessary to save the statute from judicial invalidation.
April 8, 2021
Independent Analysis Finds Montana Has Saved Millions by Moving Hospital Rate Negotiations to Reference-Based Pricing
/in Policy Montana Blogs, Featured News Home Consumer Affordability, Cost, Payment, and Delivery Reform, Health System Costs, Hospital/Health System Oversight, Making the Case for Action, State Employee Health Plans, Value-Based Purchasing /by Johanna ButlerA new, independent analysis of the Montana state employee health plan’s transition to reference-based pricing – which limits hospital prices to a multiple of what Medicare pays – found significant savings for the state in the two years after its implementation. Further, there is no evidence that utilization artificially increased as a result of the new payment model, which could occur if hospitals needlessly push more services onto patients to offset lower reimbursement rates, and, to date, there have been no hospital closures in the state.
Facing rising health care costs and dwindling reserves, Montana’s state employee health plan implemented Medicare referenced-based pricing for its approximately 31,000 members in July 2016. The state set out to address the prices the plan was paying for hospital outpatient, inpatient, and physician services instead of reducing plan costs by increasing employees’ out-of-pocket costs or adopting coverage restrictions.
Prior to implementing reference-based pricing, Montana’s third-party administrator negotiated hospital reimbursement rates as a discount off a hospital’s chargemaster rates, similar to traditional negotiations used by most health insurers when contracting with hospitals. However, because hospitals do not have to follow a standard formula or legal requirements for setting chargemaster prices, these rates can be set much higher than what it actually costs a hospital for providing services, even after the plan’s negotiated discount.
In moving to reference-based pricing, Montana established payment rates for inpatient and outpatient services that are a multiple of Medicare’s payment rate for the Montana acute care hospitals. Before the reference-based pricing agreements, Montana paid a range of 191 to 322 percent of Medicare rates for inpatient services and 239 to 611 percent of Medicare rates for hospital outpatient services. The reference-based pricing agreements lowered the range in prices paid by the health plan to 220 to 225 percent for inpatient services and 230 to 250 percent for outpatient services.
Optumas, an independent consulting firm with expertise in health care reform, used publicly available data to analyze the financial impact of the plan’s transition to reference-based pricing. Using data for the three fiscal years before and after the implementation of reference-based pricing (SFY 14 through SFY 19), Optumas calculated what the plan would have paid under traditional (without reference pricing) negotiations based on a discount off chargemaster rates and compared the estimated payments to what the Montana plan actually paid under reference pricing.
Through these comparisons, Optumas was able to estimate savings associated with the reference-pricing initiative. In total, the plan’s estimated savings for inpatient services were $30.3 million and outpatient services savings were $17.5 million – for a combined savings of $47.8 million. This savings enabled the plan to become more financially sustainable and achieved Montana’s financial goal without pushing costs onto employees or reducing coverage.
Using Medicare rates as a benchmark not only saves Montana tax dollars, but the state employee health plan is subject to more transparent price increases. Instead of being tied to opaque hospital chargemaster price increases, the Montana state employee health plan relies on Medicare’s published pricing methodology, which is updated annually, geographically adjusted, and publicly available.
State employee health plans interested in lowering hospital costs without significantly disrupting coverage may be able to use Montana’s reference pricing approach to reduce health care costs. Reference-based pricing could also be used by commercial purchasers or by states working to cap prices in public-option plans.
To learn more, read Optumas’ report, Independent Evaluation – Estimating the Impact of Reference-Based Hospital Pricing in the Montana State Employee Plan.
The National Academy for State Health Policy is planning a webinar to explore these findings.
A hospital chargemaster is the standard list prices for hospital services. Chargemaster rates are essentially the health care market equivalent of Manufacturer’s Suggested Retail Price (MSRP) in the car buying market.
Montana’s reference-based pricing agreements with hospitals:
- Generated estimated savings of $47.8 million across inpatient and outpatient services (SFY 17-SFY 19);
- Lowered prices paid for hospital outpatient services from a range of 239-611 percent of Medicare rates to 230-250 percent of Medicare rates; and
- Lowered prices paid for hospital inpatient services from 191-322 percent of Medicare rates to 220-225 percent of Medicare rates.
Independent Analysis: Estimating the Impact of Reference-Based Hospital Pricing on the Montana State Employee Plan
/in Policy Montana Consumer Affordability, Cost, Payment, and Delivery Reform, Health System Costs, Hospital/Health System Oversight, Making the Case for Action, State Employee Health Plans, Value-Based Purchasing /by NASHP StaffSign Up for Our Weekly Newsletter
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