At California’s Health Care Affordability Board (HCAB) meeting last month, members analyzed Oregon and Massachusetts’ healthcare spending targets, while taking major considerations on the design process. The HCAB is a decision-making body that is charged with setting statewide and sector-specific cost targets.
David Seltz, executive director of the Massachusetts Health Policy Commission, told the board how Massachusetts is working to improve healthcare affordability. While California’s healthcare spending target model is evolving, Seltz noted that it’s an opportunity for California to learn from other states.
“When healthcare spending grows faster than everything else, it just means less and less resources for government, for businesses, and for families and individuals,” Seltz said.
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In 2012, Massachusetts became the first state in the nation to set a statewide target to reduce growth in healthcare spending, with the growth in healthcare spending being a universal trend. Seltz explained how the Health Policy Commission provides oversight of the target spending plan, while also providing data and information to policymakers. Massachusetts measures the total healthcare expenditures (THCEs), which is the total sum of public and private spending, the administrative cost of private health insurance, and what patients pay in terms of copays and deductibles.
Massachusetts’ Health Policy Commission monitors changes in the healthcare market and provides objective, data-driven analyses of likely impacts for the purpose of increasing public transparency and accountability, Seltz said.
Sarah Bartelmann from Oregon’s Sustainable Health Care Cost Growth Target Program, presented on how the state is tackling healthcare spending.
“One piece that I want to call out specifically for California, and I’ve been talking to Vishaal [Pegany, deputy director of the Office of Health Care Affordability] and the staff about are, who are we talking about?” Bartelmann asked. “Our establishing organization says Oregon’s cost-growth target must apply to all payers and providers in the state, and this caused some consternation—are we talking about an individual doctor, and individual practitioner, is that a one-doc shop versus an individual provider within a larger health system?”
Bartelmann mentioned how the implementation committee held many discussions on who cost-growth spending targets apply to, and ultimately landed on payers who have at least 1,000 covered lives in Oregon across all lines of business, and provider organizations who have at least 10,000 unique attributed patients and who can also be held accountable for total medical expenses.
Elements of Oregon’s cost growth target include accountability via transparency, performance improvement plans, and financial penalties.
“What we’ve added—and I believe is also similar to what California will be considering—is the opportunity to impose financial penalties on organizations who, we have a couple of phrases here: repeat offenders, or who egregiously exceed the cost growth target for multiple years,” Bartelmann said, adding that organizations who exceed the cost spending target, for no particular reason, for at least three years will be assessed for penalties.
Getting the ball rolling on the Advisory Committee
During the meeting, Pegany reviewed the requirements for the HCAB Advisory Committee, which must be established this month and will begin meeting in June. The HCAB is required to appoint Advisory Committee members by a majority vote, and the board should aim for representation from consumer and patient groups, payers, hospitals, organized labor, healthcare workers, medical groups, physicians, and purchasers.
“In making appointments to the advisory committee, the board shall consider diversity of expertise on the advisory committee—diversity that reflects the makeup of California, such as race, ethnicity, gender, sexual orientation, or geography, as well as experience of the advisory committee member as a patient or caregiver of a patient with a chronic condition,” Pegany said.
The Advisory Committee will provide input and recommendations to HCAB on statewide healthcare cost targets and specific targets set by healthcare sectors and geographic regions; methodology for setting cost targets, and adjustment factors to modify targets when appropriate; definitions of healthcare sectors; and benchmarks for primary care and behavioral health spending. The Advisory Committee will also report on quality and equity metrics, standards to advance the stability of the healthcare workforce, and other areas requested by HCAB.
“We’ve laid out a few options to consider for board action,” Pegany said. “We did put out a submission form for advisory committee membership, and it closed on April 15th. We received a lot of interest and since, we’ve laid out two options for the board to discuss.”
The board unanimously voted for the second option, which establishes a subcommittee of two HCAB members to work with staff to evaluate and review the applications, and present the recommended candidates to the board.
Consideration of statewide spending target designs
Michael Bailit from Bailit Health discussed the concept of spending targets at the March HCAB meeting. At April’s meeting, he stated that for the first three quarters of this year, HCAB will be focused on methodology for measuring and reporting THCEs, which will be included in the baseline spending report. In Q4 of this year, HCAB will discuss spending targets statewide.
“THCEs [are] the basis by which the state will primarily measure performance against the spending target,” Bailit said. “It is the measure that Oregon and Massachusetts use, and frankly all the other states with spending targets use.”
THCEs are defined as all healthcare spending in the state by public and private sources, including patients and consumers. Bailit said it’s important for the board to consider what sources of healthcare coverage spending they wish to include from these sources, adding that all other states with healthcare spending targets include Medicare, Medicaid, integrated Medicare and Medicaid plans, and commercial spending.
In addition to these sources, Bailit said California’s THCE could include spending from the correctional health system, the Indian Health Service (IHS), TRICARE, and the Veterans Health Administration. Oregon, Connecticut, and Washington State all include the correctional health system as a source of coverage in their healthcare spending targets.
“In 2018, about half a percent of the state population was incarcerated,” Bailit said, adding that spending data for the correctional health system may be available, but is unlikely to be reported using the same methodology as other payer spending.
Additionally, in 2020, 1.7% of California’s population were Native American/Alaskan Native, although it’s unlikely they all accessed IHS services. A hurdle Bailit highlighted is obtaining consent from all tribes through tribal consultations.
“There are no other states that are currently receiving IHS spending, and including it in their spending target program,” Bailit said. “I know from experience that Washington, Oregon, and Nevada all considered this.”
For one reason or another, those states made the consideration to include IHS, but decided not to include it, or to take the steps to hold tribal consultations.
While much is still to be determined regarding California’s plan to address healthcare spending, Beth Capell—policy advocate for Health Access California, an organization that fights for quality, affordable, and equitable healthcare for all Californians—voiced her concerns about the meeting through public comment submission.
“We are dismayed at how this afternoon’s meeting has gone with preliminary decisions being made without prior opportunity to comment,” Capell said. “Again and again, this board nodded or said yes when we have not had an opportunity to provide input.”
Capell explained how traditionally, at Covered California for example, ideas are discussed at one meeting, while decisions are made at the next, and said the HCAB should take the same approach.
“We are also troubled by the repeated representation that there is a lack of data when there are ample data sources for many things, whether it’s bad debt … or the size of the population and their sources of coverage, so it’s a longer list than I have the patience for at the moment for things we are disappointed in,” Capell said.
During Bailit’s presentation, spending of individuals who are uninsured was taken into consideration. He stated that there is no comprehensive data source to capture out-of-pocket spending by individuals who are uninsured.