Benchmark initiative will limit spending growth, improve quality of care

NEW CASTLE, Del. – The Delaware Economic and Financial Advisory Council (DEFAC) on Wednesday issued a recommended Benchmark Index that set the state’s health care spending growth target at 3.8 percent for 2019 – the initial year of Delaware’s newly created Health Care Spending Benchmark. This move furthers the state’s goals of managing the growth of future health care spending, increasing transparency into how health care is delivered and paid for, and improving the quality and cost of health care for the citizens of Delaware.

DEFAC set the target based on Executive Order 25 signed by Governor John Carney in November. The order called for the initial benchmark to be equivalent to the advisory Benchmark Index for overall State budget growth established under Executive Order 21 signed by the Governor in June 2018.

“We know that the rising cost of health care crowds out other important state investments, keeps companies from hiring, and makes it harder for families to manage their household budgets,” said Governor Carney. “This benchmark initiative is about providing Delawareans with more transparency around their own health care spending, and making sure that Delawareans are getting the quality of health care that they’re paying for. At the state level, Delaware taxpayers rightly expect us manage their money wisely. This initiative will help us do just that.”

“Establishing the health care spending benchmark is an important step forward in learning more about how health care dollars are spent in our state,” said Dr. Kara Walker, Secretary of the Delaware Department of Health and Social Services. “In order to meet the current and future health care needs of Delawareans, our system of providing and paying for care has to change in order to be sustainable. We look forward to working with health care providers, insurers, businesses and consumers as we move forward in improving the patient and provider experience, while improving the overall health of Delawareans and doing it at a lower cost.”

“Establishing the Health Care Spending Benchmark is a vital step in establishing realistic economic measures that provide meaningful insight toward producing optimal outcomes with the limited health care dollars available to the state, our citizens and the private sector,” said Rick Geisenberger, Secretary of the Delaware Department of Finance.

In subsequent years, Executive Order 25 requires the health care spending benchmark to be calculated based on long-term projections for growth in Potential Gross State Product (PGSP). Currently, long-term PGSP is forecast at 3 percent. The target approved today provides a transitional market adjustment with the benchmark starting at 3.8% and then gradually expected to decline to 3% over the next three years.

A Health Care Spending Benchmark Subcommittee of DEFAC will monitor PGSP forecasts and health care spending trends and make annual recommendations for the Benchmark in future years.

The path to creating the health care spending benchmark began in the summer of 2017, when the General Assembly passed House Joint Resolution (HJR) 7 authorizing the Department of Health and Social Services (DHSS) to develop a spending benchmark. The Governor signed HJR 7 in September 2017, just months after an analysis by the Centers for Medicare and Medicaid Services (CMS) indicated that Delaware had the third-highest per-capita health care spending rate in the country, and a rate that was 27 percent above the U.S. average.

That fall, DHSS and Secretary Dr. Kara Odom Walker, a board-certified family physician, began a series of summits to explore how a spending benchmark could work for Delaware. In February 2018, Governor Carney signed Executive Order 19 creating an Advisory Group to provide feedback to Secretary Walker on the health care spending and quality benchmarks. While the overall health of Delawareans has been improving – Delaware is now ranked 30th among the states, according to America’s Health Rankings ¬– the pace of that improvement is trailing the growth of health care spending in the state.

Delaware has historically ranked among the top 10 states in per-capita health care spending, including in 2014, when the state ranked behind only Alaska and Massachusetts. The 50-state analysis by the Centers for Medicare and Medicaid Services (CMS) released in 2017 found that Delaware’s per-capita rate was $10,254. Without changes, the analysis estimated that Delaware’s total health care spending would more than double from $9.5 billion in 2014 to $21.5 billion in 2025.

Click here to learn more about the health care spending benchmark.

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Governor Carney Signs Executive Order Establishing Health Care Spending and Quality Benchmarks
Governor Carney Signs Executive Order on Budget Smoothing

Order will create subcommittee focused on bettering health care spending, quality across the state

WILMINGTON, Del. – Governor Carney on Tuesday signed Executive Order #25 establishing health care spending and quality benchmarks. This Executive Order will form a subcommittee of the Delaware Economic and Financial Advisory Council to focus on reducing the cost of health care for Delaware families, taxpayers, and businesses. The subcommittee will advise DEFAC and other relevant state agencies on spending, and will work closely with the Delaware Health Care Commission (DHCC) on improving the quality of health care in Delaware.

“Delaware has consistently ranked among the highest-spending states for health care, but we have not traditionally been a leader in health care outcomes. That needs to change,” said Governor John Carney. “This Executive Order reaffirms our commitment to lowering costs for Delaware families and improving the quality of care that Delawareans receive. We’ll do that, first and foremost, by improving transparency around the cost of health care services.”

In addition to setting the State’s health care spending benchmark for 2019 and beyond, the new subcommittee will consistently review its methodology and provide the public and interested stakeholders an opportunity to provide input and consider their recommendations.

This Executive Order also lays out quality benchmarks for the State for calendar years 2019 through 2021 for the Delaware Health Care Commission to follow in the categories of:

• Emergency Department Utilization Rate,
• Opioid-Related Overdose Deaths,
• Overlapping Opioid and Benzodiazepine Prescriptions,
• Adult Obesity,
• Adult Tobacco Use,
• High School Students Who Were Physically Active,
• Statin Therapy for Patients with Cardiovascular Disease, and
• Persistence of Beta-Blocker Treatment After a Heart Attack.

These quality benchmarks will be reviewed every three years, starting after 2022, to reflect improved health care performance in the state.

“I am grateful to all of the health care stakeholders for the work they have done to change how care is delivered and paid for in our state,” said Department of Health and Social Services (DHSS) Secretary Dr. Kara Odom Walker, a board-certified family physician. “As a state, we must address the cost of health care and the outcomes we are getting for that spending. The Executive Order that Governor Carney signed adds transparency and attention to our health care system, both from a spending and a quality standpoint. Today is an important milestone in moving toward a health care system that is financial sustainable for families, employers, providers and insurers, and one that rewards providers for keeping Delawareans healthy.”

This Executive Order was based on recommendations from Secretary Walker in August of this year, after a year of outreach and feedback from health stakeholders. Secretary Walker will publish a manual that contains the methodology for the health care spending and quality benchmarks no later than January 31, 2019.

“For more than four decades, the Delaware Economic and Financial Advisory Council has played a vital, non-partisan role in tracking national and state economic trends and preparing credible and trusted state revenue and expenditure estimates,” said Rick Geisenberger, Secretary of Finance. “This Executive Order creates a DEFAC Health Care Spending Benchmark Subcommittee that will solicit public and stakeholder input toward recommending a credible and trusted annual target for per capita growth of total health care costs in Delaware.”

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WHAT:           During a town hall co-hosted by five state legislators, Department of Health and Social Services (DHSS) Secretary Dr. Kara Odom Walker will discuss the need for a health care spending benchmark in Delaware and what that will mean for Delawareans. In September, Gov. John Carney signed House Joint Resolution 7, which authorized DHSS to develop a health care spending benchmark that is linked to the state’s rate of economic growth. The resolution had strong bi-partisan support. In a federal analysis released this summer, Delaware had the third-highest per capita spending for health care in the country, behind only Alaska and Massachusetts. In 2014, Delaware’s per-capita rate of $10,254 was 27 percent higher than the U.S. average. The Centers for Medicare and Medicaid Services (CMS) estimated that if Delaware continues at that pace, total health care spending in the state will more than double from $9.5 billion in 2014 to $21.5 billion in 2025. In terms of overall health, Delaware ranks 31^st among the states, according to America’s Health Rankings. The benchmark will serve as a major step in transforming Delaware’s health care system to a more outcome-driven system and away from a system that pays for care based solely on the number of hospital room days, doctor visits, procedures and tests.

WHEN:          7-8:30 p.m. Monday, Nov. 6

WHERE:        McKean High School, 301 McKennans Church Road, Wilmington

WHO:            DHSS Secretary Dr. Kara Odom Walker

State Sen. Greg Lavelle

State Sen. Anthony Delcollo

State Rep. Gerald Brady

State Rep. John Mitchell

State Rep. Michael Ramone

DETAILS:     For more information on the health care spending benchmark, go to:
http://dhss.delaware.gov/dhss/dhcc/global.html

The Department of Health and Social Services is committed to improving the quality of the lives of Delaware’s citizens by promoting health and well-being, fostering self-sufficiency, and protecting vulnerable populations.

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HJR 7 will establish health care spending benchmark linked to economic growth 

WILMINGTON, Del. – Governor John Carney on Thursday signed House Joint Resolution 7 granting authority to the Department of Health and Social Services (DHSS) to establish a health care spending benchmark for Delaware with a growth rate linked to the overall economy of the state. The signing ceremony comes less than three months after a federal analysis found Delaware had the third-highest per capita level of health spending of all the states.

House Joint Resolution 7, sponsored by House Majority Leader Valerie Longhurst and Democratic leadership, and supported by both parties, authorizes DHSS Secretary Dr. Kara Odom Walker to establish the benchmark as a way to evaluate the total cost of care of health care in the state. The benchmark also will serve as a major step in transforming Delaware’s health care system to a more outcome-driven system and away from a system that pays for care based solely on the number of room days, visits, procedures and tests. Co-sponsors of the resolution included Speaker Pete Schwartzkopf and Rep. John Viola, and Senate President Pro Tem David McBride and Sens. Margaret Rose Henry and Nicole Poore.

Delaware’s per capita health care costs are more than 27 percent above the U.S. average, ranking the state third-highest in the country, behind only Alaska and Massachusetts, according to spending data released in June by the Centers for Medicare and Medicaid Services (CMS). The CMS analysis of all insurance payers – Medicare, Medicaid and private – found that per capita spending in Delaware for 2014 was $10,254, compared to the U.S. average of $8,045. Without changes, the analysis estimates that Delaware’s total health care spending will more than double from $9.5 billion in 2014 to $21.5 billion in 2025.

“The health care spending path we are on is unsustainable,” said Governor Carney, who signed the resolution during a ceremony at Saint Francis LIFE in Wilmington, which provides all-inclusive care for more than 220 eligible seniors who continue to live in the community. “If these health care spending rates were to continue to increase at this pace, we would price too many Delawareans out of the health care system, put too high a financial burden on employers, and eat up larger and larger portions of the state government budget. We can’t afford any of those scenarios. The health care spending benchmark will provide us with the opportunity to transform the way we pay for health care and link that cost to the state’s overall economy. The two should go hand in hand.”

“Health care, both access to quality care and rising costs, is a priority and concern that affects all Delawareans,” said Lt. Governor Bethany Hall-Long. “With over 80 percent of the health care costs going to 20 percent of the population, we must invest more in outreach and prevention to make quality health care more affordable for everyone. It especially places an unfair burden on our senior population. As a nurse, I believe this benchmark is a crucial first step and I applaud the legislators, stakeholders, and Secretary Walker for working to provide affordable quality health care for all Delawareans.”

“Health care costs account for a significant chunk of Delaware’s total budget – about $1 billion – and they continue to rise. It’s time to analyze those costs and find substantial ways to improve the overall health of Delawareans without such a burdensome price tag,” said House Majority Leader Valerie Longhurst, prime sponsor of House Joint Resolution 7. “It’s my hope that this resolution will help bring a variety of health care stakeholders and perspectives together to create a benchmark that will improve the quality of health services in our state at a lower cost. We have the chance to change the trajectory of health care in Delaware, and support our residents in becoming healthier and more successful throughout their lives.”

“Saint Francis LIFE, a program of all-inclusive care for the elderly (PACE), is a strong example of how the state can provide quality care in the community, improve the patient experience and reduce cost,” said David A. Ricci, President and CEO of Saint Francis Healthcare in Wilmington. “We are proud to be a model of this ‘triple aim’ of health care in Delaware.”

The joint resolution sets up a planning year for the health care spending benchmark in Fiscal Year 2018 in which Secretary Walker will plan with health care stakeholders how to establish the benchmark, determine the sources of data and collect actuarial certification. The resolution details that benchmark planning will include an assessment of health care costs and payment reform efforts, and the development of processes to evaluate and implement the benchmark.The benchmark will allow the state to look at the growth of costs associated with hospitals, physicians, other health care providers, pharmaceuticals and insurers by comparing their growth rate to the growth rate of the state’s overall economy. This is the first step in providing transparency and accountability among payers and providers in health care.

DHSS Secretary Dr. Kara Odom Walker, who has been leading a statewide discussion on accelerating health care payment reform, said the increased demand for health care, as well as inefficiencies in the supply of that care, have led to the high per-capital spending in Delaware.

“Unfortunately, while we spend more on care, our investments have not led to better health or better outcomes for Delawareans,” she said. “The spending benchmark will improve the quality of health care in Delaware and reduce costs throughout the system by means of increased transparency, better efficiencies and system-wide innovation. I look forward to continuing my work with stakeholders to establish the benchmark.”

Delaware ranks 31st among states in America’s Health Rankings, exceeding the national average in cancer deaths per capita, cardiovascular deaths per capita, diabetes per capita, infant mortality and premature death.

“Now is the time for Delaware to embrace the concept of a benchmark for health care spending that will ultimately drive our efforts toward value-based care and better outcomes for our citizens and away from volume of care and high utilization,” Secretary Walker said.

Of the $10,254 per capita figure in Delaware, the federal analysis found this breakdown of spending:

• $4,078 for hospital care;
• $2,259 for physician and clinical services;
• $1,525 for drugs and other medical nondurables;
• $1,438 for nursing home, home health and other personal care;
• $757 for dental and other professional services;
• $197 for medical durables.

In all six categories, spending in Delaware was higher than the national average, ranging from a high of 37 percent higher for drugs and other medical nondurables, to a low of 18 percent higher for nursing home, home health and other personal care.

In a health care spending benchmark, all of the costs in the health care system are measured – commercial health coverage, Medicaid, Medicare and out-of-pocket spending by consumers. A rate of growth is set, usually by an independent government commission, to the growth of the overall state’s economy.

Along with the leadership of the Delaware Center for Health Innovation (DCHI), Delaware has been moving toward a more integrated and coordinated health care system that is team-based, especially for people with the most complex chronic conditions, has strong primary care, integrated behavioral health care, and can share information across settings to reduce waste and avoidable health care utilization. In a value-based systems, consumers and employers are given information about price and quality so they can engage in more decisions about their own care.

“The philosophy of Saint Francis LIFE is that it’s better for seniors to continue living in the community as long as medically possible,” said Amy Milligan, Executive Director of the program which now serves 223 New Castle County seniors. “LIFE’s team of health care experts provides coordinated, comprehensive care for this vulnerable population to help them achieve this goal.”

LIFE, which stands for Living Independently for Elders, is one of more than 100 PACE programs in the United States that offer this unique model of care, and the only one in Delaware. In partnership with CMS and the DHSS’ Division of Medicaid and Medical Assistance, the LIFE program serves individuals who are 55 or older; live in the New Castle County service area; are certified as needing long-term care services and supports; and can live safely at home with the support of the LIFE team. LIFE operates under the umbrella of Saint Francis Healthcare, which is a member of Trinity Health, the second largest faith-based health care ministry in the United States.

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