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Informing Policy. Advancing Health.

The CHI Weekly Legislative Update: April 2, 2012

Payment Reform Update

There is much more momentum in the payment reform movement in the legislature. Two weeks ago (March 16th) we blogged about two proposals that were being considered.  Both measures have advanced.


The first proposal was included in the budget request from the Department of Health Care Policy and Financing (HCPF).  The Joint Budget Committee (JBC) adopted the proposal to pay financial rewards, called gainsharing incentives, to providers participating in the Medicaid Accountable Care Collaborative (ACC), and to Federally Qualified Health Centers (FQHCs), Rural Health Clinics (RHCs) and Behavioral Health Organizations (BHOs) in FY2012-13.

Global Payments

The second proposal, HB 12-1281, sponsored by Representative Dave Young (D), proposes a process for Regional Care Collaborative Organizations (RCCOs) to develop pilot programs that use global payments, risk adjustment and risk sharing – with a preference for global payments.  The goal of the proposal is to foster the development of innovative payment methods.

The JBC chair, Representative Cheri Gerou (R), first considered HB 12-1281 to be an alternative to HCPF’s gainsharing proposals. After further review, she chose to support both initiatives and offered to co-sponsor HB 12-1281 with an amendment to expand the development of global payment contracts in 2015.

The amended bill includes two stages of payment reform initiatives.  The first stage begins on or before July 1, 2013, when HCPF is to select RCCO-proposed pilot payment reform projects that will be implemented for two to five years.  The emphasis on global payment projects has been reduced in this first stage to allow more incremental payment reform projects in the RCCOs, including risk sharing and payment incentive programs.

The second stage opens up the process for more dramatic changes in the ACC.   In January 2015, HCPF will reevaluate the RCCOs and assess whether the distribution and number of care coordination contracts in the state should change.  After the evaluation, the state will accept competitive bids from new or existing contractors for regional care coordination entities.  Also in 2015, the state will accept proposals for global payment projects for health services provided within the regional care coordination entities.

There has been a general understanding among the participants that the regional approaches to care coordination would be evaluated when the current RCCO contracts ended.  This legislation puts the evaluation and bidding process into statute.  In addition, the legislation allows the RCCOs to move to more risk-based care management and opens up the possibility that new contracts will be awarded to organizations with experience providing managed care.

The amended bill has broad bi-partisan support.   In addition to Representative Cheri Gerou (R), Senators Pat Steadman (D) and Ellen Roberts (R) have joined Representative Dave Young as cosponsors.

A number of consumer groups, three of Colorado’s major HMOs, and business groups spoke in favor of the bill in the House Appropriations Committee.  The Community Health Centers also spoke in favor of the legislation.  The challenge now is for the RCCOs to build new regional models of care coordination and new payment methods to reduce the cost of care for this diverse population over the next three years.

The House Appropriations Committee approved HB 12-1281 unanimously on Tuesday, March 27th. The House is scheduled to vote on the bill this week. If approved, the measure will move  on to the Senate.