Colorado’s hospital consolidations cost us more, in a hard situation: About half of Coloradans receive health insurance through their employers. About 35% of the state receives insurance through government programs, and almost 7% of people are uninsured

Colorado is a market that has had lots of hospital consolidation,” he said. “And that’s one thing that’s been linked to higher prices.”

How much do you pay for hospital services in Colorado? Likely many times more than what Medicare does.  Colorado hospitals rank among the most expensive in a RAND Corp. study. Hospitals say the numbers are misleading. 

Across Colorado, hospitals regularly charge patients with private insurance three or four times what Medicare pays for the same services, according to a groundbreaking new study from the RAND Corp. that will likely further increase pressure on hospitals in the state to lower their prices.

The RAND study looked at hospital prices in 25 states and found that Colorado ranked sixth among that group for most expensive hospitals, measured relative to Medicare prices.

The study found Colorado hospitals charge privately insured patients, on average, 269% of the Medicare price for services. Inpatient services were billed at, on average, 221% of Medicare’s price, while outpatient services were billed at 350%, on average.

There was also a lot of variability among hospitals. Some — such as Aspen Valley Hospital in Pitkin County or Wray Community District Hospital in Yuma County — were found to charge little more than Medicare prices overall and actually charged below Medicare prices for outpatient services, according to the study. Both hospitals are independently run.

Meanwhile, hospitals in Fort Morgan and Summit County were each found, on average, to charge private-pay patients more than five times what Medicare would pay. Both of those hospitals are part of larger systems.

Christopher Whaley, a researcher at RAND who was one of the report’s co-authors, said the study just looked at data and didn’t try to assign a reason for why some states had more expensive hospitals than others. But he offered a theory for Colorado’s prices.

“Anecdotally, Colorado is a market that has had lots of hospital consolidation,” he said. “And that’s one thing that’s been linked to higher prices.”

Whaley said researchers had “a pretty robust data set” for Colorado because they pulled numbers from the state’s All Payer Claims Database, which collects details on what private and public insurers pay for medical services. That meant Colorado’s payment figures in the study were based on more than a half-million inpatient and outpatient services, the most of any state included.

But the Colorado Hospital Association, in responding to the study, pointed out that numbers from the state’s claims database are incomplete. They don’t include a large percentage of claims paid by employer-based health plans that are self-insured. They also don’t include the prices paid by people who are uninsured or who choose to pay hospitals for care directly instead of going through their insurance.

“We appreciate the detailed and multi-state approach used in this report,” Steven J. Summer, the president and CEO of the hospital association, said in a statement, “but we do have concerns about the conclusions reached based on this data.”

The study reignites a fiery debate that has already flared once this year — specifically, the question of whether hospitals overcharge patients with private insurance.

Roughly half the state is covered by insurance plans through employers, while another 8% of Coloradans buy private plans on their own. In January, officials with the state Department of Health Care Policy and Financing released a scathing report alleging that hospitals had excessively shifted costs onto privately insured patients. Had hospitals better controlled their costs and lowered their margins, they could have saved patients more than $11 billion over a nine-year period, the report argued.

Hospital representatives rejected that report’s findings and led a revolt that kept the report from being approved by a state Medicaid board. But now the RAND study gives more fuel to criticisms of Colorado hospital prices.

To those advocating for hospital reform, Medicare prices represent a good benchmark because they are derived from a standardized process but are also given local adjustments based on inflation or other factors — such as the cost of hiring workers in a particular area.

Hospitals, though, argue that Medicare prices are too low — in Colorado, hospitals often say that Medicare pays only 69 cents on the dollar for a service — and aren’t a good starting point.

“Medicare payments fall far from covering the cost of care,” Summer said in his statement.

Even that is controversial.

In its annual report to Congress this year, the nonpartisan Medicare Payment Advisory Commission said Medicare payments nationwide in 2017 fell about 10% short of meeting hospitals’ costs. But efficient hospitals were able to get much closer to breaking even on Medicare payments, falling only 2% short. And, when considering all sources of revenue, hospitals across the country had near-record profits of above 7%.

Hospitals says they also have to shift costs onto privately insured patients to cover care for uninsured people from whom they receive no money. But there is a rebellion brewing among state officials and employers over prices.

The RAND study was released on Thursday, coincidentally at the same time as a meeting of the Colorado Business Group on Health, an organization of employers looking for ways to drive down their health care costs. It quickly became the talk of the meeting, with speakers urging employers to use their leverage and demand lower prices.

“Employers not only could change health care,” said Robert Smith, the group’s leader, “you’re the only ones who can.”

Kim Bimestefer, the executive director of the Department of Health Care Policy and Financing, said the state wants to work with employers on lower health care costs. Though her department administers Medicaid in the state, Bimestefer said the top goals she has been given by Gov. Jared Polis all involve lowering health prices for everyone.

And, speaking at the Business Group on Health meeting, she pulled no punches about her intentions.

“We,” she said, “have got to disrupt where health care becomes wealth care.”

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About half of Coloradans receive health insurance through their employers. About 35% of the state receives insurance through government programs, and almost 7% of people are uninsured.

That leaves the rest in what is known as the individual market — the place where people buy insurance coverage on their own, sometimes with help from federal subsidies but often not. This is where lawmakers spent much of their session debating, tweaking and voting. And here are three reasons why that is:

The cost

Health insurance is expensive for nearly everybody, but nowhere is it as expensive as in the individual market.

“The individual market is the only place in our health care system where people don’t have any help in purchasing their health insurance,” said Michael Conway, Colorado’s top insurance regulator.

With Medicare or Medicaid, taxpayers pick up at least part of — if not the entire — the tab. With employer-sponsored coverage, the employee typically pays only about a third of the monthly premium. And, even in the individual market, government subsidies for people with lower incomes can sometimes knock monthly premiums down to almost nothing.

But people in the individual market who make too much to qualify for subsidies are paying full freight. And that can often be more than $1,000 a month just to cover one person. It can also lead to what Conway calls “the really scary stories in our health care markets,” where people are choosing between paying for coverage or paying their mortgages.

“The individual market is where we have seen the most dramatic increases and where we have heard the most concerns about affordability,” said state Sen. Kerry Donovan, a Democrat from Vail who sponsored a number of the health insurance bills this year at the Capitol.

Donovan said the health care costs of people in the individual market have been the No. 1 issue she’s heard about from voters during the past couple of election cycles. Even people who have insurance through their employers talk to her about it — because they know someone who is suffering from individual market prices.

“No one has ever told me to spend less time on health care,” she said.

The impact

Conway’s title — commissioner of insurance — perhaps oversells his authority a bit when it comes to health coverage.

The state Division of Insurance has regulatory power over only about a thirdof the total health coverage market. Not only are Medicare and Medicaid outside of its purview, but so are self-insured employer plans, which make up about half of all employer-sponsored plans. That means the individual market comprises about a quarter of what’s under the Division of Insurance’s authority.

It’s also a more transparent market. While information on most employer-sponsored plans — and, especially, on what workers have to pay for those plans — can be scant, prices for plans on the individual market are easily found on the website of Connect for Health Colorado, the state’s insurance exchange.

This gives lawmakers an added incentive to address problems in the individual market. Fix them and everybody can see it.

“It’s kind of like, if you drop your keys at night, why do you keep looking under the streetlight?” said Joe Hanel, a spokesman for the nonpartisan Colorado Health Institute. “Because it’s dark everywhere else.”

The bigger meaning

The third reason for lawmakers’ attention has less to do with what the individual market actually is and more to do with what it represents. Basically, it’s become a beeping EKG monitor for the health of the Affordable Care Act.

The ACA so dramatically affected the individual market that sometimes the coverage choices in it are referred to as “Obamacare plans.” The ACA created the now-famous rules for what plans sold in the individual and small-group markets have to cover. It created the exchanges where many (but not all) individual market plans are sold. It created the mandate that everyone have health insurance — which sent previously uninsured people to the exchanges to begin with.

“It’s the marketplace that people associate with the Affordable Care Act,” Conway said. “When people think about the ACA and all the political dynamics that go into the ACA, they are typically talking about the individual market.”

That makes any fight about reforms to the individual market also inherently about the bigger question of whether the ACA is succeeding or failing. And, for Conway and a lot of especially Democratic lawmakers, that makes fixing the individual market sort of a prerequisite before moving onto reforms that will impact more people.

“We have to figure out a way we can stabilize the individual market,” Conway said, “so we can focus on making more systemic changes across the board.

From:
Three reasons why Colorado lawmakers spend so much time tinkering with health insurance for a small percentage of people

The individual market dominates discussions at the state Capitol about how to reform health coverage

The Colorado Sun — johningold@coloradosun.com

The Colorado legislature this year passed some of the most ambitious health insurance reform measures in years — first-in-the-country kinds of programs that could place the state on the leading edge of health policy nationwide.

Statistically speaking, you aren’t likely to see a direct impact from many of them.

That’s because some of the biggest policy changes focus on an insurance market that provides coverage to only about 8% of Coloradans. It’s not an insignificant number — it still represents more than 400,000 people. But it means that the vast majority of Coloradans won’t see direct benefit from, say, a measure to create a government-backed insurance plan that can offer lower rates than what are currently available. Or one to help insurance companies pay high-cost claims in order to bring down premium prices for everyone.