Minnesota could abandon even more laws it once adopted to force lower healthcare spending.
A recent Minnesota Department of Health report urges lawmakers to turn legal limits on healthcare inflation into goals. Another department report asks for the repeal of a law requiring the department to define integrated service networks. Department officials are seeking legislation on both issues.
Growth limits and integrated service networks, or ISNs, were key elements of an ambitious 1992 reform plan best known for creating MinnesotaCare, an insurance program for the poor.
Under the plan, providers and payers would form ISNs to provide standard benefits at capitated rates. Growth limits would ensure that healthcare inflation fell by 10% annually. Starting this summer, providers and payers that exceed the limits are supposed to pay the difference to the MinnesotaCare fund.
Last year, however, Minnesota scaled back its reform effort (July 24, 1995, p. 70). In doing so, it dropped the regulated all-payer option, known as RAPO, which set rates for care outside of ISNs. RAPO was meant to reinforce growth limits and motivate providers to form ISNs.
"Once RAPO was gone, we couldn't see where it would be in anyone's interest to be an ISN," said Christine Rice, deputy health commissioner.
The turnabout reflects considerable change in the market, Rice said. Since Minnesota wrote its reform laws, annual growth in Minnesota healthcare spending fell to 8% from 10%, she said.
"The Minnesota market is very much in transition," she said. Employers, like the Buyers Health Care Action Group, "have been the impetus for change" (See story, p. 35).
ISN rules could block other new modes of healthcare delivery, the department argues. Growth limits for providers don't make sense because the market is so competitive, it says. And, while goals for payers may be good, financial penalties could drive some from the market and hurt competition.
Such proposals suit hospitals, as long as the alternatives to ISN rules aren't more restrictive, said Tom Teigen, spokesman for the state hospital association.
Businesses also wonder how the state will regulate new delivery systems. "The ISN rules are set up to make it very difficult for new competitors to enter the market," said Steve Wetzell, executive director of Buyers Health Care Action Group. "But you still need to set reasonable rules to protect consumers."