Is Grand Junction Really a Model for the Future of Health Care?

President Barack Obama at a campaign stop in Grand Junction, Colo., on August 8, 2012.
National Journal
Sophie Quinton
Aug. 28, 2013, 6:29 a.m.

When Pres­id­ent Obama was mak­ing his pitch for health care re­form in 2009, he flew to Grand Junc­tion, Colo., to praise the loc­al med­ic­al com­munity for cut­ting health care costs. “You’re get­ting bet­ter res­ults while wast­ing less money,” he said. The area par­tic­u­larly ex­celled at provid­ing cost-ef­fect­ive care to Medi­care pa­tients — in 2006, Grand Junc­tion’s per-pa­tient Medi­care costs were 30 per­cent be­low the na­tion­al av­er­age. It wouldn’t be sur­pris­ing if the Af­ford­able Care Act that Obama even­tu­ally signed in 2010, with its em­phas­is on lower­ing Medi­care ex­penses, led more com­munit­ies to fol­low the ex­ample of this largely blue-col­lar city of around 50,000 on Col­or­ado’s west­ern slope.

But Grand Junc­tion’s health care story is more com­plic­ated than Obama’s praise in­dic­ated. While Grand Junc­tion has man­aged to provide low-cost care for Medi­care re­cip­i­ents, it’s not dra­mat­ic­ally less ex­pens­ive than oth­er Col­or­ado towns for non-Medi­care pa­tients. And therein lies the cau­tion for loc­al­it­ies that want to cre­ate low-cost med­ic­al havens: In­nov­a­tion that lowers health care costs for one type of pa­tient can some­times push costs up for an­oth­er. 

A his­tory of col­lab­or­a­tion has helped Grand Junc­tion rein in its Medi­care costs. The town sits hun­dreds of miles from ma­jor med­ic­al cen­ters in Den­ver and Salt Lake City, and its isol­a­tion has forced mem­bers of the med­ic­al com­munity to work to­geth­er. Back in the 1970s, area phys­i­cians formed an HMO — now known as Rocky Moun­tain Health Plans and avail­able across the state — as well as the Mesa County Phys­i­cians In­de­pend­ent Prac­tice As­so­ci­ation, a group of primary-care doc­tors and some spe­cial­ists. To­geth­er, the two or­gan­iz­a­tions de­veloped what RMHP calls the “Mesa County mod­el.” 

Un­der this blen­ded-pay­ment mod­el, MCPIPA doc­tors get the same re­im­burse­ment no mat­ter wheth­er the RMHP pa­tient they see is covered by Medi­care or private in­sur­ance. This makes it easi­er for pa­tients with dif­fer­ent kinds of in­sur­ance to find a doc­tor. Doc­tors used to get the same re­im­burse­ment for RMHP pa­tients covered by Medi­caid, too, but in 2008 re­im­burse­ments for Medi­caid pa­tients were lowered.

“We want our com­munity to go to their primary-care phys­i­cian,” says MCPIPA Ex­ec­ut­ive Dir­ect­or Sandy Ran­dall. En­sur­ing ac­cess to a fam­ily doc­tor gives pa­tients a lower-cost place to take their health prob­lems than the emer­gency room. Es­tab­lish­ing a re­la­tion­ship with a phys­i­cian also helps pa­tients man­age chron­ic con­di­tions, such as dia­betes, and get pre­vent­at­ive care.

MCPIPA and RMHP also use in­cent­ives to en­cour­age doc­tors to use less-ex­pens­ive ser­vices. RMHP with­holds a per­cent­age of re­im­burse­ments for the claims doc­tors sub­mit un­til the end of the year, when the health plan looks at its fin­ances. If premi­um rev­en­ues for Mesa County ex­ceed ex­pendit­ures on care, the health plan and MCPIPA share the profits. To set low-spend­ing norms in the med­ic­al com­munity, MCPIPA cre­ates cost pro­files for each primary care-doc­tor — with in­form­a­tion such as spend­ing on ima­ging ser­vices — and shares the pro­files among mem­bers.

There are lim­its to the reach of the Mesa County mod­el. RMHP in­sures about 25 per­cent of Mesa County pa­tients, and Mesa is home to less than half the 305,000 people in the Grand Junc­tion hos­pit­al re­fer­ral re­gion. But oth­er loc­al play­ers are also work­ing to make ser­vices more cost-ef­fect­ive. St Mary’s, the re­gion­al hos­pit­al, op­er­ates a clin­ic that gives un­in­sured and low-in­come pa­tients a low-cost al­tern­at­ive to the emer­gency de­part­ment for their non-emer­gency con­di­tions. The area hos­pice works with doc­tors to help eld­erly pa­tients make end-of-life plans, pre­vent­ing ag­gress­ive in­ter­ven­tions pa­tients don’t want.

For Medi­care, Grand Junc­tion’s ef­forts have paid off. In 2010, total Medi­care re­im­burse­ments per per­son in the hos­pit­al re­fer­ral re­gion were $6,993, 73 per­cent of the U.S. av­er­age and in the top 10 per­cent of low-cost re­gions, ac­cord­ing to the Dart­mouth At­las of Health Care. Few­er Medi­care pa­tients are re­ad­mit­ted to the hos­pit­al with­in 30 days. In the last two years of life, Medi­care pa­tients in Grand Junc­tion pay about 56 per­cent the U.S. av­er­age in co-pay­ments.

Oth­er pay­ers haven’t ex­per­i­enced com­par­able sav­ings. “We’re good for Medi­care; our oth­er costs maybe not so much,” Ran­dall says, des­pite doc­tors’ best ef­forts to lower costs for all pay­ers. It’s more chal­len­ging to con­trol costs for non-Medi­care pay­ers, she says. Medi­caid and com­mer­cial-claims data com­piled by Col­or­ado’s Cen­ter for Im­prov­ing Value in Health Care show that the total cost of care in Mesa County is ex­actly as ex­pec­ted, giv­en the pop­u­la­tion’s health status. Yet Mesa County res­id­ents are 16 per­cent less likely to be ad­mit­ted to the hos­pit­al, 26 per­cent less likely to make an out­pa­tient vis­it, and 33 per­cent less likely to vis­it the ER than their health status would pre­dict. Even though Medi­caid and privately in­sured res­id­ents use few­er ser­vices, their costs are on tar­get, not lower.

Why haven’t non-Medi­care costs dropped as dra­mat­ic­ally? “Al­most all the vari­ation in Medi­care spend­ing is driv­en by dif­fer­ences in util­iz­a­tion,” says Ateev Mehro­tra, a policy ana­lyst for Rand. Medi­care re­im­burse­ment rates are set na­tion­ally by the fed­er­al gov­ern­ment. But when it comes to private in­sur­ance, “the ma­jor­ity of the dif­fer­ence in spend­ing is not driv­en by util­iz­a­tion, but is driv­en by prices,” he says. In the com­mer­cial mar­ket, rates are set through loc­al ne­go­ti­ations between in­surers and hos­pit­al sys­tems.

In the Amer­ic­an med­ic­al sys­tem, there’s really no such thing as a low-cost re­gion. There are high-spend­ing hos­pit­als in low-spend­ing re­gions, and low-spend­ing hos­pit­als in high-spend­ing re­gions, the In­sti­tute of Medi­cine poin­ted out in a re­port last month. In fact, low Medi­care spend­ing is of­ten as­so­ci­ated with high private-in­sur­ance spend­ing, says Robert Ber­en­son, fel­low at the Urb­an In­sti­tute. Small med­ic­al com­munit­ies tend to have lower Medi­care costs be­cause there are just few­er re­sources for Medi­care pa­tients to use. But a hos­pit­al dom­in­ant over a med­ic­al com­munity has mar­ket power it can use to de­mand high­er prices from com­mer­cial in­surers.

In re­cent years, the rising cost of care has been driv­en by unit prices, not be­cause of ex­cess­ive use. Even the old rule of thumb — that it’s cheap­er to see pa­tients out­side the hos­pit­al — is erod­ing as prices for out­pa­tient ser­vices rise and more ser­vices are de­livered in an out­pa­tient set­ting. From 1999-2011, hos­pit­al out­pa­tient spend­ing per fee-for-ser­vice Medi­care be­ne­fi­ciary grew 110.5 per­cent, ac­cord­ing to the Medi­care Pay­ment Ad­vis­ory Com­mis­sion.

Grand Junc­tion demon­strates how care co­ordin­a­tion and pay­ment in­cent­ives can lower the cost of care for Medi­care pa­tients without sac­ri­fi­cing qual­ity. Lower­ing costs for every­one will take an­oth­er step: tack­ling the prices of ser­vices. That’s been hard to do, his­tor­ic­ally, be­cause of the lack of price trans­par­ency in the sys­tem. But a host of re­cent ef­forts — such as the CIVHC’s claims data­base, fed­er­al data re­veal­ing the prices giv­en hos­pit­als charge for com­mon pro­ced­ures, and na­tion­al data-gath­er­ing ini­ti­at­ives such as the Health Cost In­sti­tute — could help shed light on what’s driv­ing health care costs for non-Medi­care pay­ers. Most doc­tors don’t know off the top of their head what a giv­en pro­ced­ure at a giv­en fa­cil­ity will cost a pa­tient, Ran­dall says. Pub­lic data would make it pos­sible for them to find out.

Cla­ri­fic­a­tion: An earli­er ver­sion of this art­icle in­cluded an out­dated ac­count of the blen­ded pay­ments agree­ment between MCPIPA and RMHP. Since 2008, re­im­burse­ments for Medi­caid pa­tients have been lower than for Medi­care and privately in­sured pa­tients.

What We're Following See More »
PROCEDURES NOT FOLLOWED
Trump Not on Ballot in Minnesota
2 days ago
THE LATEST
MOB RULE?
Trump on Immigration: ‘I Don’t Know, You Tell Me’
2 days ago
THE LATEST

Perhaps Donald Trump can take a plebiscite to solve this whole messy immigration thing. At a Fox News town hall with Sean Hannity last night, Trump essentially admitted he's "stumped," turning to the audience and asking: “Can we go through a process or do you think they have to get out? Tell me, I mean, I don’t know, you tell me.”

Source:
BIG CHANGE FROM WHEN HE SELF-FINANCED
Trump Enriching His Businesses with Donor Money
3 days ago
WHY WE CARE

Donald Trump "nearly quintupled the monthly rent his presidential campaign pays for its headquarters at Trump Tower to $169,758 in July, when he was raising funds from donors, compared with March, when he was self-funding his campaign." A campaign spokesman "said the increased office space was needed to accommodate an anticipated increase in employees," but the campaign's paid staff has actually dipped by about 25 since March. The campaign has also paid his golf courses and restaurants about $260,000 since mid-May.

Source:
QUESTIONS OVER IMMIGRATION POLICY
Trump Cancels Rallies
4 days ago
THE LATEST

Donald Trump probably isn't taking seriously John Oliver's suggestion that he quit the race. But he has canceled or rescheduled rallies amid questions over his stance on immigration. Trump rescheduled a speech on the topic that he was set to give later this week. Plus, he's also nixed planned rallies in Oregon and Las Vegas this month.

Source:
‘STRATEGY AND MESSAGING’
Sean Hannity Is Also Advising Trump
5 days ago
THE LATEST

Donald Trump's Fox News brain trust keeps growing. After it was revealed that former Fox chief Roger Ailes is informally advising Trump on debate preparation, host Sean Hannity admitted over the weekend that he's also advising Trump on "strategy and messaging." He told the New York Times: “I’m not hiding the fact that I want Donald Trump to be the next president of the United States. I never claimed to be a journalist.”

Source:
×