More Than Half of All Payments to Doctors and Hospitals in Colorado’s Commercial and Medicaid Markets Tied to Value

New scorecards find that 21% of commercial payments and 40% of Medicaid payments place providers at financial risk for meeting quality targets

DENVER November 13, 2018 – Over half of the health care payments (57%) paid to doctors and hospitals in Colorado by the commercial sector in 2016 contain incentives to improve quality of care patients receive. Surpassing national trends, 54% percent of payments in Colorado’s Medicaid market were tied to value in 2016. These are among the findings of The Colorado Scorecards on Payment Reform released today by Catalyst for Payment Reform (CPR) and the Center for Improving Value in Health Care (CIVHC).

“The scorecards allow Coloradans to understand how health care providers are being financially incentivized to provide high quality care, and that Colorado is ahead of national trends in implementing new, patient-focused payment models,” said Ana English, CIVHC’s President and CEO. “Through this analysis we found that value-oriented payments such as shared savings or pay-for-performance are prominent in commercial health insurance contracts, and Medicaid contracts include a higher percentage of payments flowing through models that break away from the traditional fee-for-service structure.”

Funded through joint grants from the Robert Wood Johnson Foundation and the Laura and John Arnold Foundation, The Colorado Scorecards on Payment Reform are based on an independent review of data from commercial health plans and the Colorado Department of Health Care Policy and Financing (HCPF) for Health First Colorado (Colorado’s Medicaid program), which together insured 3.5 million Coloradans in 2016, the year on which the report bases its findings.

Additional findings from the Scorecards include:

  • Value-oriented arrangements that place providers at financial risk were more prevalent in Colorado than trends nationally, with 21% of commercial payments and 40% of Medicaid payments including some form of financial downside risk.
  • In the commercial market, payments tied to value were equally prevalent in primary care and specialists (68%), with hospital payments tied to value trailing slightly at 64% of total dollars.
  • In the Medicaid market, 100% of payments to hospitals were tied to value, with quality performance incentive payments making up 7% of total dollars paid to hospitals in 2016.
  • The most common form of value-oriented payment in the commercial market was shared savings (26.5%), which typically creates, on top of traditional fee-for-service payment, an upside-only financial incentive for providers to reduce unnecessary health care spending for a defined population of patients, or for an episode of care, by offering providers a percentage of any realized net savings, if first they meet certain quality standards.
  • In the Medicaid market, pay-for-performance, which is typically traditional fee-for-service payment with a bonus for meeting quality or efficiency goals, along with payments for non-visit functions like care coordination, case management or health IT infrastructure, were the most common forms of value-oriented payment, each representing 16.4% of total payments.

“The Colorado Scorecards provide useful baseline information to employer-purchasers who are actively searching for ways to reign in rampant health care spending while simultaneously maintaining or improving quality of care,” said Robert Smith, Executive Director, Colorado Business Group on Health. “It’s great that the health plans contributed to this innovative report and we are gratified to see that Colorado is performing above other states in these efforts.”

Kim Bimestefer, Executive Director of the Colorado Department of Health Care Policy and Financing, commented, “We appreciate the partnership with CIVHC and the continual analysis and insights they provide. Colorado Medicaid has been and will continue to be focused on tying provider payments to value. We look forward to the implementation of the Hospital Transformation Program and other initiatives that continue our value-based progress, improve health outcomes, and contain costs.”

The scorecards highlight Colorado’s good performance on the rate of cesarean deliveries among women with low-risk pregnancies, but the state has room for improvement in caring for patients with diabetes and ensuring that cost isn’t prohibiting Coloradans from accessing care. According to a recent report from CIVHC and the Network for Regional Healthcare Improvement, total cost of health care in Colorado is 19% higher than it is in the four other states in the analysis.

“Like the recently released The New Jersey Commercial Scorecard on Payment Reform and The Virginia Commercial and Medicaid Scorecards on Payment Reforms, the Colorado Scorecards look at payment reform adoption alongside state-level indicators that explore whether or not the changes in provider payment are delivering on their promise of better quality and more affordable health care,” said CPR’s Program Director Andréa Caballero.

Results of this analysis will be featured at the CIVHC Connect: Dollars & Sense event today where Change Agents are coming together to discuss how Colorado is moving solutions like payment reform and other innovations forward to create a more effective health care system for Coloradans.

About The Colorado Scorecards on Payment Reform

Both The Colorado Scorecard on Commercial Payment Reform and The Colorado Scorecard on Medicaid Payment Reform aggregate data from calendar year 2016. CPR obtained the data for the commercial scorecard through an online survey of health plans, with four commercial health plans responding, who together cover approximately 78% of the commercially-insured lives in Colorado. CPR obtained data directly from HCPF for the Medicaid Scorecard. Accompanying methodology reports, available for download, provide additional information.

About the Center for Improving Value in Health Care

The Center for Improving Value in Health Care (CIVHC) is an objective, not-for-profit organization. Through services, health data, and analytics, we partner with Change Agents to drive towards the Triple Aim – better health, better care, and lower costs – for all Coloradans. For more information visit: www.civhc.org and follow on Facebook, Twitter and LinkedIn.

About Catalyst for Payment Reform

Catalyst for Payment Reform is an independent, non-profit organization working on behalf of large employers and other health care purchasers to catalyze employers, public purchasers and others to implement strategies that produce higher-value health care and improve the functioning of the health care marketplace. For more information visit: www.catalyze.org and follow on Twitter and LinkedIn.

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Media Contacts:

CIVHC – Cari Frank, VP of Communication and Marketing

[email protected]

303.903.6007

CPR – Cary Conway, PR Consultant

[email protected]

972.649.4707

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