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New Database will Provide Valuable Health Care Cost Info

Originally published in the Denver Business Journal, Nov. 9, 2012

by William N. Lindsay III, President of the Benefits Group-Denver for Lockton Companies

While the rate of increase in health insurance costs for Colorado employers has slowed, it continues to outpace inflation. If we want to slow this rate of growth still further, we need to understand what’s driving it. Finally, Colorado is getting a tool that will help us do just that.

Lockton’s 2013 Colorado Employer Benefits Survey Report showed that, for 2013, employer health care premium increases fell below ten percent (7.4 percent) for the second year in a row, a welcome number compared to the double digit increases Colorado businesses faced over the previous decade. But the increase still lands above expected rates of inflation, forcing employers to mitigate the additional financial burden. Over 65 percent of employer respondents indicated they would increase cost sharing with employees in the form of additional employee contributions and/or changes in benefit structure. What’s clear is that Colorado must continue to address rising health care costs to ensure the financial viability of businesses and affordability of coverage for Coloradans.

Until now, Colorado has had no comprehensive source of information to begin to drive the market. On November 1, Colorado's All Payer Claims Database (APCD) was launched by the non-profit Center for Improving Value in Health Care (CIVHC). The Colorado APCD is a statewide database that, when fully operational, will include insurance claims from all commercial health plans, Medicare and Medicaid.

The APCD was a centerpiece recommendation of Colorado’s Blue Ribbon Commission for Health Care Reform. The Commission’s 2008 report to the legislature explained what we know about all markets: consumer access to cost and quality information is essential to drive market efficiency. When employer and consumer purchasers don’t know the true price of care or the quality associated with that care, they can’t make educated purchasing decisions or drive their business to the providers and health plans that provide higher quality care at lower relative cost.

Claims data helps answer important questions like “How much will it cost me to get an MRI?”. Initial analysis from the APCD shows that the statewide average payment to facilities was $906 for high cost imaging services (MRIs and CT scans) in 2011. However, analysis of the top 20 Colorado facilities (according to number of procedures performed and dollars paid) showed that some facilities were paid as low as $385 and some as high as $2049 for the same services.

As the database matures throughout 2013 and provider costs are paired with quality outcomes, businesses and consumers will be able to make value-based purchasing decisions and select providers that demonstrate the best outcomes at the lowest costs. Think of it as a “Consumer Reports” for health care services. The APCD will enable businesses to shop for health plans with the lowest cost, highest quality providers in network. And employees and consumers can compare prices for procedures or find specialists based on their quality rankings and costs.

The APCD currently contains over 2 million unique claims representing over 40 percent of covered lives across the state. As additional payers and lines of business are added over the next year, by 2014 the database is expected to encompass 90 percent of claims for insured Coloradans. The comprehensive nature of the APCD will help us uncover information that can help us control costs, improve the quality of care and enhance the health of Coloradans.

The Colorado APCD is a step in the right direction for all Coloradans, and begins to put businesses, employees and consumers in the driver’s seat towards an efficient and cost-effective health care system. Current reports on the interactive APCD website allow health policy experts and health care leaders to understand at a macro level where the major trends in health care spending and utilization exist, but the database will become more robust and consumer-centric over time. By 2014, the APCD will be an even more important resource for consumers and employers to make smart health care choices and drive more value into the system.

William N. Lindsay III is President of the Benefits Group-Denver for Lockton Companies. He chaired Colorado’s Blue Ribbon Commission on Health Care Reform.
 

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Comments

Jonathan Mathieu
The All Payer Claims Database (APCD) Total Cost of Care (TCC) figures and health plan premium increases from the Lockton survey are based on two different data sources which currently aren’t directly comparable. The APCD TCC represents average total cost of care for individuals in a geographic region based on claims data from Medicaid and the eight largest commercial payers (individual, large group fully-insured and some self-insured lives). The Lockton Survey shows employer self-reported premium increases for commercial plans only. The APCD claims data supporting the TCC calculations is currently weighted heavily towards Medicaid (60% Medicaid, 40% commercial) making it potentially misleading to directly compare APCD cost trends to commercial health plan premium trends. As the APCD data grows and more commercial payers are added to the database, more direct comparisons between total cost of care and health premiums will be possible.
11/19/2012 2:49:50 PM

David L. Roper
Interested in all sources of health cost data.
Also curious why APCD "Total Cost of Care" 2009-2011 shows no inflation, even though Lockton and most other surveys show annual increases in health costs of 6-10% over this period.
11/15/2012 10:49:08 AM

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