Next year, Colorado public employees, as well as people working for big companies like Walmart and Comcast, could be part of a test to find out whether it is possible to reduce health care costs without government intervention. government.
The state government, however, is not in the driver’s seat, unlike the recently adopted Medication Accessibility Council and Colorado’s optional insurance plan. Instead, the nonprofit Colorado Purchasing Alliance will lead negotiations between participating hospitals and employers, including the state, several school districts, and the counties of Denver and Larimer.
The idea is that if employers negotiated with hospitals and other vendors like they do with computer server vendors, for example, they might get a better deal for employees.
As it stands, businesses and government offices often have no idea how good the health care services are provided to employees, let alone whether they are getting a good deal, said Bob Smith, president of the alliance. and executive director of the Colorado Business Group on Healthcare.
“If it was cars or washing machines, would we accept that?” ” he said.
If the plan produces substantial savings, it’s a sign the market can bring healthcare costs under control, Smith said.
The pandemic derailed alliance negotiations with hospitals last year, Smith said, but they expect to sign contracts this summer and have a plan in place for 2022. If all companies and all governments that have expressed an interest follow through, more than 100,000 employees being involved, as well as children or spouses who use their coverage.
Governor Jared Polis has expressed support for government employees joining the alliance. Colorado Department of Personnel and Administration spokesperson Adrian Schulte said the state has not set any firm requirements for how much savings or which vendors need to be networked.
The first step is to determine which hospitals have the lowest rates of unnecessary procedures and complications like preventable infections for orthopedics, oncology and maternity care, and then ask them to bid on contracts, said Smith. Gradually, they will work on agreements for other specialties, such as cardiology, he said. The alliance also plans to pay primary care physicians more so they spend more time guiding the care of people with chronic illnesses.
Then the alliance and the hospitals will negotiate prices for specific services, based on a certain percentage above the price paid by Medicare. Typically, negotiations begin with hospital sticker prices and end with a discount for insurance companies or large employers. Part of the group’s goal is to move away from discount trading, Smith said, because a big discount on an inflated price may still not be a good deal.
“Every other business in Colorado is competing for quality and price,” he said.
Colorado Hospital Association spokesperson Cara Welch said she supports employers and hospitals working together to keep healthcare affordable, but disagreed with starting by Medicare prices.
Medicare payments fall far short of the cost of care – reimbursing just 72 cents of every dollar hospitals have to spend to care for Colorado patients – and shouldn’t be taken as a standard benchmark for hospital prices, “she said in a statement. .
Welch said they also support considering hospital quality metrics, but only between hospitals of similar size and type.
“For some hospitals and some departments, because the number of patients is small, it can be very difficult to develop reliable quality measures,” she said.
Elizabeth Mitchell, president and CEO of the Buyer Business Group on Health, which includes national companies like Walmart, said their group would bring experience in quality assessment to the partnership.
For eight years, the organization was part of a different partnership that encouraged employees to go to “centers of excellence” with the best surgeons for certain types of care. In some cases, this involved having potential patients travel across the country, but since they were less likely to have complications, everyone benefited, she said.
“Better care actually costs less,” she said.
Member companies have said they want high-quality regional hospital networks and more attention to primary care, which they are trying to address with the Colorado partnership, Mitchell said.
If the Colorado alliance fails to strike deals for certain services, members’ insurance plans will default back to their existing network, Smith said. So far, they have been successful in involving some groups of doctors and independent institutions, but hospital chains are less interested, he said.
“We are trying to change the way the market works,” he said. “For the most part… the market works quite well for large healthcare systems. “
It would be difficult to build a network if health systems remained disinterested; About half of Colorado’s hospitals are part of healthcare systems, according to a 2020 report from the Center for Economic and Policy Research. In the Denver area, all but four of the hospitals are in systems.
So far, most healthcare buying groups nationwide have failed to cut prices, but Mitchell said she sees a “drive to innovate,” both employers and patient groups.
“We have tolerated poor, variable quality and sky-high prices for too long,” she said.