Hickenlooper announces plan to save Medicaid dollars

Gov. John Hickenlooper thinks he can save taxpayers almost $300 million while extending Medicaid coverage to 160,000 more Coloradoans.

His plan has five elements and, except for one that focuses in part on eliminating redundant or unnecessary medical services, it does not contemplate a reduction in the extent of health care provided to participants in the program.

According to a Jan. 3 press release the cost savings would come from extending "clinically appropriate services" and "ensure use of the most effective care at the lowest cost." The proposal would also focus on rewarding better cooperation between healthcare providers and their achievement of "performance benchmarks." 

The plan will also include an effort to pay providers based on the "value" of their care, as opposed to the frequency with which care is given, and encourage the use of more sophisticated technology capable of improving the efficiency of claim administration. 

Finally, the governor's proposal suggests that additional efforts to reduce wasteful or inappropriate expenditures will help lower program costs. 

“We are focusing on transforming our health system to ensure all Medicaid recipients have access to the right services, at the right time, in the right setting and at the right price,” Susan E. Birch, the executive director of the state's Department of Health Care Policy and Financing, said in a statement.

The cost of the expansion would be about $1.4 billion, but according to DHCPF the steps outlined in the proposal would offset all but about 20 percent of that amount.

House speaker-designate Mark Ferrandino, D-Denver, thinks the governor's plan might work.

"If we combine cost controls and smarter, outcomes-oriented payment systems, we can expand Medicaid and not break the bank,” he said.

Republicans were less enthusiastic, with House minority leader-designate Mark Waller of Colorado Springs arguing that it might lead to an increase in spending on the program and cuts in the number of people who can be served.

"We’ve already scaled back Medicaid once because of costly and inaccurate forecasting, let us make sure we’re not repeating those mistakes under the Governor’s plan," he said.

Another leading GOP voice on health care issues, Rep. Cheri Gerou of Evergreen, said she is concerned that financing Hickenlooper's plan might mean a reduction in spending on education.

"The Governor will need to explain how adding 160,000 people to our Medicaid system will not further reduce the monies available to support our K-12 schools and institutions of higher education.”

If enacted into law, the governor's proposal would expand Medicaid eligibility up to an income level that equals 133 percent of Federal Poverty Level as of Jan. 1, 2014. That means a family earning no more than $30,657 per year could qualify.

Under current Colorado law children and pregnant mothers qualify for Medicaid coverage even if the income of their family is substantially higher than that threshold. Those two categories of beneficiaries are eligible if family income does not exceed 250 percent of FPL.

One sweetener of the proposed expansion could be a delay in Colorado's assumption of the expense it involves. Under the sweeping federal healthcare reform law passed in 2010 the U.S. government will pay for Medicaid expansion to the extent Hickenlooper has proposed until 2016. The federal treasury's contribution to the cost would then decline to a 90 percent share by 2020.

The state's general fund revenue is also not necessary to pay for the expansion. Legislation passed in 2009 that established a provider fee to be assessed on hospitals is the source of funds to pay for it.

Ferrandino and Sen. Irene Aguilar, D-Denver, will sponsor legislation aimed at implementing parts of Hickenlooper's proposal.

If enacted, according to a report published by the Colorado Center on Law & Policy in December, about 120,000 additional Coloradoans would gain access to health insurance coverage.