CHASE Hospital Cost Analysis

Background

“We strive to support and care for individuals when they are the sickest and most vulnerable, implement programs to better control claim costs in the near term, to better prepares us for economic volatility in years to come, and align our programs with industry standards to streamline Medicaid administration for doctors and hospitals.” -Kim Bimestefer, Executive Director for the Colorado Department of Health Care Policy and Financing

Hospital costs are a significant driver of public and private insurance expenditures, for Medicaid 30 percent are attributed to hospitals. Additional analysis of hospital data could potentially lead to initiatives that improve the health care delivery system to the benefit of all users and insurers.

Request

On November 1, 2017 the Colorado Department of Health Care Policy and Financing requested an increase of $1.2 million total funds, including $596,132 from the Healthcare Affordability and Sustainability (HAS) Fee Cash Fund, for 11 new staff positions to support the Colorado Healthcare Affordability and Sustainability Enterprise (CHASE), legal services to defend the enterprise, data analytics consulting services, and software licensing.​

R-15 CHASE Administrative Costs

Approved Request

However, the Joint Budget Committee staff believed HCPF would benefit from additional resources to address hospital cost and hospital cost shift to payers. The General Assembly approved a total of 11 staff positions. Four of these positions will support the administrative needs of CHASE. Seven positions have different purposes than HCPF’s original request. These 7 positions will target the drivers of hospital expenditures, particularly to explore why the cost shift does not appear to be decreasing as expected.

Hospital Trend Analysis

The JBC instructed the Department to investigate why the Medicaid payment to hospital cost ratio does not appear to be improving. When the General Assembly first authorized a provider fee for hospitals in HB 09-1293, hospital administrators testified that it would reduce the cost shift from Medicaid to private insurance, thereby containing private insurance costs. Additionally, the implementation of the Affordable Care Act increased the amount the Department could pay hospitals through the provider above what was contemplated when the General Assembly adopted HB 09-1293. At the same time, care provided by hospitals to the uninsured decreased dramatically, likely due to the combination of the Medicaid eligibility expansion, federal tax credits for buying insurance through the healthcare exchange, and the individual mandate in the ACA to purchase health insurance or pay a tax penalty. Despite these changes, hospitals report that the payment to cost ratio for private insurance has increased, and a cost shift from Medicaid to private insurance continues. Upon direction of the General Assembly, the Department has targeted resources towards researching hospital costs and cost shift for both public and private payers.

Other Actions

As part of implementing the budget request the Department is:

  • Creating tools that analyze hospital costs,
  • Working with outside stakeholder on lowering costs to all payer-types, and
  • Published reports about the cost-shift ratio.

​Cost reports and other information as it becomes available will be posted on this page.

For more information contact
Nancy Dolson
nancy.dolson@hcpf.state.co.us