A new report from the Center for Improving Value in Health Care reveals significant variation in payments in Colorado for hip and knee replacements between private health insurance payers and Medicare: Coloradans with private insurance in the northeast pay $55,000 more than their neighbors with Medicare, while those in Denver pay $17,000 over Medicare prices.
Recent national studies have revealed little to no correlation between Medicare and commercial payer healthcare spending in the same region. But areas like Grand Junction, Colorado -- historically praised for its low cost to treat Medicare recipients -- have come under recent scrutiny for higher-than-average commercial healthcare costs relative to other areas in the state and nation.
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The Western Slope region of Colorado, which encompasses Grand Junction, has the third highest commercial costs in the state after the northeast and mountain regions. Coloradans with commercial insurance along the Western Slope pay around $47,000, or $26,000 more than Medicare recipients receiving a knee or hip replacement. In the mountain region, the disparity between commercial insurance and what Medicare pays is in excess of $43,000, and in the northeast it exceeds $55,000 -- equating to a 232 percent markup.
The report suggests that some variation in costs across regions is expected, due primarily to the higher cost of living and the relative health of the population. It's not readily apparent, however, why commercially insured Coloradans in the northeast pay twice as much, $78,000, as their neighbors in the southeast, $39,000, for the same service.
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"Identifying such dramatic fluctuations in prices between payers gives us an opportunity to ask why this is happening, whether it's warranted and where we have opportunities to reduce costs and improve care," said CIVHC CEO and President Ana English.
Many groups in the state, including the Colorado Commission on Affordable Health Care, are looking at data in the Colorado all payer claims database, and elsewhere, to pinpoint where the state can make improvements. This latest study indicates that, at a minimum, higher-cost regions have opportunities to explore what drives increased spending locally, and to investigate what practices lower-cost regions use to keep costs down.
Twitter: @JELagasse