Changes in Health Care Spending and Quality Following the Adoption of Insurance Affordability Standards in Rhode Island

Background

Healthcare spending for primary care services has increasingly transitioned from fee-for-service to alternative payment strategies intended to enable primary care practitioners to proactively prevent avoidable morbidity and associated healthcare costs. For example, payments for primary care services delivered outside of routine visits have been introduced by both Medicare and private insurers, to fund activities such as phone-based or nurse-directed complex medication management, with the goal of avoiding emergency department visits or hospitalizations related to medication non-adherence or adverse medication effects. Starting in 2010, the State of Rhode Island required that private insurers increase the share of total commercial medical care spending on primary care by one percentage point each year from 2010 to 2014, mostly through non-FFS payments; insurers were required to increase the primary care spending share without raising enrollee’s insurance premiums or increasing overall medical expenses. Here, we evaluated changes in healthcare spending and quality before and after initiation of Rhode Island’s primary care payment share requirement.

Methods

Using a generalized difference in differences model, we compared changes in healthcare spending and quality among N=247,679 adults aged 27 through 64 years old enrolled in private insurance in Rhode Island, and N=2,861,318 similar adults in other New England states over the period 2007-2015. We studied quarterly standardized spending in total, by category of service, and by primary versus specialty care, adjusted for demographics, secular time trends (month-year fixed effects) and between-state differences (state fixed effects). We included only those individuals with three years of pre-policy enrollment in order to test the assumption that individuals who were and were not exposed to the policy change shared a common trend in health outcomes prior the policy, by including multiple leads interacted with treatment dummies in the model. As sensitivity analyses, we tested for differential changes in enrollee number and composition in Rhode Island versus the control population; included co-morbid conditions (CMS Hierarchical Condition Category risk score); repeated the analysis with pharmaceutical claims and using an alternative national control population by sampling from the overall claims data from all 50 states with 1:1 coarsened exact matching by age, sex, and risk score.

Results

Among Rhode Island enrollees, total medical spending through fee-for-service payments declined by $52/enrollee/quarter more than the control population (95% CI: -80 to -24; P<0.001), after the required increase in primary care payment share (a 4.9% decline from 2009). The spending decline was primarily from a reduction to insurer spend on outpatient services (a reduction of $58/enrollee/quarter; 95% CI: -79 to -38; P<0.001). A sharp drop in patient cost sharing (total payments minus net payments) in control states, but not in Rhode Island, during 2014 temporarily offset the relatively greater insurer spend in the control population in that year. Ambulatory-care sensitive admission metrics and thirty-day readmission rates were unchanged based on preliminary analyses.

Conclusions

Private insurance enrollees in Rhode Island experienced reduced total healthcare spending following the requirement that insurers increase their share of spending on primary care.