Q & A with Patrick Tigue, RI’s Health Insurance Commissioner – Richard Asinof

by Richard Asinof, ConvergenceRI, contributing writer

Photo: OHIC Commissioner Patrick Tigue

Part One (Part Two follows…)

The day before ConvergenceRI was scheduled to sit down for a lengthy, one-on-one interview with Patrick Tigue, the R.I. Health Insurance Commissioner, OHIC published a remarkable 25-page working paper on the proposed merger of Care New England and Lifespan [and Brown University], which, if approved, would create an integrated academic health system that would control approximately 80 percent of the market share of the state’s health care delivery system. [See link below to working paper.]

The document put forth a series of recommendations, based upon an extensive review of the best available evidence from the research literature, using the framework of OHIC’s statutory purpose to promote affordability and improve quality and access to health care.

“The available evidence clearly suggests that hospital consolidation leads to higher prices and that the evidence on the impact of hospital concentration on the quality of care is mixed,” the report found, in a surprisingly candid conclusion.

The interview began with a discussion of the working paper, and many of the questions posed by ConvergenceRI to Commissioner Tigue, not surprisingly, seemed to lead back to the findings from the working paper on the proposed merger.

Here is the ConvergenceRI interview with R.I. Health Insurance Commissioner Patrick Tigue, who is developing a strong voice when it comes to articulating future health care policies under the purview of OHIC.

ConvergenceRI: I saw the memo that got put out yesterday [June 29] about the proposed merger. And to me, it was fascinating. It was not required for you to write the memo, but it seemed as if you felt obligated to do so, to at least frame the issues. How are you framing the issues, in terms of what are the right questions to ask about the merger?
TIGUE: Thanks for the question, Richard. What you are referring to is the working paper that we published yesterday morning about the proposed Lifespan and Care New England merger.

You are correct; we are not required to put out such a paper. And so, in the working paper, we tried to look at it from the perspective of [what are] the potential effects of the proposed merger, should it be approved, and how would those effects impact OHIC’s statutory purpose.

Fundamentally, if you look at OHIC’s statutory purpose, it really does boil down to three goals: which are to improve access to the health care system, to improve affordability, and to improve quality.

And so, given the nature of the proposed merger of that size and scope, I think it is quite obvious, and it was substantiated by the data, that [the merger] would have a very significant impact on all those of public interest objectives.”

ConvergenceRI: You think?
TIGUE: [laughing] That is why I felt it was important for the Office to speak, and for me to speak, about how we, and I, are thinking about that issue.

I would characterize how the paper frames the issues as follows:

• First, I would point out what the paper expressly does not do, is that it does not take a position whether or not the merger should be approved.

The reason for that is that OHIC is not the regulatory entity charged with evaluating the transaction. That authority, as I think you know, rests at the federal level with the Federal Trade Commission, and here in the state, with both the Office of the R.I. Attorney General and the R.I. Department of Health.

I thought it was very important to be respectful of the regulatory [authority] of those other entities, to not take a position from the Office’s perspective about whether or not the merger should be approved.

But what the working paper does do is to evaluate what the likely impacts of the merger, if it is approved, could be for access, quality and cost.

• What the paper essentially says is this: the combination of our analysis of the data in our current market and the research literature strongly suggest that there would be both risks and opportunities related to that merger. But that the risks to have a negative impact on affordability without having a positive impact on quality are so significant that they warrant the strongest possible regulatory scrutiny and regulatory oversight, should it be approved.

ConvergenceRI: There is this huge pot of federal money that comes into Rhode Island through Medicare to support medical education. I have had difficulty trying to figure out where the money goes and how it is spent, and who is accountable for that money. Will that become a potential part of the regulatory recommendations regarding the proposed merger?
TIGUE: The funding through Medicare for medical education, as you alluded to, is not something that OHIC has authority or purview over.

In the working paper, for that very reason, we do look at, broadly speaking, the evidence in the literature about operating costs, which is not exactly analogous to that. What we found in the paper, based on the research literature, is that while there may be some potential for very small operating cost efficiencies that come out of a merger, that after a period of a few years, the efficiencies that are gained do not appear to be sustained.

ConvergenceRI: Another big issue with the proposed merger, I believe, will be the interoperability of data systems and electronic health records. Which I think does intersect with all three of OHIC’s goals – access, quality and costs.
If we are looking at access to data as part of the proposed merger, and something that falls within your regulatory purview to lower unnecessary costs and improve access, what is the right way to frame the question about achieving interoperability of data?
TIGUE: I think that is a great question, Richard, and I think about it in a couple of different ways.

The first would be, as it relates to the merger, specifically, is that certainly conceptually, one could imagine a conceptual benefit, an opportunity would be through a merged system to create an integrated system.

You also pointed out, which I think is likely correct as well, that even if that were the result, ultimately, of a merger, or a benefit that was very tangible and real, there would be a cost to achieving that benefit.

Because, to produce that integration, there would be transition costs that could be quite significant. I think it is fair to point to, over the long term, there could certainly be a benefit to having a more integrated data system, matching up with having an integrated hospital system.

However, what I would caution us  to do is to look at the research literature on these questions. You would expect that ultimately, if that would be the result, the literature would show that you would see improvements in quality that would result from that kind of integrated information system.

However, what you see in the research literature is that is not the case, that there is very mixed evidence on quality. There is really no evidence that quality improves as a result of larger mergers of hospital systems.

That does not mean that it is impossible or that it is conceptually not a possibility. I think that it is, but my message, what I wanted to emphasize, and what the paper emphasizes is this: we can’t take that conceptual potential benefit for granted.

We can’t assume that that is going to happen. We have to have the strongest possible regulatory oversight measures in place if a merger is approved to ensure that those kinds of benefits actually do come to fruition.

ConvergenceRI: Two follow-up questions. One is about the cost of achieving an interoperable data system, which promises to be phenomenal. Who pays for it? Is that a cost that is borne by the hospital entity? Is that a cost that is covered by an overhead charge, a facilities fee, to every patient who engages with the merged system? And, how would such costs be reflected in insurance premiums?
TIGUE: Given OHIC’s focus on affordability of health insurance, this is exactly why the working paper raises concerns about potential negative impact on affordability from a merger.

The questions that you pose, Richard, squarely reflects what the evidence shows us, again, in other markets, is that the question of who pays turns out to be, in the commercial health insurance market, commercial ratepayers. Meaning employers, employees and consumers in their premiums, because that’s the primary source of revenue for any provider system, be they merged or unmerged.

But what the literature also shows is that a highly consolidated entity will then wield its market power to extract very high prices from commercial payers. And, that will eventually accrue, as it has to for fiscal solvency reasons, to commercial ratepayers.

From my standpoint, because of that fact – and what is present in the research literature – that is why I think the proposed merger deserves the strongest possible scrutiny.

And, if it is approved, it again needs strong regulatory guardrails to ensure that that type of negative impacts on affordability does not come to pass.

ConvergenceRI: One of the lessons from the COVID-19 pandemic is that there were a large number of people who fell below the radar screen when it came to accessing primary care, who were uninsured or underinsured, in terms of administering testing and vaccinations.
Does there need to be new affordability standards in place to protect people who are underinsured or uninsured in terms of accessing care, beyond utilizing charitable care through emergency rooms?
TIGUE: I would respond by making two points. As it relates to the merger specifically, the exact points that you are raising, about ensuring that there is an obligation to address population health and improve health equity, because that is really at the core of what you are talking about – making investments that are targeted specifically in an evidence-based way in improving disparities in health outcomes that are certainly not limited to race and ethnicity but absolutely encompass them.

My view, and what the working paper articulates, is that because of the size and scale of what a merger would look like for Lifespan and Care New England, it is my view that if the merger were to be approved, there should be specific regulatory requirements placed on that entity to improve population health and health equity, and that there should be specific financial goals and incentives and disincentives tied to that obligation.

I would make an added point here. I think that the obligation in a merged entity, should it be approved, should extend not just to the patient that that system is serving, but because we are talking about a system that would [encompass] potentially 80 percent of the Rhode Island hospital market, I think it is fair in this case to apply responsibility for statewide performance in health outcomes and in health equity.

Normally, that would not be reasonable, because an individual doctor’s office or an individual health care system cannot reach the entire population. But again, the merged entity we are talking about, with the size and the scope that we are considering and contemplating as a state, I think it can and should have the obligation to address health equity and population health on a statewide scale.

The second point I would raise, you mentioned our affordability standards. One thing that I am potentially most excited about in working with the team at OHIC and with stakeholders is that we are looking right now at developing what we are calling our next generation affordability standards. We have developed our initial concept presentation.

One of the standards, the second proposed standard that we are developing in an exploratory phase [we will move into a more formal rule-making process down the line], is specifically focused on commercial health insurer community investment to address health equity and social determinants of health.

So, to answer you question globally about where should that responsibility lie, it should lie with both provider systems – certainly a provider system the size and scope of what is being considered in the Lifespan/Care New England merger – and the payers as well, the commercial health insurers, who have an obligation, in my view, to specifically make investments to address those things and improve population health, affordability.and health equity.

ConvergenceRI: Another piece of the policy and fiscal puzzle related to the potential merger is crafting a statewide policy about coordinating care in emergency rooms and the diversion of ambulances.
TIGUE: I have not looked at the issue of diversion closely, but my understanding is that ultimately it would fall under the regulatory purview of the R.I. Department of Health.

But from a broader policy perspective, if you think of it in the context of the proposed merger between Lifespan and Care New England, an entity with that size, scope and resources could be accountable for proactively addressing the emergency room policies, for bringing creative solutions to the table, for thinking through what is in the best interests of Rhode Islanders, in a way that can reduce costs while improving quality and the experience of the individuals who need to be placed in the appropriate care setting, in a timely way.

My message overall would be that we should not assume that this type of an issue, without proper regulatory oversight, would be naturally addressed by a proposed merged entity. But if that entity does come to pass, there should be strong regulatory accountability mechanisms.

ConvergenceRI: I recently interviewed the new president and CEO of Blue Cross and Blue Shield of Rhode Island, Martha Wofford. In preparing for the interview, I asked a number of folks involved with health care – neurologists, physical therapists, primary care physician assistants, social workers, and nurses – what questions they would want to ask if they could meet with Wofford. The overwhelming majority responded with questions about the practice of co-pays.
Is it in OHIC’s purview to ask about the value of co-pays? And, how they affect access to health care? Do they add value to the insurer’s bottom line?
TIGUE: It is absolutely true that cost-sharing, which includes co-payment and co-insurance as well as deductibles, have been a long-standing feature as you know, Richard, of the commercial health insurance market.

You are right, however, that these are squarely in our purview at OHIC to review the benefit designs that the insurers in the commercial market offer, of which cost-sharing is part of that, as well as the clinical services that are ultimately covered.

As I think you are aware, in addition to reviewing annual premiums that the insurers propose to charge, we also review their plan designs every year, as part of the form review process, which is a parallel process along with our rate review process.

The first question that you have to address is: does it conform to federal and state requirements? Much as we look at the rates, we also ask the question: is it in the public interest? And, does this type of cost-sharing create an undue barrier to access? And, then we look at the benefit design and the way it is structured and the way that cost-sharing is imposed and how that is related to the cost of premiums.

That has to be the first question that you ask. And then look at the beneift design and the way it is structured or the way that the cost-sharing is imposed and also how that is related to premiums.

I would say broadly, in my general view, even though many plans with very high cost sharing, whether it is the form of co-pays, deductibles or co-insurance, those may very well be regulatory permissible.

The fact that plan designs are put forward that have very, very high cost sharing on consumers, and that is the only way to achieve what is viewed as being a more affordable premium.

That just shows that the work that we have left to do to actually address underlying health care costs. It should not be the only way that we are achieving lower cost premiums is through having extremely high cost sharing. That is not then ultimately benefiting the consumer or serving the system.

That is one of the things that animates why I want to do this work, because we have so much work left to do. Where we are today is not where I believe we need to go.

Part Two

A prescription how to make health care more affordable

These days, so much of the state’s economic and political future revolves around health care: the proposed merger of the two largest health systems, Care New England and Lifespan, in partnership with Brown University; the continuing crisis around the contagious spread of COVID-19 and the Delta variant, where resistance by some to getting vaccinated and wearing masks threatens to upend school openings; and the escalation in overdoses and deaths caused by the opioid epidemic, despite efforts to attach legal liability to drug manufacturers and distributors.

And, of course, there is the continuing saga of the increasing high costs of health care delivery, driven here in Rhode Island by pharmacy costs, according to the latest data analyses.

From the national perspective, the U.S. spends the highest percentage of its gross domestic product on health care, compared to 11 other wealthy industrialized nations, but ranks last in access to health care, according to an analysis by the Commonwealth Fund. The report found that the U.S. ranked last on access to care, administrative efficiency, equity, and health care outcomes, despite spending 17 percent of GDP on health care.

The question is: What can be done to control health care spending here in Rhode Island?

On June 28, the R.I. Office of the Health Insurance Commissioner released the 2022 requested commercial health insurance rates for review.

“I am concerned by many of the requested premium increases,” said R.I. Health Insurance Commissioner Patrick M. Tigue, in a news release accompanying the publishing of the requested rate increases. “Recently, health insurers have generated substantial profits as a result of the reduction in medical services during the coronavirus disease 2019 public health emergency. My office will scrutinize the requested increases and critically evaluate the necessity of significant increases, given the overall financial health of the insurers.”

At the same time, OHIC will be reviewing each health insurer’s coverage and benefit contracts with consumers to ensure that plans sold in Rhode Island meet all benefit, access, and member cost sharing required by state and federal law. A decision by OHIC to approve, modify, or reject the proposed rates is expected in mid-to-late August.

• The proposed individual market requests for 2022 revealed that Blue Cross Blue Shield of Rhode Island requested a 3.1 percent increase, while Neighborhood Health Plan of Rhode Island requested an 8.5 increase.

• The proposed small group market requests for 2022 revealed that Blue Cross Blue Shield of Rhode Island asked for a 2.9 percent increase, Neighborhood Health Plan of Rhode Island asked for a 6.5 percent increase, UnitedHealthcare asked for a 17.5 percent increase for its HMO plans and a 10.7 percent increase for its PPO plans, and Tufts Health Plan asked for a 5.2 percent increase for its HMO plans and 5.1 percent increase for its PPO plans.

• The proposed large group market requests for 2022 revealed that Blue Cross Blue Shield of Rhode Island is seeking a 7.4 percent increase, UnitedHealthcare is seeking a 14.1 percent increase, Tufts Health Plan is seeking a 9.1 percent increase for both its HMO and PPO plans, Aetna is seeking a 9.0 percent increase, and CIGNA is seeking a 5.3 percent increase.

Translated, the increased costs of health insurance show no signs of diminishing in 2022, despite the due diligence of OHIC to exert its regulatory authority to improve access, improve quality, and increase affordability.

Tracking the high cost of health care
In ConvergenceRI’s recent interview with R.I. Health Insurance Commissioner Patrick Tigue, in addition to talking about a working paper the agency drafted looking at the risks and opportunities of the proposed merger, there was also an in-depth dialogue around the potential to develop new affordability standards. [See link below to ConvergenceRI story, “Ensuring affordability, access and quality.”]

One topic concerned the controversial use of the practice of step therapy by health insurers as a method to control costs, through which a patient needs to move through a series of lower-priced drug interventions before receiving authorization for the higher-priced treatment.

[It was an issue raised by a neurologist and a primary care physician, when ConvergenceRI asked them for what question they would like to ask Blue Cross and Blue Shield of Rhode Island President and CEO Martha Wofford; see link below to ConvergenceRI story, “Ensuring better access and more health equity.”]

ConvergenceRI: Is the practice of what is known as “step therapy” as a cost containment technique deployed by health insurers something that falls under the purview of OHIC?
TIGUE: Step therapy deserves scrutiny, in my opinion. It concerns me that [the practice] can function as a barrier to access.

[We need to ask:] What are the most efficient ways to contain costs? Are there more global ways that can help us to contain cost that do not have these [alleged] adverse impacts on patients?

To give a concrete example of that, in contrast to imposing co-payments on particular services, or as you said, step therapy, I would much rather see our emphasis be on moving the system holistically toward value–based payment, where we are not rewarding volume, where we are actually paying for quality outcomes and value.

Obviously, health policy experts say that all the time. But that is where our efforts should be focused, not on these individual types of efforts, even if they are permissible from a regulatory standpoint.

I think that containing costs is critically important, because that obviously is what is directly related to maintaining affordability.

Regulating the cost of specialty care
Another focus of the conversation was looking at the degree to which specialty care, differentiated from how inpatient and outpatient care by hospital systems, was regulated.

ConvergenceRI: How is specialty care regulated when it comes to health insurance plans, looking at value-based care?
TIGUE: This is actually another area in the next generation of affordability standards that we are considering.

That area, physician services, which includes specialty services, is commonly referred to as “professional services” in our field.

Historically, OHIC, through our regulation of the payers, has worked to contain the growth of inpatient and outpatient costs. OHIC has not done work, historically, on professional services. That is an area that we considering expressly for the next generation affordability standards, for the exact conceptual reason that you are alluding to, that so far, that is an unregulated area of our market.

Rhode Island has been quite successful historically at containing inpatient and outpatient hospital costs. But we have not been successful in many cases in doing that on the professional services side. We need to think about addressing physician services and specialty services, in particular, in terms of prices, price growth, and price variation. It can have a very negative impact on affordability.

Drug prices as the driver of higher medical costs
Recent data analyses conducted in partnership with OHIC identified that rising medical costs were being driven by higher drug costs, not utilization. [See link below to ConvergenceRI story, “Prescription drugs, not utilization, are driving higher health costs in RI.”]

ConvergenceRI: The most recent market analyses showed that pharmacy costs, not utilization, were the driver of higher medical costs in Rhode Island, across all areas of the market, in commercial insurance, in Medicare and Medicaid. Yet there appears to be little or no regulation of drug pricing.
TIGUE: It is an absolutely critical issue, and I would be even more precise. With pharmacy costs, when you dig a little deeper on the data for issue, it is not the volume of drugs being prescribed; it is unit price that is driving that overall cost.

And, you are absolutely right. In the commercial market, one of the most significant drivers of health insurance premium increases are pharmaceutical price increases.

I absolutely think it is something that needs to be addressed. It is something that is most amenable to federal policy action. However, because I don’t have any confidence in the short term that we are going to see short-term federal action, although that would be incredibly welcome.

In my view, I think that we have to strongly consider what are our options for taking state action. One approach that OHIC testified in favor of this past legislative session, there was action in both chambers of the legislature to consider a bill to establish reference pricing as a model for containing pharmacy costs. [The bill would have] pegged the cost that is paid for a specific drug to external benchmarks, which are significantly lower, particularly when you look at international benchmarks.

Infusion policies
The recent FDA approval of a new drug to treat Alzheimer’s, which is administered through an infusion treatment, has raised questions about the payment models for the drug, for which initial projections had Medicare paying some $26 billion next year.

As a subset of drug pricing, ConvergenceRI asked Tigue about the costs of expensive drugs used in infusion treatments and how they might become part a broader examination of drug-pricing regulation.

ConvergenceRI: Has there been any study of the role that the costs of drugs used in infusion treatments factor into the overall increases in drug pricing?
TIGUE: I am not aware of any analysis that has been done to look at the issue, at infusion specifically.

It could be included as an important feature of annual rate review process that is one of the important features of our annual rate review process. Obviously, the first focus is on the data that is collected to make an informed judgment on the decision whether the requested rates should be approved, modified, or rejected, but as a secondary benefit for the state and the public interest, we can collect a wide range of data, to your point, Richard, that can be used for other public interest objectives.

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Richard Asinof

Richard Asinof is the founder and editor of ConvergenceRI, an online subscription newsletter offering news and analysis at the convergence of health, science, technology and innovation in Rhode Island.