Making sense of the governor’s 30% proposal

It’s a good idea, but do the numbers add up?

GOV. CHARLIE BAKER’S PROPOSAL to require that health care spending for both primary care and behavioral health grow from its current base by at least 30 percent over the next three years has won a lot of plaudits, but the details on how this transformation will actually come about have been scarce. Here’s a look at some of the big questions:

How much money are we really talking about?

Based on recent Health Policy Commission published data on total health care spending, and Baker’s estimate that about 12.5 percent (that’s the midpoint of the 11 to 14 percent range the governor mentioned) is dedicated to primary care and behavioral health, from HPC data, I estimate that the 2019 baseline spending for primary care and behavioral health for the state’s commercially insured population is about $900 per member per year.

In concept, Baker’s plan is to increase that amount 10 percent a year for the next three years while keeping total spending growth in the system at no more than 3.1 percent per year. Without going through all the math here, and noting that there are a number of ways to mandate and track achieving an overall 30 percent growth rate over three years (use either the 12.5 percent or the $900 per member per year as a base to grow from), the net impact of the governor’s proposal would be to absorb about half of the total new dollars available if the overall spending pie grows annually at the state benchmark rate.

Is that too much, too little, or just right?

It likely depends on whom you ask.

Our neighbors in Rhode Island grew primary care spending at a rate that was just over 10 percent compounded for five years (behavioral health was not part of the growth mandate). Massachusetts is only mandating growth at that level for three years, so some could argue the governor’s goal is too modest a redistribution to truly make a difference.

The behavioral health providers have no other state example to compare to—but appreciating the chronic underfunded state for mental health and substance abuse services, they, too, would likely worry that this proposed boost is not enough to truly meet patient and family needs.

On the other hand, the rest of the medical establishment may not be pleased to see a group of cognitive-oriented providers taking away about half of the total growth in available dollars. After all, inflation will likely eat up practically all of the increase left for them.

Baker and Marylou Sudders, his secretary of health and human services, would probably argue to those who want more primary care and behavioral health spending that their proposal grows both primary care and behavioral health spending while Rhode Island only increased primary care, and for that matter counted fuzzy things like healthcare IT as part of the primary care spending growth. They would argue that their proposal should provide enough growth dollars to boost direct patient care and give primary care and behavioral health clinicians in outpatient settings the “time and ability to do a better job”, as the governor hoped out loud last week.

As for the rest of the medical establishment, Baker and Sudders could point out that the sky did not fall for hospitals in Rhode Island, even when they had to operate under a rate growth cap during a good portion of these primary care growth years as well.

Baker and Sudders, however, seem to want to avoid discussing the fact that per person commercial spending growth already exceeded the benchmark these past years, and as I pointed out last November, forces are in play to make it increasingly difficult to stay under the 3.1 percent per person growth target in upcoming years. Hence, it seems almost inescapable that the state will have to either pass its own limit on total hospital spending growth or directly reduce the rates paid to our higher-priced providers in order for the governor’s redistribution proposal to succeed on the terms he has laid out.

What about providers who already spend a lot more than others on primary care and behavioral health?

They may find it more challenging to meet the law’s new expectations than those who are currently at the lower end of primary care and behavioral health spending.  Since the larger and richer providers in the state are ones that at present tend to dedicate less proportionate resources to primary care and behavioral health, and earn most of their huge revenues from overpaid procedural care, this proposal could perversely even worsen the have-versus-have-not-differential among providers if not carefully crafted.

Does it matter how the additional monies are spent and how practices are paid?

I think it does.

First, redistributed monies should not go solely for boosting fee-for-service payment rates, though some spent there would be appropriate.  The bulk of dollars should be to transform practices by supporting needed care management and care coordination efforts through expanded service offerings, such as behavioral health integration into primary care, use of patient navigator and substance abuse peer supports, telehealth services or supports for addressing health-related social needs of patients and their families.

In addition to what to support, how practices are paid also matters—at least as was noted by a  group of academic primary care doctors who testified at the hearing.  They strongly urged the use of more primary care capitation for both base pay as well as to support the kinds of transformational activities noted here.  Payment for behavioral health services would likely remain mostly fee-for-service, but capitation experiments for behavioral health services should be encouraged as well.

What sort of accountability should there be for the new monies?

The governor’s proposal wisely places accountability on both insurers and providers for making the redistribution happen.

While there is a longer, technical discussion on exactly how to define primary care and behavioral health, and how to count insurer dollars put forward for these services, I have two thoughts about the oversight scheme.

For insurers:   A more difficult issue would be how to count end-of-year bonus payments for quality or health care savings—if paid to providers at the ACO level.  As it is not always clear that such bonuses get into the hands of the primary care of behavioral health providers, or are used to support their transformed practices; assuring that this happens is worth some consideration in the accountability rules development.

For providers: If providers are only evaluated by the proportional revenues that they take in, I worry that there are ways to game the accounting system.    A provider could find ways to affect their measured proportional revenues by taking actions that are unrelated to efforts to truly transform primary care and behavioral health practice in their organizations.   That is why the law should mandate some measures that actually focus on the operational expense side of health systems and get beyond provider compensation or full time equivalent employee counts—evidencing that there have been real investments by these provider systems to truly transform the care experience and improve health for those cared for by primary care and behaviorla health providers.

What’s next?

Who knows what will happen with this proposal as it gets into the hands of the Legislature? The House tends to get stuck in status quo thinking, trying to find a way to throw some small pots of monies at financially challenged community hospitals and health centers.  This sort of bail-out focus tends to crowd out more creative thinking. The hope is that the governor’s redistribution proposal could help begin a cultural shift that would make these community providers both more essential and more financially viable on their own.

Meet the Author

Paul A. Hattis

Associate professor, Tufts University Medical School
The Center for Health Information and Analysis is running a listening session on Wednesday on improved ways to define primary care and behavioral health expenditures that may be a next step in thinking where we go from here with this idea.

Paul A. Hattis is an associate professor at Tufts University Medical School.