The 2010 Affordable Care Act (ACA) imposed price and product controls on insurance coverage. This in turn reduced plan choice, more than doubled unsubsidized premiums, ballooned deductibles, pared down pharmacy formularies, and narrowed networks so much that months long waits for care are now commonplace.
Thanks to the ACA, access to specialists may now be a bigger problem than access to primary care. Regardless, some Colorado legislators are apparently unhappy that “primary care spending in Colorado remains low, accounting for 10.3% of all medical spending in 2021 excluding pharmacy and dental spending.”
Those legislators plan to use the power of state government to increase primary care spending to a more pleasing level. House Bill 24-1005 imposes new statewide price and product controls designed to force insurers to add politically preferred primary care providers to their networks, at payment rates set by the state.
New mandates
If HB 1005 becomes law, people who buy health insurance will be forced to pay even higher premiums to fund health system changes that likely will not benefit them. Colorado politicians have historically gone to great lengths to protect the finances of Denver Health, and the fact that the proposed law applies to all insurers in Colorado except Denver Health is instructive.
The bill requires that health insurers add approved “primary care providers” as in-network preferred providers. “Approved” primary care providers must be enrolled in an approved “alternative payment model.” Primary care providers who practice on their own but simply accept payment for services rendered are not covered by the proposed law.
Once the bill passes, other types of providers can be added to the “must include” list by unspecified rule making. There is nothing in the bill to stop the state from ultimately forcing insurers to include every provider in the state as in-network providers and paying them as the state dictates.
In Colorado law, “alternative payment models” typically condition payments on achieving certain numeric goals, population metrics, and clinical guideline adherence. In general, the models are designed to reduce spending. Research suggests that they frequently do so by skimping on patient care. Some of the provisions in the bill suggest that commercial networks will likely be forced to include and pay primary care providers practicing in tax subsidized community mental health centers, federally qualified health centers, and specialty clinics.
The big pay raise
The state will hire “an actuary” to determine how much commercial insurers must pay the practitioners forced upon them. No matter what the actuary determines, the bill dictates that in-network reimbursement for the state’s favored providers may not be less than 135 percent of Medicare reimbursement plus unspecified “incentives” for integrating “behavioral health-care services and comprehensive care coordination services.” Though Medicare reimbursement rates already include a geographic adjustment factor, the bill allows additional adjustments for the cost of living. It does not specify how to further adjust for the cost of living or put any limits on the amount insurers can be required to pay.
Emerging research shows that commercial insurers price health care goods and services more efficiently than Medicare. They frequently pay more than Medicare for high value care and less for care they believe is overused. Data from the Urban Institute suggest that commercial payments to primary care physicians in family medicine, obstetrics and gynecology, and internal medicine average 110 percent of Medicare rates or less. By this standard, forcing insurers to pay at least 135 percent of Medicare constitutes a big pay raise for favored providers.
The pay raise gets even bigger when you include everyone the bill defines as primary care providers, including advanced practice nurses in various specialties, physician assistants, “behavioral health providers,” licensed addiction counselors, licensed professional counselor certified addiction specialists, and certified addiction technicians. People with degrees in social work, human services, psychology, and rehabilitation can also qualify if they meet statutory requirements, typically by passing an exam and completing one to two years in of supervised professional experience.
There is scant evidence to show that substituting advanced practice nurses for physicians necessarily reduces the cost of care or improves its quality. A 2018 Cochrane Review concluded that it was impossible to decide because the evidence quality was “very low.” With respect to mental health treatment, an international group of academic researchers concluded “the effect sizes of psychotherapies and pharmacotherapies for mental disorders are limited” relative to placebo treatment or usual care.
For the sake of patients, and those who pay more than they should for health coverage already, the legislature should avoid HB 1005’s plan to further misallocate scarce resources, and leave commercial insurers free to figure out how to efficiently price the services offered under their contracts.
Linda Gorman is director of health care policy at the Independence Institute, a free market thing tank in Denver.
