Background: How CIVHC is Using Pricing Transparency as a Tool for Change
Rising health care costs affect everyone from patients to families, employers, health plans, and taxpayers. These escalating expenses strain household budgets, reduce access to care, and create inefficiencies throughout the system. In Colorado, CIVHC (the Center for Improving Value in Health Care) uses the Colorado All Payer Claims Database (CO APCD) to analyze health care spending and identify actionable strategies to make care more affordable, equitable, and sustainable.
This case study examines CIVHC’s recent analyses on ambulance services and reference-based pricing – two key areas where data-driven transparency can lead to meaningful cost reductions. By shining a light on these cost drivers, CIVHC equips stakeholders, ranging from policymakers to providers, with the insights necessary to take action.
Why Ambulance Spending Matters – A Critical, Yet Costly Challenge in Colorado
When a medical emergency occurs, timely access to ambulance services can be lifesaving; however, for many Coloradans, these vital services come with high and unpredictable bills, especially because ambulance rides are not currently covered under the federal No Surprises Act.
Without this protection, patients may incur out-of-network charges that they cannot prevent, adding financial stress during a health crisis.
CIVHC’s Claim Analysis Findings
CIVHC’s analysis of claims data revealed important insights into ambulance service utilization and spending trends across Colorado:
- Utilization is rising for both emergency and non-emergency ambulance services.
- Commercial payers consistently paid two to three times Medicare rates for all ambulance services analyzed, regardless of network status.
- The most significant variation was seen in basic life support non-emergency transport (A0428), where allowed amounts differed more substantially between in-network and out-of-network providers.
- While overall pricing varied, the lack of consistent network participation and regulation in this space continues to drive higher costs for patients, payers, and the broader health care system.
These findings underscore how fragmented networks and limited oversight in ambulance billing contribute to a hidden driver of health care inflation and financial strain on consumers.
Opportunities for Improvement in Colorado
To address these challenges, Colorado has several potential levers:
- Transparency and Consumer Awareness
- Clear communication with patients about whether providers are in- or out-of-network.
- Tools for payers and policymakers to monitor pricing and utilization trends.
- Care Coordination and Alternative Solutions
- Integrating ambulance dispatch data with health systems and insurers to reduce unnecessary trips.
- Encouraging alternative transportation (e.g., urgent care rideshare programs) for non-emergency situations.
- Policy Solutions
- Expanding the No Surprises Act to cover ambulance services, providing federal protection for patients.
- Incentivizing fair, predictable pricing through state-level policy measures.
By increasing transparency and promoting systemic changes, Colorado can provide equitable access to emergency care.
Leveraging Reference-Based Pricing to Control Costs
Reference-based pricing is a cost-control strategy that uses Medicare’s standardized rates as a benchmark for commercial insurance payments. Medicare rates are updated annually and adjusted for local factors, providing a consistent and equitable standard for comparison. Under reference-based pricing, insurers and purchasers set payments as a percentage of Medicare, rather than negotiating variable rates with each provider.
This approach can simplify payment negotiations and make health care pricing more transparent for all parties involved.
CIVHC’s Role in Reference-Based Pricing
CIVHC analyzed the potential financial impact of reference-based pricing on hospital and emergency transportation spending in Colorado. The goal was to provide evidence-based insights to employers, payers, and policymakers exploring reference-based pricing strategies. CIVHC’s analysis considered cost reduction and the implications for quality and access to care.
Aligning commercial payments to Medicare benchmarks could significantly reduce health care costs for:
- Patients, through lower out-of-pocket expenses.
- Employers, through reduced premiums and claims spending.
- State agencies and payers, through improved budget predictability.
Reference-based pricing provides a scalable and repeatable model for addressing high costs in other areas of care. It alsorepresents a practical, data-driven solution to some of the most persistent inefficiencies in health care spending.
Updated Medicare Reference-Based Pricing Tool
To support transparency, CIVHC updated its Medicare Reference-Based Price Tool, which compares what commercial insurers pay hospitals and Ambulatory Surgery Centers (ASCs) to Medicare rates. 2019–2023 data highlights:
Why Medicare as a Benchmark is Critical
Medicare provides a fair and consistent comparison point:
- Adjusts annually for local and regional variations.
- Aligns with principles of equity by considering patient demographics and community needs.
- Serves as a neutral baseline to evaluate commercial pricing practices.
“Colorado has made great strides toward transparency, and tools like this are essential for understanding the real drivers of health care costs. By comparing commercial payments to a consistent standard like Medicare, we can support better decision-making across the system—from policy to purchasing—and help move toward more equitable and sustainable health care for everyone in Colorado.”
Practical Applications for Reference-Based Pricing
The tool is used by:
- State agencies and policymakers to guide health system reforms.
- Employers and purchasing alliances to negotiate fairer rates.
- Hospitals and payers to identify and address inefficiencies.
- Advocacy groups and researchers to track trends over time.
Linking Ambulance Costs to Broader System Reform
Ambulance spending isn’t an isolated issue, but rather part of the larger challenge of fragmented health care systems. By linking this data to broader reforms like reference-based pricing:
- Policymakers can target cost drivers that affect both emergency and routine care.
- Employers and payers can design smarter benefit plans that encourage efficient, high-value services.
- Communities can improve patient outcomes while reducing unnecessary expenses.
We Need to Advance Transparency for Sustainable Health Care
CIVHC’s work illustrates the power of data-driven transparency to drive systemic change. From uncovering the hidden costs of ambulance services to promoting Medicare-aligned pricing strategies, these analyses provide a roadmap for stakeholders committed to affordability and quality.
By leveraging tools like the CO APCD and ongoing updates to CIVHC’s Medicare pricing comparison tool, Colorado is building a health care system where data informs decisions, resources are used wisely, and patients remain at the center of care.