County and Division of Insurance Hospital Payments Vary Significantly Across Colorado

A new regional analysis of commercial health insurance payments is available to help communities, employers and others understand how much is being paid for services in their area compared to Medicare. Across counties in Colorado, hospital payments range from just above Medicare rates (115%) to nearly six times Medicare payments (576%). This data unlocks another important aspect of cost transparency that can be used to inform decisions and improve the lives of Coloradans, and is the first in a series of new analyses that will be released over the next year.

Locally and nationally, many cost reduction strategies have been implemented and tested to address rising health care costs. One model in particular – negotiating rates using Medicare payments as a reference – has proven effective in reducing health care spending in other states. The new interactive report and downloadable data show regional payments for inpatient and outpatient services as a percent of Medicare, along with patient experience and an overall quality rating at the individual hospital level.

“Colorado’s landscape is unique depending on where you are in the state, and health care costs are no different,” stated Ana English, President and CEO of Center for Improving Value in Health Care (CIVHC). “Data at the state and local level is imperative to help communities, employers, payers, providers, state agencies and others identify ways to lower costs and improve lives.”

The data is based on a RAND Corporation hospital-specific analysis that was recently released using 2015-2017 paid claims in the Colorado All Payer Claims Database (CO APCD).

Some highlights of the county-level data include:

  • The highest county is being paid almost six times Medicare rates (Morgan – 576%) for inpatient and outpatient services combined, whereas the lowest paid county is getting paid just above Medicare rates (Pitkin – 115%).
  • Rural areas are on both the low as well as the high end of the spectrum of counties for combined inpatient and outpatient payments, with no apparent correlation to resort or non-resort areas.
  • Volume of services also does not appear to be a direct driver of payments. For example, Lincoln County has very low inpatient and outpatient volume, yet is being paid second lowest across all 47 counties evaluated whereas higher volume areas like Denver and El Paso are at least twice Medicare rates.

Evaluation of the Division of Insurance rate setting regions shows similar variation. Groups like Peak Health Alliance in Summit County and others across the state are using data like this from the CO APCD to inform their work to drive down health care costs for employers and community members.

CIVHC is in the process of working with the authors of the RAND Corporation study to conduct a similar percent of Medicare analysis for all claims in the CO APCD, regardless of the health care setting. This includes care provided in other settings such as Ambulatory Surgery Centers, doctor’s offices, Skilled Nursing Facilities, Long Term Care Facilities and Home Health Agencies. CIVHC anticipates having initial views of the expanded analysis in early 2020.

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