2023 -- S 1000

========

LC001063

========

     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2023

____________

A N   A C T

RELATING TO STATE AFFAIRS AND GOVERNMENT -- THE RHODE ISLAND ALL-

PAYER HEALTH CARE PAYMENT REFORM ACT

     Introduced By: Senator Ryan W. Pearson

     Date Introduced: May 15, 2023

     Referred To: Senate Health & Human Services

     It is enacted by the General Assembly as follows:

     SECTION 1. Title 42 of the General Laws entitled "STATE AFFAIRS AND

GOVERNMENT" is hereby amended by adding thereto the following chapters:

CHAPTER 14.7

THE RHODE ISLAND ALL-PAYER HEALTH CARE PAYMENT REFORM ACT

     42-14.7-1. Short title.

     This chapter shall be known and may be cited as “The Rhode Island All-Payer Health Care

Payment Reform Act.”

     42-14.7-2. Legislative findings, intent, and purpose.

     The general assembly hereby finds and declares as follows:

     (1) Health care providers are stewards of critical health care resources and deliver services

that are necessary to support the health and wellbeing of Rhode Islanders and the communities in

which they live.

     (2) The structure and terms of health care payment significantly influences the allocation

of resources within the health care system by creating a system of incentives that influence the

behavior of health care providers and health care purchasers.

     (3) The prevailing system of fee-for-service payment creates a financial incentive for

increasing the volume of health care services and acts as a barrier to meaningful systemic

transformations in health care delivery that would promote more affordable and predictable cost

growth, improved financial stability for health care providers, and technical innovation in care

delivery to support population health and quality excellence.

     (4) The coronavirus disease 2019 public health emergency heightened the faults of the

prevailing system of fee-for-service payment. The sharp reduction in service volume caused by the

suspension of elective procedures, combined with increasing marginal costs borne by health care

providers to institute infection control measures, necessitated the appropriation and disbursement

of hundreds of millions of dollars by the State of Rhode Island and the federal government in the

form of economic stabilization and revenue replacement funds for health care providers. The

aggregate value of these economic stabilization and revenue replacement funds was largely

distributed to hospitals and hospital systems, which account for the highest share of total health

care spending.

     (5) The fragmented organization of health care purchasing activity between multiple public

and private payers, acting principally through competing health insurance companies, precludes

meaningful efforts to align the structure and terms of health care payment in the absence of

government intervention and creates administrative burdens for health care providers.

     (6) Government, as health care purchaser and regulator, possesses a unique role as a

convener and facilitator of discussions between health care providers and health insurers, acting on

behalf of health care purchasers, to reform the structure and terms of health care payment as a

means to improve operating efficiency, improve health care quality, reduce administrative burden,

and serve the public interest in healthy people and equitable health outcomes.

     (7) Payment reform, defined as the restructuring of the terms of health care payment

through the development and implementation of advanced value-based payment models, is

necessary to achieve the goals of affordable and predictable cost growth, improved financial

stability for health care providers, and technical innovation in care delivery to support population

health and quality excellence.

     (8) The general assembly recognizes that on April 13, 2022, Rhode Island health care

leaders entered into a compact to accelerate advanced value-based payment model adoption,

finding that transforming payment away from fee-for-service to a prospective budget-based model

can support improved health care affordability and reorient health care delivery to focus on how

best to organize health care resources to meet population needs, and improve access, equity, patient

experience, and quality.

     (9) The benefits of payment reform are maximized when advanced value-based payment

models enjoy the participation of all payers, public and private. Rhode Island has a successful track

record of all-payer health care reforms, including the patient-centered medical home program for

LC001063 - Page 2 of 6

primary care endorsed by the general assembly under chapter 14.6 of title 42, the ("Rhode Island

All-Payer Patient-Centered Medical Home Act").

     (10) It is the intent of the general assembly to endorse and support the efforts of health care

providers and health insurers, acting on behalf of health care purchasers, to increase the adoption

of advanced value-based payment models in Rhode Island. Furthermore, the general assembly

endorses the findings and efforts articulated by health care leaders in the April 13, 2022, Compact

to Accelerate Advanced Value-Based Payment Model Adoption in Rhode Island. It is the purpose

of this chapter to provide policy direction and resources to support the development and

implementation of all-payer advanced value-based payment models in Rhode Island.

     42-14.7-3. Definitions.

     As used in this chapter, the following terms shall have the following meanings:

     (1) “Advanced value-based payment model” means a prospective budget-based payment

model with quality-linked financial implications that is defined for a specific patient population

and/or set of services.

     (2) "Health insurance plan" means any individual, general, blanket or group policy of

health, accident and sickness insurance issued by a health insurer. Health insurance plan shall not

include insurance coverage providing benefits for:

     (i) Hospital confinement indemnity;

     (ii) Disability income;

     (iii) Accident only;

     (iv) Long-term care;

     (v) Medicare supplement;

     (vi) Limited benefit health;

     (vii) Specified disease indemnity;

     (viii) Sickness or bodily injury or death by accident or both; and

     (ix) Other limited benefit policies.

     (3) "Health insurer" means all entities licensed, or required to be licensed, in this state that

offer health benefit plans in Rhode Island including, but not limited to, nonprofit hospital service

corporations and nonprofit medical-service corporations established pursuant to chapters 19 and 20

of title 27, and health maintenance organizations established pursuant to chapter 41 of title 27 or as

defined in chapter 62 of this title 42, a fraternal benefit society or any other entity subject to state

insurance regulation that provides medical care on the basis of a periodic premium, paid directly

or through an association, trust or other intermediary, and issued, renewed, or delivered within or

without Rhode Island.

LC001063 - Page 3 of 6

     42-14.7-4. Promotion of all-payer health care payment reform.

     (a) All-payer payment reform convening and payment model development shall be

implemented as follows:

     (1) The health insurance commissioner and the Medicaid director shall convene an all-

payer payment reform working group comprised of health care providers, including hospitals,

ambulatory care providers, and clinicians, health insurers, businesses, consumer advocates, and

other parties with relevant expertise and interest in all-payer adoption of advanced value-based

payment models. The health insurance commissioner and the Medicaid director, in consultation

with the working group, shall be charged with developing the structure and terms of advanced

value-based payment models for use by all-payers.

     (2) The health insurance commissioner and the Medicaid director may exercise discretion

in the selection and sequencing of payment model development by provider type; however, at a

minimum, shall develop recommendations for the design of hospital global budgets for facility and

employed clinician professional services and prospective payment for at least two (2) professional

provider types.

     (3) The health insurance commissioner and the Medicaid director may form subgroups of

the working group to develop recommendations for the design of specific all-payer advanced value-

based payment models.

     (b) All-payer payment reform reports shall be provided as follows:

     (1) The health insurance commissioner and the Medicaid director, in consultation with the

working group described under subsection (a) of this section, shall develop the following reports

to supply information necessary to develop and implement advanced value-based payment models.

These reports shall be submitted to the general assembly by the following dates indicated:

     (i) By July 1, 2025, the health insurance commissioner and the Medicaid director shall

complete a report examining the cost structure and financial performance of hospitals licensed in

Rhode Island. The report shall examine, at a minimum, hospital operating costs, fixed costs and

variable costs, costs related to the provision of patient care, costs unrelated to the provision of

patient care, net patient revenues, the relative prices received by hospitals from different payers,

other income and operating expenses, profitability, and operating margins by payer type. The

hospitals included in the report may have up to thirty (30) days to review the draft report prior to it

being finalized;

     (ii) By July 1, 2025, the health insurance commissioner and the Medicaid director shall

complete a report examining the cost-shifting phenomenon between payers. The report shall also

examine the fiscal and economic impact of changes to Medicaid reimbursement rates for hospital

LC001063 - Page 4 of 6

services; and

     (iii) By January 1, 2026, the health insurance commissioner and the Medicaid director shall

submit finished recommendations around payment model design for hospital global budgets for

facility and employed clinician professional services and prospective payment for at least two (2)

professional provider types.

     (2) The health insurance commissioner and the Medicaid director shall procure necessary

technical assistance and consulting services to prepare the payment model recommendations under

subsection (a) of this section and the reports enumerated under subsection (b)(1) of this section.

     (c) Engagement of the Centers for Medicare and Medicaid Services shall be undertaken as

follows:

     (1) The health insurance commissioner, in consultation with the Medicaid director, shall

engage the federal Centers for Medicare and Medicaid Services to explore opportunities to secure

federal participation in advanced value-based payment models through the Medicare program.

     (2) The health insurance commissioner, for commercial and Medicare, and the Medicaid

director, for Medicaid, are authorized to negotiate the terms of any necessary waivers under Section

1115(A) of the Social Security Act to secure federal participation in advanced value-based payment

models in Rhode Island.

     42-14.7-5. Annual reports on administration and implementation.

     The health insurance commissioner and the Medicaid director shall report to the general

assembly annually on or before March 1, commencing on March 1, 2024, on the implementation

of advanced value-based payment models and the work performed by the all-payer payment reform

working group described under § 42-14.7-4(a)(1). The annual report shall include

recommendations and draft legislative language for adoption by the general assembly, if necessary,

to ensure continued progress toward implementation of advanced value-based payment models in

Rhode Island.

     42-14.7-6. Regulations.

     The health insurance commissioner and the Medicaid director shall promulgate all

necessary and proper rules and regulations to implement this chapter.

     SECTION 2. This act shall take effect upon passage.

========

LC001063

========

LC001063 - Page 5 of 6

EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO STATE AFFAIRS AND GOVERNMENT -- THE RHODE ISLAND ALL-

PAYER HEALTH CARE PAYMENT REFORM ACT

***

     This act would require that the health insurance commissioner and the Medicaid director

convene an all-payer payment reform working group which would be charged with developing the

structure and terms of advanced value-based payment models for use by all-payer healthcare

insurers. Annual reports would be provided annually commencing March 1, 2024, to the general

assembly.

     This act would take effect upon passage.

========

LC001063

========

LC001063 - Page 6 of 6