WARWICK, R.I. (WPRI) – The working group convened by Gov. Gina Raimondo to reduce how much Rhode Island spends on its multibillion-dollar Medicaid program has come up with a short list of proposals, including a new push to change how nursing homes get paid.
A laundry list of proposals circulated at the group’s packed meeting Wednesday would trim $85.5 million in state Medicaid spending from the 2015-16 budget, nearly achieving the $90 million goal set by the governor. A spokesman said new ideas that came in over the last 24 hours would increase the figure.
The Medicaid group is scheduled to finalize a full list of recommendations to send to Raimondo by April 30. The cuts outlined Wednesday would actually reduce the state’s budget by $158.6 million when matching federal dollars are included in the calculation.
“This isn’t being done because things are bad in Rhode Island,” working group co-chair Dr. Ira Wilson, a professor at Brown University, said. “Care is good in Rhode Island. But it needs to be great. And to go from good care to great care, we need to change some fundamental things.”
The future of Medicaid is hugely important to Rhode Island government’s long-term financial health. More than 30% of state revenue is spent on the program, which provides health care to lower-income residents in partnership with the federal government. About one in four state residents is enrolled in Medicaid.
The dozens of proposals include a 5% reduction in rates paid to hospitals, which would save $31 million in state and federal funds, and a 3% reduction in rates paid to nursing homes, which would save about $18 million. In both cases, however, the state would commit to paying them an amount equal to the savings in the following budget year if they meet various quality benchmarks.
The proposal for hospitals to accept a rate cut in one year in exchange for quality-based incentive payments they could earn in the next year is supported by the Hospital Association of Rhode Island, which includes all the state’s hospitals except for those in the huge Lifespan system that owns Rhode Island Hospital.
“We think we need to go in a different direction,” said working group co-chair Dennis Keefe, president and CEO of the Care New England hospital system and chairman of the hospital association. “We think we need to use these cuts as a fulcrum to get to some reform that’s meaningful and sustainable in the future.”
But the reaction to the proposal from Lifespan was tepid.
“These types of programs are complex and multifaceted and have been implemented in other states,” Lifespan spokeswoman Gail Carvelli said in an email. “Each program is unique to the state and health environment in which it resides. Regrettably, we do not have enough details about this proposal to responsibly assess its validly.”
And the proposal to implement a similar model for nursing homes could also be controversial.
Secretary of Health and Human Services Elizabeth Roberts said the idea was put forward by the American Health Care Association, which lobbies for nursing homes nationally, but has not been accepted by its local counterpart, the Rhode Island Health Care Association.
Virginia Burke, the Rhode Island Health Care Association’s executive director, said her group would be “happy to accept” the pay-for-quality proposal – if it weren’t paired with the 3% rate cut. “Staff layoffs won’t enhance quality,” she wrote on Twitter.
Under the terms of the proposal, nursing homes could receive incentive payments in 2016-17 if they reduce the number of patients who go from a hospital to permanent residency in a nursing home and if they reduce the number who are re-hospitalized following a stay in a nursing home.
“We’ve been talking about it for a long time, but we really need to start rebalancing” Medicaid spending on long-term care, Roberts said, so that fewer residents wind up in nursing homes.
“The goal here is to create incentives for the nursing homes to do what is good for patients, particularly those who have come out of a hospital,” she said.
“None of this is going to happen overnight,” said Maureen Maigret, a consultant to the Senior Agenda Coalition of Rhode Island, which promotes community-based care for the elderly. “We’re not going to transform our system in one year. Other states that have done it have said it really takes five years to make the kind of transition you’re going to make.”
Other proposals highlighted in the working group document include increasing the state’s hospital license fee to fund new supplemental payments, which would save $23 million; streamlining Medicaid program management, which would save $6 million; and creating a new program to coordinate care for people suffering serious mental illness, which would save $6 million.
Most of the other programs would save between $300,000 and $2 million each.
The Medicaid working group won’t be finished once it identifies the $90 million in state savings for the 2015-16 budget year, however. The panel has also been tasked with coming up with another set of recommendations for longer-term structural changes in the program, which is expected to be sent to the governor by July.Ted Nesi (firstname.lastname@example.org) covers politics and the economy for WPRI.com. He hosts Executive Suite and writes the Nesi’s Notes blog. Follow him on Twitter: @tednesi