Report Is Latest Step in Effort to Analyze Cost and Quality of Care in Delaware

DOVER (June 4, 2020) – The Delaware Health Care Commission (DHCC) has released preliminary data on health-care spending in the state in calendar year 2018, the latest step in the state’s effort to reduce health care spending and improve quality of care for Delawareans.

The report, available here, follows the establishment in late 2018 of a state health care spending benchmark, a per-annum rate-of-growth benchmark for health care spending. The first benchmark went into effect Jan. 1, 2019, and was set at 3.8 percent, with the target expected to decrease gradually to 3.0 percent over the following three years.

The DHCC collected spending data from calendar year 2018 to provide a preliminary basis for calculating the state’s health care spending performance and to serve as a baseline for 2019 spending growth calculations. The 2018 baseline data collection also allowed the state’s health insurers and the DHCC to test payers’ data-submission methods and identify areas for improvement.

The DHCC is scheduled to collect 2019 medical expense data from insurers this summer. As part of the next round of benchmark data collection, health care insurers will be asked to resubmit their 2018 data to incorporate any updates to collection methods to ensure better year-over-year comparisons. Because of that, the DHCC expects the next set of 2018 data to differ from that released today.

The state plans to release its 2019 health-care spending performance as measured against the 3.8 percent benchmark early next year.

The release of the preliminary spending data from 2018 marks another step along the state’s “Road to Value” initiative to improve access to affordable, quality health care for all Delawareans. That effort remains vitally important while Delaware addresses the impact of the COVID-19 crisis, said Dr. Kara Odom Walker, secretary of the Department of Health and Social Services, a member of the Delaware Health Care Commission and a practicing family physician.

“We need to support our health care system to rebound from the global pandemic with value-based goals so it can be stronger than ever,” Secretary Walker said. “Now, more than ever, our vision to improve transparency and public awareness of spending and quality in our state through the adoption of spending and quality benchmarks will assist in these efforts.”

To learn more about Delaware’s health care spending and quality benchmarks, visit the Delaware Health Care Commission website.

-30-

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

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.

###

Related news:
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.”

###

Delaware one of 11 participating states vetting strategies around crises such as Hepatitis C and opioid use disorder

WILMINGTON, Del. — Delaware was one of 11 states that vetted potential strategies through the National Governors Association (NGA) Center for Best Practices to address public health crises such as Hepatitis C and opioid use disorder by improving access to evidence-based pharmaceutical interventions while ensuring the fiscal sustainability of public programs. The NGA released the report on the strategies today.

“Working with other states and the NGA, our Delaware team has found ways to address these public health crises that are having such a devastating impact on the people of our states, while still being able to effectively manage the cost of the medications we use to provide effective and life-saving interventions,” said Governor John Carney. “Giving states more options helps us make the right decisions on behalf of people in need.”

Across all states, specialty medicines – including treatments for Hepatitis C – have been a key driver in Medicaid spending, accounting for 0.9 percent of claims and 32 percent of Medicaid drug spending. A national study found that naloxone use in Medicaid increased 66 percent from 2013 to 2014, as compared with 12 percent for all drugs, and 101 percent from 2014 to 2015, compares with 10 percent for all drugs.

Delaware joined teams from 10 other states in coming up with the strategies: California, Louisiana, Massachusetts, New Mexico, New York, Ohio, Oregon, Rhode Island, Virginia and Washington. Beginning in November 2017, the NGA Center supported the states in generating ideas for governors across the country to consider as they balance access and cost concerns. The strategies include:

• Establish a Medicaid spending cap for pharmaceuticals.
• Pursue alternative payment mechanisms such as a subscription model with a pharmaceutical manufacturer.
• Consider options for excluding select drugs from Medicaid coverage.
• Engage in bulk and pooled purchasing.
• Determine and pay value-based prices for drug treatments by incorporating value assessments.
• Explore whether the federal government would allow nominal pricing for correctional facilities.

In Delaware, health care spending – including Medicaid, the Department of Correction and state employee health benefits – account for about 30 percent of the state’s total budget. About 225,000 Delawareans are served by Medicaid, the shared state and federal health insurance program for people from low-income households, seniors eligible for long-term care and individuals with disabilities.

Department of Health and Social Services Secretary Dr. Kara Odom Walker, who represented Delaware in the NGA vetting, said the strategies complement the work Governor Carney and she are leading to advance a health care spending benchmark and value-based care in Delaware. In February, Governor Carney signed Executive Order 19 creating a 13-member Advisory Group to make recommendations to Secretary Walker on health care cost and quality benchmarks across Delaware’s health care system, including employer-based coverage, Medicare and Medicaid. Secretary Walker will provide her formal recommendations to the Governor this summer. Beginning in 2019, Delaware will measure the total cost of health care, the first step in increasing transparency in how health care dollars are spent.

“Our Medicaid team has launched several initiatives to improve the quality of care for our Medicaid clients, to address the social determinants of health and to encourage value-based payments,” said Secretary Walker. “These NGA strategies involving evidence-based pharmaceutical interventions offer us options in balancing health care innovations, where appropriate, with the affordability of making those innovations available to the people we serve.”

The full report can be found here.

###

Op-ed by Rick Geisenberger, Secretary of the Delaware Department of Finance

Over the next several weeks, as we complete another budget debate in Dover, we should not lose sight of Delaware’s long-term challenges and of one issue in particular: the rising cost of health care.

The projected growth rate for state spending on health care services will more than double our expected growth rate in available revenue over the next two years. Next year alone, Delaware taxpayers will spend more than $1.3 billion on health care — primarily on state employee benefits and Medicaid, the state-federal program that provides insurance for low-income Delawareans, those with disabilities, and older residents that require long-term care.

In January, Governor Carney proposed a 2019 budget plan focused on investing in Delaware’s economy, in high-needs schools, and communities across our state. The governor’s budget proposal limits spending growth to 3.5 percent — an increase far below available revenue this year, and one that is sustainable over the long term.

But if we hope to continue making investments that matter, we cannot continue on our current path.

State spending on health care now accounts for more than 30 percent of the state’s budget. Simply put, the growth of state spending on health care crowds out investments in schools, communities, infrastructure, and our economy that would move our state forward.

And this is not an issue unique to state government. Health care spending severely strains the budgets of Delaware families and businesses up and down our state, limiting household spending and making it harder for companies to invest and create jobs.

A few statistics tell the tale:

Delaware’s health care spending per person exceeds the national average by more than 27 percent. Among states, only Alaska and Massachusetts spend more. And we’re not getting our money’s worth. Delaware ranks 30th in terms of overall health quality.

Workers’ contributions for health care have increased 40 percent since 2010, while Delaware wages have increased only 25 percent.
Health care spending per person has increased every year since 1991, even as our economy has grown and contracted through recession and recovery.

To be clear, health care is an important sector of Delaware’s economy, accounting for 12.5 percent of the state’s workforce, and thousands of jobs. But we cannot ignore concerns that health care costs are growing dramatically faster than other measures of economic growth.

To address these issues last year, the General Assembly enacted and Governor Carney signed House Joint Resolution 7, authorizing the Department of Health and Social Services (DHSS) to establish a benchmark, with a growth rate for health care spending linked to growth in our overall economy. DHSS will select the methods to measure and report on the total cost of health care and identify metrics to measure and track spending and quality across our health care system.

Governor Carney established the Health Care Delivery and Cost Advisory Group to assist in this process and provide feedback to DHSS Secretary Dr. Kara Odom Walker.

The good news is that there is a great deal of consensus and energy about the importance of this work among Delaware’s purchasers and providers of health care services. But, understandably, some providers are concerned that, in the future, a benchmark might be used to set price controls or create spending caps on private health care spending.

To be clear, this is not at all the purpose for the benchmark.

Our goal is to provide additional price transparency and attention to the underlying costs and quality of health care delivery across the state. Delaware families and businesses deserve to know how much they are paying for health procedures, and what they’re getting for their money.

With better information, we can analyze and report on variations in cost and quality. We can make this data available to policymakers and health care providers so that everyone better understands the sources of cost growth. Most importantly, we can use this information to work collaboratively to address unwarranted variations in costs and quality.

As the state’s chief financial officer, I’m keenly aware of the importance of bending the health care cost curve to more closely align with public and private resources available to cover these costs. At the Delaware Department of Finance, we believe it’s critical that the process for setting health care benchmarks be verifiable, transparent, and independently generated. Dr. Walker already has engaged the health care community significantly in this effort and this commitment will continue.

The challenge presented by the growth of health care spending is a national problem. But many solutions will need to be local. Delaware’s size — and our history of working together to solve difficult problems — means we are uniquely equipped to bring all stakeholders to the table to address this challenge.

As Governor Carney has said, lowering health care costs while improving quality is the most important thing we can do for the future health of our economy, our citizens and our finances.

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