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June 7, 2019

A Colorado town bypassed insurers to negotiate prices directly with the hospital. (And now they're seeing premiums fall 15% to 20%.)

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    Faced with high insurance premiums, residents of Summit County, Colorado, decided to negotiate prices directly with the local hospital before getting an insurer involved—and their effort has led to a significant reduction in premiums, John Ingold reports for the Colorado Sun.

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    Forming an alliance

    Rising health insurance premiums are making news around the country, and in in Summit County, the situation had grown dire for some families. Not long ago, premiums "were higher than mortgage payments," Ingold writes. The high premiums led some residents to forgo doctor visits. Others left the county completely.

    To gain leverage, residents of Summit had an idea: team up to negotiate prices collectively with area providers. So they established the Peak Health Alliance, which now consists of several employers within the community who negotiate prices with doctors and hospitals—before insurers get involved.

    Soon, people who shop for insurance individually will also be able to join the Alliance, at which point the Alliance will represent about 6,000 of Summit County's 30,000 full-time residents.

    Making a deal

    That number got the attention of leaders at Centura Health's St. Anthony Summit Medical Center, the only hospital in the county, Ingold reports.

    The Alliance approached St. Anthony Summit with a report prepared by a consultant that showed the hospital was charging privately insured patients five times what Medicare would pay for outpatient services, and eight times what Medicare would pay for emergency services. While it is not uncommon for hospitals to negotiate rates with private insurers that are significantly higher than Medicare's rates, the Alliance still felt the exact figures were eye-opening.

    The Alliance also found research showing as many as half of the people in Summit County were leaving to receive medical treatment elsewhere, often citing high prices within the county, Ingold writes.

    Tamara Drangstveit, the executive director of the Family and Intercultural Resource Center and a leader within the Alliance, said, "I think that helped bring them to the table. Although, I think to be really fair to Centura, they were really looking to develop this kind of partnership."

    St. Anthony CEO Lee Boyles agreed: "We knew we had to come to the table and do something for our community and our local residents of Summit County," he said.

    Boyles acknowledged the hospital's relatively high rates, explaining that its location, in a resort community where many visitors are engaged in potentially dangerous activities, brings unique financial demands. Further, because the hospital doesn't want to lay people off during the slower fall and spring months, it needs to maintain that same staffing when the patient load decreases.

    Even so, Boyles noted hospital leaders know they need to do something to make health care more affordable for residents, and Centura and the Alliance ultimately struck a deal that will reduce hospital prices for Alliance members by at least 20%.

    After negotiating with Centura, the Alliance then sought bids from insurers throughout the state to cover its members.

    The Alliance's success

    As a result of the Alliance's negotiations, Drangstveit said Alliance members in Summit County will see drops of 15 to 20% in their premiums, which would translate to savings of $400 per month for people paying a $2,000 monthly premium. According to Ingold, the $2,000 figure is a common premium price in the county.

    On top of that, the state's plan to implement reinsurance might give the Alliance a boost, Ingold reports. Colorado Insurance Commissioner Michael Conway said that once the reinsurance program is implemented, Summit County residents could see their insurance bills drop by 50% compared to pre-Alliance rates.

    "I think that it is a huge first step for our community," Drangstveit said of the Alliance's work. "And it will go a long way toward making it more affordable for Summit County residents to get health care" (Ingold, Colorado Sun, 6/4).

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