Senate Commission: Hospital Costs Are an Uneven Burden
Thursday, March 24, 2011
A Senate commission released a report yesterday warning that the rates for health care at hospitals vary widely among providers—leading to a system that is unequal and unfair.
The report outlines ways the state can improve patient health and promote efficiency in the hospital system.
"Hospitals are vital to Rhode Island both in terms of our citizens' health and as a sector of our economy," said Senator Joshua Miller D-Cranston, Warwick, who is chairman of the commission. "It's in the best interest of the public to ensure that they remain solvent."
The commission—formally known as the Special Senate Commission to Study Cost Containment, Efficiency and Transparency in the Delivery of Quality Patient Care and Access—is calling for a move away from the current rate-for-service model of payment by insurance companies—highlighting the inequities created by a system that sets rates by negotiation between insurers, Medicaid, or individual patients and hospitals.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLAST"The rate system is not transparent and clear enough to ensure that all hospitals are being reimbursed fairly and equitably, and it may even penalize hospitals for getting patients healthy quickly," Miller continued.
Different payers pay different rates
As a result of the current system, different payers pay different rates for the same services, and hospitals are paid differently for the care they provide. Though some hospitals improve patient health more efficiently than others, they receive no extra benefits because payments are made per service without regard for the patient's health outcome.
"The rate system should be fair to all hospitals, but even more importantly, it needs to encourage and reward practices that result in better patient health and are efficient," said Miller.
The commission recommends that the state utilize its power as one of the largest purchasers of health care services for its employees and public health programs. Doing so would include monitoring and supporting an initiative proposed by the Office of the Health Insurance Commissioner in July to change the approval process for new rate pans.
Broad recommendations
The report calls for a Provider Payment Reform Task Force within the executive branch that would study appropriate payment levels by payer, hospital, and inpatient/outpatient service type and monitoring payment reform efforts to ensure fairer pricing.
It also recommends that individuals be required to designate a primary health care provider and that the state promote Hospital Life Transitions — a program designed to increase the safety of patients transitioning out of hospital care and reduce unnecessary re-admittance.
The commission encourages a transition away from policies relying on emergency hospital visits for behavioral health care intervention in favor of less-expensive, community-based options. It also calls for permanent funding of programs that increase statewide coordination of health care planning and payments.
Finally, the commission noted that "the business of hospitals is changing, and the way rates are determined should change with it... especially as the federal health care reforms change the way health care is delivered."
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