Smaller premium increases sign of things to come?

R.I. Health Insurance Commissioner Dr. Kathleen C. Hittner compares controlling health care costs to the old arcade game featuring mallets and plastic moles.
“Part of what happens is we contain costs in one area – such as hospital admissions, which have gone down – and then something unexpected goes up, like the treatment of hepatitis C,” Hittner, now entering her second year as commissioner, said in a phone interview.
Still, over the past five years, the soaring rise of insurance premiums has at least slowed, even if hasn’t retreated into something most would consider affordable.
“They have moderated and leveled off even though they are not where we would like them to be,” Hittner said. “I think this was very good year looking at rates. What I really like is we have more options for people in different categories than we had before.”
In July, Hittner approved health insurance premiums for 2015 that featured, on average, smaller rate increases than those Rhode Islanders have come to expect.
In the small-group market, the state approved increases ranging from a 9.6 percent hike for UnitedHealthcare of New England’s HMO, to Neighborhood Health Plan of Rhode Island’s rare request to reduce its base rate 1.8 percent.
The state’s largest insurer, Blue Cross & Blue Shield of Rhode Island, was granted a 5.2 percent small-group premium increase and Tufts Health Plan a 4.5 percent increase, both modest hikes by historical standards. Blue Cross and United had requested larger increases than Hittner approved.
The approved large-employer premium increases for 2015 were larger, averaging 8.1 percent, but also less than prior years.
The individual market is difficult to compare, as Blue Cross was the only game in town until this year and its rates have varied wildly due to large changes made by then-Commissioner Christopher F. Koller.
Hefty premiums increases in the small-group market first began slowing in 2012 and dropped more significantly in 2013. This year’s premiums have been difficult to compare because of the implementation of the Affordable Care Act, which changed how they are calculated.
The health commissioner’s office could only provide a percent change between 2013 and 2014 for large-employer plans – an average hike of 10.4 percent for the three participating insurers.
Asked for positives in health-spending trends, Hittner identified primary care, which the state doesn’t want to see fall behind other areas and seems to be holding steady at about 10 percent of total spending.
In general, keeping health insurance premiums stable and predictable are the primary goals of the health commissioner’s office, and both in-patient and out-patient spending appear to have stabilized, Hittner said.
The push and pull between insurers and the commissioner over premiums is just one piece of a complex system that determines how much is spent on health care every year.
Insurers, for their part, are constantly negotiating with providers to get the lowest reimbursement rates for each set of services.
Blue Cross President and CEO Peter Andruszkiewicz said although the last few years have seen costs moderate, it is too early to call it a trend. He said Rhode Island remains a “Wild West” of fragmented, fee-for-service care, and the result of efforts by providers and insurers to better coordinate care would determine where costs go in the future.
“Rhode Island has the most fragmented delivery I have seen with very little coordination and little coordination between hospitals’ subspecialists,” Andruszkiewicz said.
Neighborhood said its 2015 small-group rate-request decline of 1.8 percent and its request for a 7.3 percent decline in the individual rate were the result of how new it was to the commercial market.
With first-hand data only in Medicaid, Neighborhood was conservative with its 2014 request, said Patrick Tigue, director of operations for Neighborhood, and then was able to drop its estimates with better data. “The key change was we had some data we were able to look at from experience and concluded we could absolutely decrease rates and offer more affordable products,” Tigue said.
The drop in Neighborhood premiums should be a major boost for the state’s health-benefits exchange, because, unlike the other insurers, Neighborhood offers all its plans on HealthSourceRI.
Especially in the small-business market, HealthSource enrollment in its first year was dominated by Blue Cross. As of March 8, Blue Cross accounted for 19,039 HealthSource enrollments versus 651 through Neighborhood, according to HealthSource.
Boosting what has been relatively modest interest from small businesses in HealthSource has been a major goal for the exchange this year.
“We do believe [the 2015 plans] are more attractive offerings for an employee or employer,” Tigue said.
On the provider side, health care companies are trying a variety of things to lower their own costs and deliver services more effectively to patients.
For the past year Lifespan, the state’s largest hospital owner, has been streamlining its operations using “lean” and Six Sigma principles developed for manufacturing.
“We have looked at our most complex processes and had some pretty good results,” said Cathy Duquette, chief nursing officer and executive vice president for nursing affairs at Lifespan.
Lifespan and Blue Cross in June launched Rhode Island’s largest “accountable-care organization,” a three-year project to coordinate patients’ care and deliver payment for outcomes instead of service volume.
Hittner said accountable-care organizations and other innovations, such as patient-centered medical homes, are too new to have any local data on how they impact premiums.
But her goal, which she acknowledges may be optimistic, is to see 80 percent of health care spending in the state happen outside “fee-for-service” in five years.
“I think you will see reimbursement change,” Hittner said. •

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