2023 -- S 1000
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LC001063
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S TATE OF RHODE IS LAND
IN GENERAL ASSEMBLY
JANUARY SESSION, A.D. 2023
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A N A C T
RELATING TO STATE AFFAIRS AND GOVERNMENT -- THE RHODE ISLAND ALL-
PAYER HEALTH CARE PA YMENT REFORM ACT
Introduced By: Senator Ryan W. Pearson
Date Introduced: May 15, 2023
Referred To: Senate Health & Human Services
It is enacted by the General Assembly as follows:
SECTION 1. Title 42 of the General Laws entitled "STATE AFFAIRS AND 1
GOVERNMENT" is hereby amended by adding thereto the following chapters: 2
CHAPTER 14.7 3
THE RHODE ISLAND ALL-PAYER HEALTH CARE PAYMENT REFORM ACT 4
42-14.7-1. Short title. 5
This chapter shall be known and may be cited as “The Rhode Island All-Payer Health Care 6
Payment Reform Act.” 7
42-14.7-2. Legislative findings, intent, and purpose. 8
The general assembly hereby finds and declares as follows: 9
(1) Health care providers are stewards of critical health care resources and deliver services 10
that are necessary to support the health and wellbeing of Rhode Islanders and the communities in 11
which they live. 12
(2) The structure and terms of health care payment significantly influences the allocation 13
of resources within the health care system by creating a system of incentives that influence the 14
behavior of health care providers and health care purchasers. 15
(3) The prevailing system of fee-for-service payment creates a financial incentive for 16
increasing the volume of health care services and acts as a barrier to meaningful systemic 17
transformations in health care delivery that would promote more affordable and predictable cost 18
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growth, improved financial stability for health care providers, and technical innovation in care 1
delivery to support population health and quality excellence. 2
(4) The coronavirus disease 2019 public health emergency heightened the faults of the 3
prevailing system of fee-for-service payment. The sharp reduction in service volume caused by the 4
suspension of elective procedures, combined with increasing marginal costs borne by health care 5
providers to institute infection control measures, necessitated the appropriation and disbursement 6
of hundreds of millions of dollars by the State of Rhode Island and the federal government in the 7
form of economic stabilization and revenue replacement funds for health care providers. The 8
aggregate value of these economic stabilization and revenue replacement funds was largely 9
distributed to hospitals and hospital systems, which account for the highest share of total health 10
care spending. 11
(5) The fragmented organization of health care purchasing activity between multiple public 12
and private payers, acting principally through competing health insurance companies, precludes 13
meaningful efforts to align the structure and terms of health care payment in the absence of 14
government intervention and creates administrative burdens for health care providers. 15
(6) Government, as health care purchaser and regulator, possesses a unique role as a 16
convener and facilitator of discussions between health care providers and health insurers, acting on 17
behalf of health care purchasers, to reform the structure and terms of health care payment as a 18
means to improve operating efficiency, improve health care quality, reduce administrative burden, 19
and serve the public interest in healthy people and equitable health outcomes. 20
(7) Payment reform, defined as the restructuring of the terms of health care payment 21
through the development and implementation of advanced value-based payment models, is 22
necessary to achieve the goals of affordable and predictable cost growth, improved financial 23
stability for health care providers, and technical innovation in care delivery to support population 24
health and quality excellence. 25
(8) The general assembly recognizes that on April 13, 2022, Rhode Island health care 26
leaders entered into a compact to accelerate advanced value-based payment model adoption, 27
finding that transforming payment away from fee-for-service to a prospective budget-based model 28
can support improved health care affordability and reorient health care delivery to focus on how 29
best to organize health care resources to meet population needs, and improve access, equity, patient 30
experience, and quality. 31
(9) The benefits of payment reform are maximized when advanced value-based payment 32
models enjoy the participation of all payers, public and private. Rhode Island has a successful track 33
record of all-payer health care reforms, including the patient-centered medical home program for 34
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primary care endorsed by the general assembly under chapter 14.6 of title 42, the ("Rhode Island 1
All-Payer Patient-Centered Medical Home Act"). 2
(10) It is the intent of the general assembly to endorse and support the efforts of health care 3
providers and health insurers, acting on behalf of health care purchasers, to increase the adoption 4
of advanced value-based payment models in Rhode Island. Furthermore, the general assembly 5
endorses the findings and efforts articulated by health care leaders in the April 13, 2022, Compact 6
to Accelerate Advanced Value-Based Payment Model Adoption in Rhode Island. It is the purpose 7
of this chapter to provide policy direction and resources to support the development and 8
implementation of all-payer advanced value-based payment models in Rhode Island. 9
42-14.7-3. Definitions. 10
As used in this chapter, the following terms shall have the following meanings: 11
(1) “Advanced value-based payment model” means a prospective budget-based payment 12
model with quality-linked financial implications that is defined for a specific patient population 13
and/or set of services. 14
(2) "Health insurance plan" means any individual, general, blanket or group policy of 15
health, accident and sickness insurance issued by a health insurer. Health insurance plan shall not 16
include insurance coverage providing benefits for: 17
(i) Hospital confinement indemnity; 18
(ii) Disability income; 19
(iii) Accident only; 20
(iv) Long-term care; 21
(v) Medicare supplement; 22
(vi) Limited benefit health; 23
(vii) Specified disease indemnity; 24
(viii) Sickness or bodily injury or death by accident or both; and 25
(ix) Other limited benefit policies. 26
(3) "Health insurer" means all entities licensed, or required to be licensed, in this state that 27
offer health benefit plans in Rhode Island including, but not limited to, nonprofit hospital service 28
corporations and nonprofit medical-service corporations established pursuant to chapters 19 and 20 29
of title 27, and health maintenance organizations established pursuant to chapter 41 of title 27 or as 30
defined in chapter 62 of this title 42, a fraternal benefit society or any other entity subject to state 31
insurance regulation that provides medical care on the basis of a periodic premium, paid directly 32
or through an association, trust or other intermediary, and issued, renewed, or delivered within or 33
without Rhode Island. 34
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42-14.7-4. Promotion of all-payer health care payment reform. 1
(a) All-payer payment reform convening and payment model development shall be 2
implemented as follows: 3
(1) The health insurance commissioner and the Medicaid director shall convene an all- 4
payer payment reform working group comprised of health care providers, including hospitals, 5
ambulatory care providers, and clinicians, health insurers, businesses, consumer advocates, and 6
other parties with relevant expertise and interest in all-payer adoption of advanced value-based 7
payment models. The health insurance commissioner and the Medicaid director, in consultation 8
with the working group, shall be charged with developing the structure and terms of advanced 9
value-based payment models for use by all-payers. 10
(2) The health insurance commissioner and the Medicaid director may exercise discretion 11
in the selection and sequencing of payment model development by provider type; however, at a 12
minimum, shall develop recommendations for the design of hospital global budgets for facility and 13
employed clinician professional services and prospective payment for at least two (2) professional 14
provider types. 15
(3) The health insurance commissioner and the Medicaid director may form subgroups of 16
the working group to develop recommendations for the design of specific all-payer advanced value-17
based payment models. 18
(b) All-payer payment reform reports shall be provided as follows: 19
(1) The health insurance commissioner and the Medicaid director, in consultation with the 20
working group described under subsection (a) of this section, shall develop the following reports 21
to supply information necessary to develop and implement advanced value-based payment models. 22
These reports shall be submitted to the general assembly by the following dates indicated: 23
(i) By July 1, 2025, the health insurance commissioner and the Medicaid director shall 24
complete a report examining the cost structure and financial performance of hospitals licensed in 25
Rhode Island. The report shall examine, at a minimum, hospital operating costs, fixed costs and 26
variable costs, costs related to the provision of patient care, costs unrelated to the provision of 27
patient care, net patient revenues, the relative prices received by hospitals from different payers, 28
other income and operating expenses, profitability, and operating margins by payer type. The 29
hospitals included in the report may have up to thirty (30) days to review the draft report prior to it 30
being finalized; 31
(ii) By July 1, 2025, the health insurance commissioner and the Medicaid director shall 32
complete a report examining the cost-shifting phenomenon between payers. The report shall also 33
examine the fiscal and economic impact of changes to Medicaid reimbursement rates for hospital 34
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services; and 1
(iii) By January 1, 2026, the health insurance commissioner and the Medicaid director shall 2
submit finished recommendations around payment model design for hospital global budgets for 3
facility and employed clinician professional services and prospective payment for at least two (2) 4
professional provider types. 5
(2) The health insurance commissioner and the Medicaid director shall procure necessary 6
technical assistance and consulting services to prepare the payment model recommendations under 7
subsection (a) of this section and the reports enumerated under subsection (b)(1) of this section. 8
(c) Engagement of the Centers for Medicare and Medicaid Services shall be undertaken as 9
follows: 10
(1) The health insurance commissioner, in consultation with the Medicaid director, shall 11
engage the federal Centers for Medicare and Medicaid Services to explore opportunities to secure 12
federal participation in advanced value-based payment models through the Medicare program. 13
(2) The health insurance commissioner, for commercial and Medicare, and the Medicaid 14
director, for Medicaid, are authorized to negotiate the terms of any necessary waivers under Section 15
1115(A) of the Social Security Act to secure federal participation in advanced value-based payment 16
models in Rhode Island. 17
42-14.7-5. Annual reports on administration and implementation. 18
The health insurance commissioner and the Medicaid director shall report to the general 19
assembly annually on or before March 1, commencing on March 1, 2024, on the implementation 20
of advanced value-based payment models and the work performed by the all-payer payment reform 21
working group described under § 42-14.7-4(a)(1). The annual report shall include 22
recommendations and draft legislative language for adoption by the general assembly, if necessary, 23
to ensure continued progress toward implementation of advanced value-based payment models in 24
Rhode Island. 25
42-14.7-6. Regulations. 26
The health insurance commissioner and the Medicaid director shall promulgate all 27
necessary and proper rules and regulations to implement this chapter. 28
SECTION 2. This act shall take effect upon passage. 29
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EXPLANATION
BY THE LEGISLATIVE COUNCIL
OF
A N A C T
RELATING TO STATE AFFAIRS AND GOVERNMENT -- THE RHODE ISLAND ALL-
PAYER HEALTH CARE PA YMENT REFORM ACT
***
This act would require that the health insurance commissioner and the Medicaid director 1
convene an all-payer payment reform working group which would be charged with developing the 2
structure and terms of advanced value-based payment models for use by all-payer healthcare 3
insurers. Annual reports would be provided annually commencing March 1, 2024, to the general 4
assembly. 5
This act would take effect upon passage. 6
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