Private insurance costs not keeping pace with public

Grand Junction’s frugal Medicare spending grabbed national headlines and spawned a PBS documentary. 
But a study by health care and benefits consulting firm Milliman Inc. indicates that commercial insurance providers are paying a steep price for local emergency room and hospital visits.

The Grand Junction region had the fourth-lowest Medicare reimbursement rate among 306 hospital-centered regions in the United States in 2009, according to the newest data from the Dartmouth Atlas of Health Care. Medicare paid an average of $6,919 per enrollee in the Grand Junction region that year, when adjusted to account for regional differences in health care charges.

Compare the Grand Junction region to a sampling of similar hospital regions across the country, though, and the average cost to private insurance companies for the same care isn’t quite as impressive.

Milliman analyzed the private insurance reimbursement costs for 33 hospital regions in 2010, including Grand Junction.

The area’s reimbursement rates for physician visits per insured member fell below the average among the 33 regions, but Grand Junction had higher private insurance reimbursements for emergency room, hospital and outpatient facility visits.

Commercial, or private, insurance companies paid 129 percent of the study’s average for emergency room care, 135 percent of the average for hospital stays, and 145 percent of the average for outpatient procedures when the cost was measured per member per month, according to Milliman.

Local medical and insurance professionals say there’s not one obvious reason for the cost difference. It may have something to do with costs in Colorado versus the 21 other states in Milliman’s study.

Data released earlier this month by the Center for Improving Value in Health Care combine costs for private and public insurance and seem to reverse the thesis of the Milliman study. The center’s ranking places Mesa County 10th among Colorado counties for physician costs to all insurers but 32nd in hospital costs, 40th in outpatient facility costs and 44th in emergency room costs.

The cost difference could be linked to the prevalence of uninsured and publicly insured residents in Mesa County as well.

Mesa County’s private insurance enrollment was five percentage points above the national average for adults at 69 percent in 2009, according to the U.S. Census Bureau, but it was two percentage points below the Colorado average that year, giving the county fewer privately 
insured residents to share costs.

Dan Prinster, vice president of business development at St. Mary’s Hospital, said Grand Junction is more likely than larger urban areas to have an expensive mix of trauma and other lower-need patients in its emergency room in particular.

Regions with more hospitals can spread out patients, but Grand Junction gets the bulk of trauma patients in western Colorado and eastern Utah. That can be a problem if people come from rural areas where having public insurance or no insurance is more common, Prinster said.

“It’s after we care for them that we find out they don’t have any means to pay. We can write it off, but we can’t write off all of that. We have to push it on somebody else,” Prinster said.

That “somebody else” often involves private insurance companies and their clients.

Primary Care Partners Executive Director Michael Pramenko said uninsured patients and publicly insured patients can drive up costs for other patients and their insurance companies by paying smaller reimbursement rates than commercial insurance can offer.

Commercial insurance customers eat more of that cost, too — an estimated $20,728 a year for a family of four in the United States, according to a 2012 study by Milliman.

“We’ve gotten great attention for Medicare and Medicaid efficiency, but we’re not so great at commercial,” Pramenko said. “If you ask people buying commercial (insurance) product in town they say, ‘We don’t feel savings,’ and it’s true.”

access key issues

The price on a hospital bill is little more than a suggestion to insurance providers.

At Community Hospital, for example, Medicaid will pay 22 cents on the dollar for a procedure while Medicare will pay 34 cents per dollar for the same procedure, according to Community Hospital President and Chief Executive Officer Chris Thomas.

Thomas expects the hospital to get 18 cents for each dollar on the bill if the patient has no insurance, although sometimes that bill ends up a charity case or goes into the bad debt pile.

Commercial insurance will pay the hospital about 70 cents on the dollar.

“I just don’t get that 66 or 78 cents” from public insurance, Thomas said. “That’s why we depend on people with commercial insurance.”

Unfortunately for Community and other local medical providers who rely on private insurance reimbursements to even out their cost burdens, 24 percent of Mesa County adults did without insurance in 2009, according to the Colorado Fiscal Policy Institute, while 12 percent of adults were enrolled in Medicare or Medicaid.

That’s three percentage points more than the state average for uninsured adults and five percentage points more than the state average for adults enrolled in public insurance programs.

Public and private insurance provider Rocky Mountain Health Plans has attempted to improve access to primary care doctors for the publicly insured by paying health professionals within its Grand Junction provider network a little more for Rocky’s Medicaid, Medicare and Child Health Plan Plus clients and a little less for its private insurance clients to help smooth the difference in reimbursement rates.

In exchange, those professionals have to accept patients with public insurance.

The goal of the agreement is to provide more preventive care so primary care providers can detect and treat conditions before they escalate and require more expensive hospital or emergency room visits, Rocky Mountain Health Plans’ President and Chief Executive Officer Steve ErkenBrack said.

“By creating that access, we lower the cost for everybody,” he said.

Patients who get their public insurance elsewhere are reimbursed at the usual rate.

Even with Rocky Mountain Health Plans’ cross-subsidizing reimbursement, though, Thomas said physicians can only afford a certain level of the still-lower reimbursements. He worries the combination of Mesa County’s lingering economic lull and increasing maximum income thresholds to qualify for public insurance may make it difficult to continue cross-subsidizing. 

“This is not greedy physicians wanting their share. They’re running a small business, and they can only provide service for so many” public insurance patients, Thomas said.

“I think most doctors limit it to 30 percent of their practice is Medicare or Medicaid. It’s a simple business decision.”

Dr. Gregory Reicks, president of the Mesa County Physicians Independent Practice Association, said he knows of few primary care practices who are accepting new patients at this time, which is another limit to access.

Mesa County had 5.9 primary care providers for every 1,000 residents in 2011, according to the Center for Improving Value in Health Care. Even though that’s the sixth-highest ratio among Colorado counties, Reicks said the area has “a health profession shortage.”

“We still probably do not have enough (physicians) to meet demand, and demand will be higher in the future with the Affordable Health Care Act” bringing more people into the insurance pool, Reicks said.


Emergency room

At 94.2 percent, Mesa County last year had the state’s highest percentage of people claiming they had a usual source of care, according to the 2011 Colorado Health Access Survey of 21 Colorado regions.

But that doesn’t mean county residents always visit their regular physician for health care.

The same survey found Mesa County had the highest emergency room utilization in the state with 31.5 percent of county residents using an emergency room at least once in the 12 months before the 2011 survey.

Statewide, the survey found 19.3 percent of people with private insurance and 20.5 percent of uninsured Coloradans used the ER. Medicaid patients visited the ER at a rate of 39.7 percent.

Some may assume emergency rooms are populated with uninsured people seeking care, but Thomas said about 10 percent of emergency room patients at Community Hospital do not have insurance.

Uninsured people are more likely to frequent the hospital’s Grand Valley Urgent Care after-hours clinic, Thomas said, because many uninsured people do not have a primary care physician and want a lower-cost alternative to repeated emergency room visits.

He estimated about half of the patients there are uninsured.

Medicaid patients may choose to visit the ER because they do not have a cost disincentive for picking an emergency room over a physician or after-hours clinic, Reicks said.

Others may not know that after-hours clinics such as Primary Care Partners’ Docs on Call, Redlands After Hours and Urgent Care have extended hours and can provide more than basic medical care.

“Some people don’t know they have X-ray capability and blood work testing. It’s about educating people about where (the clinics) are, how to access them and when they’re open,” Reicks said.

Educating Mesa County residents about proper use of the emergency room versus after-hours clinics will help cut down on medical costs in the county, Prinster said, because the same work can be done for less in other settings.

“It’s crazy to see people in the hospital for things that could be handled in outpatient settings,” Prinster said.

“St. Mary’s, Community Hospital, Family Health West, Rocky Mountain Health Plans and physicians have all been encouraging people to call their doctor first to see if (their ailment) requires an emergency room visit.”


Safety nets

Urgent care, emergency rooms and hospitals may beckon to some uninsured patients, but there is another option.

The Marillac Clinic offers medical, mental, optical and oral health care to uninsured locals.

The clinic charges fees for services based on income and attempts to provide a safety net for the uninsured to find care when doctors won’t accept them as patients and hospitals would charge more, according to Kristy Schmidt, Marillac’s interim executive director.

“The value of a safety net in any community is they can offset high-dollar costs to ERs. Most of our patients have chronic diseases and multiple diagnoses,” Schmidt said.

ErkenBrack said having resources such as Marillac is becoming increasingly important in Mesa County, which recorded an 8.3 percent unemployment rate in October.

“A lot of people have fallen on very difficult economic times and health insurance is one of those things people say they can’t afford anymore,” ErkenBrack said.

“We are fortunate to have the Marillac Clinic because otherwise they show up at the ER. It’s hard to do anything about that.”

Another group likely to use the emergency room is Medicare patients, according to Pramenko.

Part of the reason is force of habit and part of it is that the senior population tends to have more health problems.

Hospice & Palliative Care of Western Colorado has helped cut down on ER visits among that population and contributed to Grand Junction’s low ranking for Medicare reimbursements.

Hospice & Palliative Care of Western Colorado Chief Executive Officer Christy Whitney said more than 90 percent of patients here pay through Medicare.

Hospice provides patients with medical kits that can help them if they need medication and has nurses who patients can call if they think they may need to go to a hospital.

“Part of it is people having a touch point instead of the ER,” Whitney said. “Most of the cost savings are in avoidance.”

Safety nets and alternative care sources are just a few of the ways Grand Junction’s health care community is trying to cut down on medical costs.

Prinster said St. Mary’s also has financial counselors who help patients figure their out-of-pocket costs and determine if they are eligible for public insurance.

St. Mary’s and Community Hospital participate in bulk equipment-buying groups with other hospitals to save money.

Experts across the community agree their work isn’t done and further efficiencies will be needed in how care is provided and reimbursed.

Pramenko said payment reform is in the works nationwide.

“I hope people ask the health care community, ‘What are you all doing to help with cost?’ Particularly the commercial group, which we haven’t done so well with,” he said.


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