Delaware's health care spending benchmark is complicated. Here are 5 things to know

It's no secret that the country is seeing rising costs in health care. Delaware is no exception.

In the fall, the state began efforts to reduce the amount of money Delaware spends on health care. 

But what does that consist of? And who is making these decisions?

Here's what you need to know about the state's efforts: 

So, what is a benchmark? What would it do?

Last September, Gov. John Carney signed legislation that allows state Health and Social Services secretary Dr. Kara Odom Walker to create a "benchmark" to help rein in growing health care costs in the First State. They point out that health costs are taking bigger and bigger chunks of both state and family budgets, and they believe establishing a benchmark would help them see where those dollars are being spent  

A benchmark is a target rate that state officials want to use to help control the cost of health care services in Delaware. Before they can set that rate, they need to figure out the total cost of health care in Delaware. 

In 2019, they expect to use the Delaware Health Information Network to aggregate all the costs of Delaware health spending, including Medicaid, Medicare, hospitals, pharmacies, nursing homes and more. They will be measured again in 2020 to see how much those numbers change.

Using that information, the state will set a target inflation rate — or benchmark — that is an increase that they do not want expenditures to go over in 2021. 

For example, the state may say they would like to keep any increases in Delaware health expenditures in 2021 under 3 percent. The information will be public and talked about in public meetings, such as the state Health Care Commission.

Walker said the benchmark would not penalize organizations if they exceed the benchmark rate. Any who do will have an opportunity to talk about the numbers in the commission meetings.

Health insurance premiums will not be measured, because they are not a direct cost for a service.

The state plans to link the financial information to a "quality benchmark" that would look at the health of the entire population with the idea of improving outcomes of individuals, reducing wasteful procedures or services and streamlining care.

These metrics could look at things like cervical, breast and colorectal screenings, childhood immunization status, immunizations for adults, adult BMI and screening for clinical depression. 

Why does Delaware need a benchmark?

According to state officials, Delaware is third in the country for how much it spends on health care per capita. Yet it is 30th in the country in terms of overall health due to its prevalence of chronic diseases and rapidly aging population. 

Officials say that without some controls the state's total health care spending will double from $9.5 billion in 2014 to $21.5 billion in 2025. The state's healthcare spending has increased by $480 million in the last five years.

"Bottom line is: If we don’t do something, the state will go bankrupt because of health care," Walker said in September.

Who sets the benchmark?

Right now, it looks like the Health Care Commission will set the actual benchmark rate.

Over the course of the last four months, Walker has met with the Health Care Spending Benchmark Cost Advisory, which was created by the governor. The purpose of the group is to give the secretary recommendations on how how to measure and report the total cost of health care in Delaware, as well as how to establish the actual growth rate. 

The members include state officials, an independent physician, hospital representatives, insurance industry representatives, a health economist and a person from the business community.

The advisory group's last meeting was on June 6. A report of recommendations of how to calculate the benchmark will be sent to the health secretary later this month.

Walker and her department will then give calculations to the Health Care Commission, a group that consists of state officials and six private citizens. The commission is tasked with finalizing the actual benchmark rate. 

Is everyone on board with this idea?

As of now, it appears so.

But this wasn't always the case. In March, Delaware Healthcare Association President Wayne Smith wrote a letter to Carney that said the organization "will not support the benchmark without a fundamental reset of this process, including consideration of what other options exist for addressing rising health costs in Delaware."

The letter was supported by the CEOs of Beebe Health System, Bayhealth Medical Center, Christiana Care Health System, Nemours Children's Health System, Nanticoke Health Services and Saint Francis Healthcare. 

CEOs were concerned that the benchmark would turn into a spending cap, which would force the hospitals to curb certain services. Hospitals also were concerned they were being singled out while other health services such as drug costs and insurance premiums did not seem to be set to be scrutinized.

Since then, there has been "productive conversations" and an "optimistic outlook" about the benchmark, Christiana Care Health System officials told The News Journal in May. 

CEO Dr. Janice Nevin said Christiana Care, the largest hospital system in the state, is "committed to being at the table to look at how we solve some of those issues." She pointed out that Christiana Care is already tackling some things and pointed to automatics screenings for depression when a patient comes to the emergency room.

"It's really important to pay attention to what things cost," said Nevin, who is a member of the advisory group. "It's really important to pay attention to affordability. That's what most people care about. But it's really important that we're paying attention to access."

OK, so what's next?

The advisory group's report will be sent to Walker on June 18 and will eventually be available to the public. The health secretary says she will then create an implementation plan for the benchmark. 

As of now, the process to set the benchmark rate, which is based on similar programs in Massachusetts, Rhode Island and Vermont, is expected to start when the state begins measuring the cost of services Jan. 1, 2019. 

Contact Meredith Newman at (302) 324-2386 or mnewman@delawareonline.com and on Twitter @MereNewman.

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