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How Value-Based Health Care Can Address Coloradans Costs

With incremental changes could come improved quality and diminished costs

Bruce A. Johnson //January 7, 2019//

How Value-Based Health Care Can Address Coloradans Costs

With incremental changes could come improved quality and diminished costs

Bruce A. Johnson //January 7, 2019//

As Colorado heads into 2019 with a new governor and legislature, health care will likely be on the policy agenda. Policy proposals will probably be influenced by recent media attention on the high cost of coverage on Colorado's Western Slope and stories suggesting expansion and other activities by Colorado hospitals and health-care providers that play a role in increased health-care costs.

Yet purchasers and consumers also play a part in the health-care cost challenge. Commercial insurers may not have a platform to offer innovative coverage arrangements to employers and consumers that drive down costs. Meanwhile, today's consumers make choices regarding their services in a marketplace with limited information regarding price or quality and frequently in the context of high deductible coverage arrangements that give them limited incentive to consider such information even if it was available. 

There's no single solution that will magically enhance coverage and reduce costs in Colorado, but value-based health care may help us close in on an answer. The term refers to health-care deliver and payment models in which physicians, hospitals and other providers, payors and consumers consumers are incentivized to ensure appropriate, high-quality and cost-effective care is provided. Today, value-based arrangements range from simple “pay‑for-performance” models, to more sophisticated “population health” and “episodes of care” arrangements involving “shared savings” and “shared risk” – all of which are linked to evolving measures of quality. Regardless of the approach, value-base” systems have been touted as a potential solution to improve health-care quality and reign-in costs.

Five policy themes that align with value-based care and that could be driven by private and public sector stakeholders might help move Colorado providers, payors and consumers toward arrangements yielding better care at lower costs.


Greater consistency in regulatory requirements applicable to organizations engaging in value-based health initiatives in Colorado could reduce participation barriers. State level policies governing Medicaid managed care organizations, hospital transformation under the Colorado Healthcare Affordability and Sustainability Enterprise Act of 2017 and others could be aligned with federal programs such as the Medicare Shared Savings Program (MSSP) governing provider-driven “accountable care organizations” and networks, but with Colorado-specific variations. This type of alignment could promote consistency and reduce complexity and burden on physicians, hospitals and other providers in the nine MSSP ACOs currently operating in Colorado and stimulate these and new organizations to partner with commercial and self-insured plans on transformative programs focused on population health.


Commercial insurers in Colorado could be required to offer at least one ACO product in each market service area through which networks of clinically integrated providers can earn shared savings. Payors could be required to furnish ACOs with claims data for commercial health plan beneficiaries that could be used along with Medicare and Medicaid data to promote population health and furnish lower cost, higher quality care. Third party administrator service operators could also be required to make TPA services and provider networks available that would support shared savings and similar programs for use by persons covered by employer sponsored self-insured health benefit plans.


Financial and other incentives could be established for providers to participate in multi-payor ACOs across the state and to migrate from shared savings to shared risk arrangements for fee-for-service beneficiaries. Incentive carrots to drive innovation could include waivers/exceptions from select reimbursement rules and other restrictions akin to those found under federal law. Those waivers could provide greater flexibility to providers engaged in ACO-like arrangements to implement care coordination and management approaches that can improve quality and reduce cost. The Medicare Hospital Value Based Purchasing Program, the physician Quality Payment Program and other federal value-based initiatives could provide useful value-based incentives for providers that could be deployed in Medicaid and commercial programs.  


ACOs and similar models focusing on episodes-of-care require costly technology, data analysis and other infrastructure to achieve viability and succeed in a value-based care environment.  Various creative financing and other arrangements could help drive innovation and efficiency in deployment of such systems and infrastructure. For example, a “value-based success fund” could aggregate capital from multiple sources and provide seed funds to promote movement into value-based care, with repayment linked to future earnings.  Alternatively, the private-sector might create joint venture technology enterprises to efficiently support the infrastructure for “big data” analysis, analytical personnel and other services supporting value-based care.  Such an enterprise could be co-owned by payors, providers and/or other investors, and it could provide operational infrastructure to multiple ACOs, eliminating the need for each to develop its own systems and capabilities.


Promote greater price transparency for health care services and create financial incentives for consumers/patients to consider pricing and other factors in their provider selection decisions.  For example, consumers could be incentivized to access a health-plan-specific dashboards containing pricing and other information for common services and providers. Comparative pricing information for in-network and out-of-network providers could be presented in relation to Medicare prices for the same services. Consumers who use have plans and providers involving value-based ACO and similar arrangements could be eligible to receive rebates on their health plan premiums if they use the dashboard and the arrangement has achieves actual savings.

Value-based care is by no means the panacea to what ails the overall health-care delivery and payment system in Colorado. Individually, the policy themes suggested above are likely to make only incremental changes, but the combination of these and potentially other well-focused refinements to existing policies combined with market-based activities, might help reduce burden, promote consistency and encourage adoption of value-based care arrangements that can help improve health care quality and reduce its cost in Colorado.


Bruce A. Johnson and Gerald A. Niederman are both shareholders at Polsinelli and are both experts on health-care systems and policy.