Inflationary pressures threaten DORA’s plans to standardize health plan benefits under the Colorado option – Status of Reform

According to a new report, medical inflation could force health care providers in Colorado to cut back on services and shift rising costs to Option for Colorado of insured consumers.

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Data released from Institute for Common Sensea conservative think tank in colorado has shown that medical inflation has risen to 7.62% in Metro Denver, which is nearly 5 points higher than the allowable growth rate estimated by the Insurance Department.

The increase in medical costs is likely to jeopardize the viability of the Colorado option, which from next year, requires health insurance providers to offer gold, silver and bronze levels of the standardized plan with significantly lower premiums than they charged for their average plans in 2021.

Under last year’s Account for house 1232, a stakeholder engagement process was initiated last July to develop the benefits of the Colorado option, a standardized, affordable public health insurance plan that all carriers will have to offer. The results of this process informed the Insurance Department’s (DOI) application for a 1332 waiver, which was submitted to the CMS for approval in November.

HB 1232 requires a standardized health plan to address racial health inequalities and reduce racial health disparities. Improving perinatal health care coverage and first dollar coverage, pre-deduction for certain high-value services such as primary and behavioral health care are also among the health justice strategies outlined in the law.

At a time when insurers are required to meet these premium reduction targets, medical inflation, a measure of the cost of providing and receiving services within the healthcare industry, places additional financial burdens on doctors, hospitals and health insurance companies.

The Colorado Hospital Association (CHA) and the Colorado Health Planning Association (CAHP) outlined these concerns in a joint letter to the Department of Insurance and explained that they believe that the impact of inflation on the Colorado option will have a negative impact on hospitals.

“The [CSI] The report highlights another key challenge we see for hospitals and health systems facing the Colorado option – the role of inflation and cost growth, “the CHA said in a statement issued to the State of Reform.

“The American Hospital Association is also simple issued a report and on this issue, which shows that in the last two years, hospitals have faced a significant increase in key expenditure categories such as labor (an increase of almost 20 percent), medicines (an increase of nearly 30 percent) and medical supplies (an increase of 20 percent) . “The option in Colorado relies on the use of a 10-year historical average of trends in medical costs, but residents of Colorado and our hospitals are still experiencing significantly higher trends in costs. This flaw in program design can lead to program failure to achieve its goals and can place a significant additional burden on Colorado hospitals, many of which already operate with unsustainable operating margins.

Democrats in the state legislature pointed to the profitability of hospitals in drafting legislation aimed at reducing costs and reducing health insurance premiums. The Department of Health Policy and Finance (HCPF) has published report in 2021, claiming that Colorado hospitals are the most profitable in the country, but the CHA claims that since the data is from 2018, they no longer reflect the current situation.

DORA officials say the Colorado Standardized Options Plan is designed to stimulate high-value-based care, remove barriers to the care of colorful communities, and require provider networks to be culturally responsive and representative of the community it serves. .

DORA told the State of Reform that in line with HB 1232’s requirement for a standardized medical inflation adjustment plan, it plans to adjust premium targets based on its medical inflation calculations – which differ from the data in the CSI report.

“The law requires the DOI to adjust the premium targets for Colorado’s national medical inflation option, which the law defines as a ten-year average of the consumer price index (CPI-U) component of health care,” DORA said in a statement. statement to the state of reform.

“Earlier this year, the DOI published a newsletter to ensure that our calculations of national medical inflation are transparent. At the time of publication of the bulletin, the latest available data are for the period from March 2012 to February 2022. The average ten-year value of the CPI-U healthcare component for this period was 2.7%, much more -low of 7.2%, as stated in the report of the Institute for Common Sense. However, if these data in the future show that inflation is 7.2%, then we will use 7.2%.

The DOI is currently reviewing proposals for standardized plans submitted by carriers and will release standardized plan tariffs in September or October. The standardized plans for the Colorado Option are scheduled to be available for purchase in November this year.

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