It’s no secret that the cost of healthcare is astronomical, and the cost often outweighs the perceived benefits. Governor Polis has made reduction in healthcare spending a priority for his administration and has presented a number of policy solutions, the latest of which is House Bill 21-1232, the Colorado public option. The initial version required health insurance premiums in 2024 to be 20% below where they were in 2021 or the state would create an insurance plan. The newly introduced amendment moves away from a public option and requires private insurance companies to offer highly regulated, standardized plans with cost reductions over three years.
Regardless of these amendments, Colorado would benefit from adopting a more cooperative approach in state-led initiatives. We should be seeking to improve healthcare outcomes alongside cost reduction, and not treat them as mutually exclusive goals.
The Colorado healthcare industry has strongly opposed the original version of the public option, largely due to the inherent revenue implications for them. Another valid concern is the public option essentially penalizes—or fails to recognize—organizations that have already been making strides in reducing premiums and improving quality, mainly via cooperative arrangements with healthcare providers.
Cooperation is paramount to the success of cost reduction, not just for the public option, but across the board in healthcare. Again, we should be seeking to improve healthcare outcomes alongside cost reduction; they cannot be treated as mutually exclusive goals.
The best way to achieve cooperative behaviors is to incentivize healthcare providers to have “skin in the game.” In other words, we need to put their reimbursement at risk in such a way that strong performance is rewarded, and weak performance is penalized. The mechanism to accomplish these goals is to align financial incentives between the provider and the insurance company in order to encourage both entities to work toward achieving the Triple Aim—lower costs, better care, and an improved patient experience.
If costs are reduced and quality improves, the hospital or doctor receives an enhanced payment. Ultimately, the best healthcare providers will be the best-paid providers: Those who provide proactive, preventive care in the right setting, at the appropriate level. Cooperative agreements allow all parties in the healthcare industry to align incentives based on doing right by the patient.
Organizations like Monument Health, known as a clinically integrated network or CIN, sit in the middle of these cooperative arrangements, which we call “value-based” agreements. We bring providers and insurance together to create aligned financial incentives, share clinical best practices, and implement a robust, predictive model dataset that, in turn, drives higher quality outcomes across a broad population. Through our partnership with Rocky Mountain Health Plans, for example, we have successfully reduced premiums for their insurance plan sold on the Connect for Colorado Exchange, also called Monument Health, by an average of 10% in the past year. This is the highest reduction to an exchange product seen this year in the State of Colorado.
Clinically integrated networks and value-based agreements should continue to grow until the point that they can represent a sizable portion of healthcare provider revenue. Today, value-based payment represents one-third or less of a hospital’s total reimbursement, which is a step in the right direction. CINs help shift the reimbursement model from pay-for-volume to pay-for-value, defined as the Triple Aim. Simply stated, this means that providers are paid based on the quality of care they give and the positive outcomes of their patients rather than the impersonal, turnstile model where they are paid based on the number of patients they see daily. It’s a structure that promotes wellness and early intervention.
Medicare has begun to leverage the work of CINs for Medicare cost reduction, as well. In 2019, Medicare reported $1.9 billion of savings generated by CINs that participated in value-based agreements with CMS. The work of these networks is effective regardless of whether insurance is publicly or privately funded. Washington’s CascadeCare, Maryland’s Health Services Cost Review Commission’s all-payer rate setting structure, Massachusetts’ MassHealth, and other state-imposed healthcare options have all recognized the critical need for cooperative arrangements, and have included a number of value-based components in reimbursement design to providers.
Colorado would benefit from adopting a more cooperative approach as it considers state-led healthcare initiatives. We should shift our mindset to elevate better health outcomes as our ultimate goal, which includes lowered cost as a critical component.
By encouraging cooperative arrangements with providers and insurers, Colorado can achieve better health outcomes for patients and promote the Triple Aim—lower costs, better care, and an improved patient experience.