A health care pilot project could make Colorado Springs a magnet for businesses seeking to lower health care costs.
The project seeks to bundle payments for chronic illness in an effort to lower costs for companies that self-insure employees. Self-insured employers pay for the bulk of employees’ health care costs themselves, and then use a stop-loss insurance policy when costs reach a certain level.
“We think this is transformative,” said Donna Marshall, executive director of the Colorado Business Group on Health, a nonprofit association whose members are larger purchasers of insurance. “We think that this will be so transformative to the marketplace, people will move to Colorado Springs because of it.”
The $3.2 million implementation grant from Colorado Health Partnerships and the Colorado Business Group of Health creates a partnership of large, self-insured employers in the Springs — Utilities, the City of Colorado Springs and School District 11 — and the city’s largest physician groups like Colorado Springs Health Partners and Mountain View Medical Group.
Together, the organizations are working to track and ultimately lower costs for six chronic illnesses that are historically the most expensive to treat.
The groups will pay a single payment for services from both primary care physicians and specialists, and that payment will cover the entire care for a patient. Currently, most insurance companies pay for every individual service, instead of a single payment based on outcomes. The pilot project hopes to change that.
The project uses a software program known as Prometheus to bundle payments for illnesses like diabetes, asthma, chronic obstructive pulmonary disease, coronary artery disease, gastroesophageal reflux disease and hypertension. The ultimate goal is to lower costs by having doctors work closely with specialists and patients to reduce unnecessary hospitalizations and complications.
“Everyone talks about lowering costs,” said CSHP CEO Debbie Chandler. “We also want to increase quality. That’s where you get the value in health care — lowering costs and increased quality.”
Right now, the project is in its first few months, and it’s too soon to tell how much it will lower costs. But Chandler believes that it will.
“What we’re doing now is tracking a year’s worth of care for each patient with one of these chronic illnesses,” she said. “And the software will tell us what typically is spent on a patient with a particular kind of illness. For instance, the software can say someone with diabetes will spend x amount on health care in a year. It will tell us if we’re over that, and then we can take a look at why we’re over it.”
The goal is to care for patients in a more comprehensive way — combining care over the entire system and connecting primary care doctors to specialists and hospitals.
“For instance, if we’re sending a patient for surgery, we can take a look at which is more expensive, the hospital or a private surgical center,” Chandler said. “And once there’s that level of transparency, doctors can make the decision that will save money.”
And when there are cost savings, the money will be split between the specialist and the primary care doctor, Marshall said.
“It serves as a real incentive to providing care across the entire continuum,” she said.
If the program is proven to be as successful as organizers believe, health care costs in the Springs will be lower, and that will serve as a major economic driver for the city.
“Health care costs are second behind salaries in terms of business expenses,” Marshall said. “And for a decade, employers have seen their costs double. They haven’t been able to do anything about it either — they’ve just dealt with rising costs, thinking it was someone else’s job to fix it. We’re saying partner with us and we’ll fix it together.”
Combining payments based on outcomes — instead of paying for every service rendered — seems to be the future of health care payments. The Affordable Care Act requires bundled payments, and Medicare has its own pilot projects nationally.
Wal-Mart, the world’s largest retailer, also is experimenting with its own project to bundle payments for specific problems. It’s working with Geisinger Clinic and the Mayo Clinic to bundle payments for specific problems, such as orthopedic surgery.
But it’s the scope of the Colorado Springs project that makes it unique.
“We’re the only ones dealing with chronic illness,” Marshall said. “By some estimates, chronic illness accounts for 80 percent of health care costs. We’re taking a huge chunk here. If we can bend the cost curve on something that large, then we can stop the double-digit health care increases employers are seeing.”
By some reports, the initiative is headed in the right direction. Medicare’s bundled payment plan for heart bypass surgery dropped costs by 10 percent and reduced the average length of stay in hospitals.
Geisinger Health Plan reported a 21 percent reduction in complications and a 44 percent reduction in readmissions in its ProvenCare bundled payment pilot for heart bypass surgery — which led to a 5 percent decrease in the hospital’s costs.
It’s that kind of success that Marshall hopes to create on a grander scale in the Springs.
“We don’t just want to reduce readmissions,” she says. ‘We want to reduce admissions and emergency room visits. Look at it this way, if you end up in the hospital because of complications from diabetes, something has gone wrong.
“We’re hoping to stop it from going wrong.”
Much of the implementation rests with doctors and hospitals, who are responsible for tracking patients. But a great deal of it rests with patients themselves.
“The software can track patients, send them reminder emails about their medicine, suggest diet tips and exercise,” Marshall said. “And we really are leaving it up to the doctors on how to implement the partnership — that’s their specialty. And if we can make people healthier, then we automatically reduce health care costs.”
Colorado Springs recently has focused on its health and wellness economy as a way to market the city. Its goal, said Dave White, the Regional Business Alliance’s chief business development officer, is to become the healthiest city in the nation and to attract bioscience, sports and wellness companies to the Springs.
This pilot project, Marshall says, will help the city get there.
“We’re going to demonstrate that we can help employers, improve the health of their employees and save money,” she said. “It’s the best of both worlds. If premiums go down, if out-of-pocket costs go down, but health improves. That’s going to make a big impact on the bottom line. This partnership is going to make the Springs more attractive for businesses.”