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Colorado Medicaid Bill Enables Important Value-Based Payment Reform

By Edie Sonn, Vice President of Strategic Initiatives, CIVHC

This week, Governor Hickenlooper will sign House Bill 1281, setting up 2-year payment reform pilots within Colorado’s Medicaid program. Brief pilot programs might seem like baby steps – but for a program as large and challenging as Medicaid, they are essential “proofs of concept.” And these pilots will likely have a big impact on how Medicaid takes shape in the coming years. This legislation is important both for the path it lays out for Medicaid’s future, and for the broad bipartisan and multi-stakeholder consensus it reflects.

As the legislative declaration for the bill points out, “Increasing health care costs do not necessarily reflect improvement in either health outcomes for patients or in patient satisfaction with the care received; moreover, the fee-for-service payment model may not support or align financially with evolving care coordination and delivery systems.” We couldn’t have written it better ourselves.

The bill enables proposals for a variety of value-based payment approaches, including global payments, risk sharing and gainsharing, “to achieve improved quality and to control costs” for Medicaid. In other words, HB 1281 gets Medicaid moving down the same path that the private insurance market is pursuing – and one that CIVHC advocates. This is important for a few reasons:

  • Data show that outcomes are better and costs are lower when care is provided through more integrated models and paid through mechanisms that reward value over volume. That’s true for patients in commercial plans, and even more so for people in public programs like Medicaid.
  • Greater alignment of payment models should drive greater alignment of quality measurement among payers. Colorado’s health plans evaluate clinicians on a mind-boggling array of metrics – more than 900 for primary care physicians alone! If both public and private payers don’t start using the same measures, we’ll drive our health care practitioners mad or out of the state. Consistent payment models are a necessary (though not sufficient) step toward consistent measures.
  • Once Colorado’s Health Benefits Exchange becomes operational in 2014, we will see more Coloradans moving between Medicaid and private health coverage. It’s important that their experience of care is consistent, regardless of the insurance mechanism.

In CIVHC’s advocacy for HB 1281, we pointed out that it lays the groundwork for a different and better approach to Medicaid managed care than the version many of us lived through in the 1990s. The legislation explicitly requires that projects account for variations and unique characteristics of the region(s) they propose to cover, and that the state must consider their potential impact on quality, outcomes and patient satisfaction – not simply costs.

A fascinating and encouraging facet of HB 1281 is the bipartisan embrace it ultimately enjoyed, especially after initial partisan wrangling. Combined with the fact that providers, health plans, business organizations and – critically – consumer groups worked together to craft and pass the legislation, HB 1281’s passage demonstrates the spirit of collaboration that exemplifies health care in Colorado (ref. the 208 Commission and the passage of the Health Benefit Exchange legislation in 2011). Kudos to sponsors Reps. Dave Young (D) and Cheri Gerou (R), and Sens. Pat Steadman (D) and Ellen Roberts (R).

Obviously, many unknowns remain until we see the proposals and their implementation – not to mention how they might affect future provision of services to all Colorado Medicaid recipients. For example, we would hope that these pilots might lay the groundwork for all Medicaid contractors to better integrate physical, behavioral and long-term care services. And, despite the safeguards in the bill, we must remain vigilant to ensure that these new payment approaches really do benefit patients and providers, as well as taxpayers. But HB 1281 is an encouraging step toward helping Colorado achieve the Triple Aim of better health, better care and lower costs for our Medicaid population.

To contact the author, email Edie Sonn at

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Medicaid only covers emergency and essential care. No elective procedures are ever covered. In fact, even "necessary" medical care is severely limited. For example, for someone who needs glasses to see, you may be limited to one eye exam and/or one pair of glasses only every 2 to 5 years. There is NO way taxpayers are going to cover an elective surgery, or in fact, anything not critical to your survival. And no arguments about it are going to change that. There is no circumstance whatsoever that will get someone else, like taxpayers, to pay for something like this.
6/21/2012 10:29:42 AM

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