States have long faced budget limitations, a history of systemic racism, and a mandate to contain costs while maintaining access to quality care. COVID-19 has exacerbated these issues as state revenues decline and communities of color are disproportionately impacted by the pandemic. These challenges raise an important question – how does a state advance health equity while addressing health system costs?
The rising cost of health care has created an additional barrier to accessing quality care, particularly for racial/ethnic minorities. In 2018, 13 percent of White patients reported going without needed care due to its prohibitively high cost. For nearly every other racial/ethnic group, this number ranged from 17 to 21 percent.
One contributing factor is that people of color are disproportionately uninsured. Not only are the uninsured solely responsible for their medical costs, but they are charged a higher rate for their care without the advantage of an insurer’s negotiated pricing with providers. Additionally, as millions of people have lost insurance coverage due to pandemic-related job loss, there remains a clear need for strategies that lower health care system costs rather than simply through insurance coverage.
Leveraging Payment Systems to Enable Community Investments
One such strategy discussed by state leaders at the National Academy for State Health Policy’s (NASHP) recent annual conference is a global hospital budget approach. Under this system, a state works with a hospital to determine the hospital’s allowed revenues for the year. As implemented in Maryland, a hospital’s deviation from its allowed revenues – whether by surplus or deficit – by more than a narrow 0.5 percent margin resulted in penalties against the hospital’s budget the following year.
Through this approach, a state offers predictable payments to hospitals and incentivizes them to avoid excess costs. While fee-for-service hospitals across the country express concerns of closures due to unpredictable revenue from the pandemic-related pause in elective procedures, participating global budget hospitals in Maryland have been able to rely on more consistent revenue despite a decline in care utilization.
This predictability better enables hospitals to retain revenue and invest those funds within the community to address the upstream determinants of health, as required of tax-exempt hospitals under community benefit laws. While research shows the majority of nonprofit hospitals do not address health disparities in their investments, Maryland is one of the states working to pivot hospital investments to meet equity goals. Maryland requires nonprofit hospitals to submit an annual report that includes a list of its community benefit initiatives and the cost of each one.
At NASHP’s conference, Katie Wunderlich, executive director of the Maryland Health Services Cost Review Commission, described a Baltimore hospital that has reduced its inpatient footprint and increased its spending on substance use disorder counseling, a healthy food market, and job training. Investments in the socioeconomic resources needed to foster good health (such as healthy housing, nutritious food, and sufficient income) are particularly important in communities of color, which have been historically deprived of these resources.
Just as global budgets enable hospitals to invest retained revenue in their communities, a growing number of states are utilizing cost-growth benchmark programs to avoid unnecessary public spending on health care, which can instead be invested in services beyond the scope of clinical care.
Utilizing Cost-Containment Strategies to Improve Chronic Care Management
While acute care provided in clinical settings is important for improving health, chronic conditions such as cardiovascular disease and cancer encompass a growing share of patient care needs and costs, particularly for patients of color. Managing these conditions – and preventing the costly care associated with them – require the engagement of the state, public and commercial payers, hospital and non-hospital providers, and community organizations alike.
Cost-growth benchmarks, in which a state sets a limit on annual per capita health spending growth, operate statewide and engage all stakeholders in managing a state’s total cost of care. State leaders can also use these as tools to improve health outcomes by including quality benchmarks.
Multiple entities work with the state oversight agency to set and meet these cost and quality benchmarks statewide, enhancing transparency, efficiency, and shared accountability for health care spending and quality. When it created its benchmark program through an executive order, Delaware established eight quality benchmarks, including:
Adult obesity – A long-term benchmark of no more than 27.4 percent of adults with a body mass index greater than or equal to 30 kg/m2.
Physical activity amonghigh school students – A long-term benchmark of at least 48.7 percent of students engaging in physical activity for greater than or equal to 60 minutes per day five days a week.
Statin therapy for patients with cardiovascular disease – A long-term benchmark of 82.1 percent of commercially insured and 68.3 percent of Medicaid-enrolled, at-risk individuals adhering to medication compliance greater than or equal to 80 percent of the treatment period.
Persistence of beta blocker treatment after a heart attack – A long-term benchmark of 91.9 percent of commercially insured and 83.9 percent of Medicaid-enrolled individuals age 18 and older receiving beta-blockers for six months after discharge
Similarly, Maryland’s new total cost-of-care model seeks to reduce the burden of chronic disease – particularly diabetes – through a focus on chronic care management. The goal is to help providers pay specific attention to and provide additional resources for communities disproportionately affected by chronic diseases.
While meeting these statewide benchmarks would not inherently address equity issues within these health outcomes, the inclusion of these quality benchmarks can contain costs through effective management and prevention of chronic conditions. In turn, it would reduce health care spending among Black and Latinx adults as they are the most likely to suffer from cardiovascular disease risk factors, such as hypertension and obesity. As racial/ethnic minorities disproportionately lack health insurance coverage, it is crucial to prevent the development of inequitable health outcomes before costly clinical care intervention is needed, in addition to effectively managing these conditions in clinical settings.
As racial and ethnic minorities disproportionately lack health insurance coverage, it is crucial to prevent the development of inequitable health outcomes before costly clinical care intervention is needed, in addition to effectively managing these conditions in clinical settings.
Moving forward, states can use global budgets and cost-growth benchmarks as strategies to advance health equity while addressing health system costs. As states search for ways to better ingrain health equity into payment systems, these strategies offer states the ability to retain much needed revenues, focus upstream spending in non-clinical settings, better enable hospital community benefit spending, and manage chronic conditions that disproportionately impact people of color.
https://www.nashp.org/wp-content/uploads/2018/12/happy-group-health-equity-shutterstock-12_6_2018.jpg43976437Adney Rakotoniainahttps://www.nashp.org/wp-content/uploads/2019/06/NASHP-Logo.pngAdney Rakotoniaina2020-09-28 21:24:372020-09-29 15:18:28How States Can Advance Health Equity while Addressing Health System Costs