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Coloradans With Private Health Insurance Paying Significantly More Than Their Medicare Neighbors For the Same Procedure

Source: The Center for Improving Value in Health Care (CIVHC)
Media Contact:
Cari Frank, Director of Communications & Marketing
303.903.6007 or cfrank@civhc.org

February 12, 2016 – DENVER – A new report from the Center for Improving Value in Health Care (CIVHC) reveals significant variation in payments for hip and knee replacements between private health insurance payers and Medicare. Coloradans with private insurance in the northeast pay $55,000 more than their neighbors with Medicare while those in Denver pay $17,000 over Medicare prices.

Recent national studies have revealed little to no correlation between Medicare and commercial payer health care spending in the same region.  In particular, areas like Grand Junction, Colorado, historically praised for its low cost to treat Medicare recipients, have come under recent scrutiny for higher than average commercial health care costs relative to other areas in the state and nation.
 

According to the new report, the Western Slope of Colorado, which encompasses Grand Junction, has the third highest commercial costs in the state after the northeast and mountain regions. Coloradans with commercial insurance along the Western Slope pay around $47,000, or $26,000 more than Medicare recipients receiving a knee or hip replacement. In the mountain region, the disparity between commercial insurance and what Medicare pays is over $43,000 more, and in the northeast it’s over $55,000 more (equating to a 232 percent markup).

Some variation in costs across regions is expected due to higher cost of living, the relative health of the population and other factors; however, it’s not readily apparent why commercially insured Coloradans in the northeast pay twice as much ($78,000) as their neighbors in Denver ($39,000) for the same service.

“Identifying such dramatic fluctuations in prices between payers gives us an opportunity to ask why this is happening, whether it’s warranted and where we have opportunities to reduce costs and improve care,” stated Ana English, CIVHC CEO and President. “This type of analysis from the Colorado All Payer Claims Database (CO APCD) suggests that we have the potential to do a much better job controlling costs in some areas.”

Many groups in the state, including the Colorado Commission on Affordable Health Care, are exploring ways to pinpoint where Colorado can make improvements -- either with data in the CO APCD or from other sources. This latest study suggests that at a minimum, higher-cost regions have opportunities to explore what drives local spending increases and to investigate what practices lower-cost regions use to keep costs down.

New alternative payment models such as Medicare’s bundled Comprehensive Care for Joint Replacement are designed to address high variation in spending on knee and hip replacement by paying one fixed amount to hospitals for all care provided to the patient up to 90 days after discharge.  Additionally, some self-insured employers in Colorado have partnered with hospitals to develop bundled payment programs for knee and hip replacements, and other common procedures, in an effort to reduce variation and provide excellent care.

About CIVHC
CIVHC (civhc.org) is a nonprofit, nonpartisan organization that helps Colorado identify ways to pay for, deliver and select high value health care. Through the pioneering Colorado All Payer Claims Database, we offer the state’s most comprehensive health care cost, quality and utilization claims data. We unlock information and provide tools and insights that guide meaningful action to improve health, enhance quality and lower cost. Bringing together a broad spectrum of organizations and individuals to design and drive collective change, CIVHC is devoted to a single cause: advancing an exceptional health care system for Colorado.

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