Peter Banko, president and CEO of Centura Health, joins the Check Up to talk about a new Colorado law that proponents say will expand access to affordable healthcare across the state.
The Check Up: Peter Banko of Centura Health
MH: Hello, I'm Matthew Weinstock, managing editor of Modern Healthcare. Thanks for tuning in to the latest edition of the Check Up. On June 16, Colorado Governor Jared Polis signed into law a bill that proponents say will expand access to affordable healthcare across the state. But the bill that landed on his desk is pretty different from what advocates were actually hoping for. They wanted Colorado to create a public option. What they got was a law that requires insurers to offer a set of standard health benefits for individuals and small groups starting next year. And by 2025, insurers must drop premiums 15% from the current rate. The law is also going to create a whole set of new dynamics between payers and providers as they work to implement many of the mandates, including expanding access, that'll get after health equity issues. I'm pleased to be joined today by Peter Banko. He's president and CEO of Centura Health, which operates more than a dozen hospitals across the state. We're going to talk about how this new law may impact providers and patients. Peter, thank you so much for being with us to talk about Colorado's new health insurance law.
Banko: Yeah, thank you for having me today.
MH: Before we delve into what you've got going on in the state, we're recording this on the same day that the Supreme Court came out with a ruling that upholds the Affordable Care Act. In a seven to two ruling, they ruled that the plaintiffs did not have any standing to sue. So therefore the case was thrown out and the ACA stands. Just want to get your reaction on that. I imagine for yourself and your peers in the hospital C-suite across the country, it creates some sense of normalcy, that we'll be able to continue under the ACA for at least, you know, until the next election cycle, but give us your your initial reaction to what we have coming out of the Supreme Court.
Banko: Yeah, if the ACA was thrown out, there was significant implications for consumers and providers. So like you said, happy with the stability, think there's an opportunity in the public option. And Colorado has some of that to fix, some of the gaps in the ACA, think the alternative was Medicare for All. And it's not really Medicare. And it's not really for all, so it's a good place where where we're at. And I think it's also going to demonstrate this, the gridlock in DC is going to have more states embarking upon experimentation and innovation with healthcare reform.
MH: Does it create though, since we've now had three cases of the court and the ACA withstood those three cases? Does it create a sense of, I don't want to say a relief. You know, in the C-suite, you've been waiting for these rulings every couple of years to come out. Does it give you a little bit of stability to move forward?
Banko: No, I don't think so I think as states embark upon reform, and, you know, the Democratic platform was around Medicare for All, though President Biden wasn't there. But he was really a public option proponent. So now I don't think it gives us any rest. It just keeps us attuned to the next development.
MH: Got it. So let's pivot a little bit then to to Colorado and, as you said, it may help fill in some of the gaps that you saw within the ACA. You know, the hospital and insurer industry lobbied pretty hard against the original bill, that was a public option. Talk to me about what you've seen in this final law that the governor signed and and overall your feelings about it, and general reaction.
Banko: We played a major role in getting it shifted. The hospital industry in general, but also Centura in particular. So this started to bubble up in 2019. So we spent a lot of time with our board and two national thought leaders that have led states as a governor or served in the Senate, and from both parties, to craft alternatives. Because I think all too often in our industry, we can get into a position politically of just saying no, no, no without an alternative. So the the original bill had, I think at least two things in there that were troublesome. The first one was an on-exchange product that was government-run. So an on-exchange product, you start to mess with it gets really wonky, you start to mess with subsidies for those that are on there right now. So you could actually harm people that are on the exchange with increased subsidies or increased payments. So we were really focused in an off-exchange option so that we didn't get into that. And now post-COVID you know, Colorado went from the seventh lowest unemployment rate to the 33rd. And states are strapped right now, and having the state have to kick in more money for health plans, we started to look at the actual actuarials and around that three to five year, it starts to not make financial sense for the state and gets into a position of they're either increasing taxes, which we have a TABOR law, or they're lowering hospital rates or taxing providers. So those were the real, two issues with the first out of the gate bill. So we really lobbied for off exchange. The other one was a hospital rate setting. You know, rate setting didn't work in World War Two, price controls didn't work. They didn't work in Cuba, Soviet Union, Venezuela, and we somehow thought they were going to work for the hospital industry. So we really focused in on guaranteed consumer savings off exchange and fixing some of the ACA flaws. You know, I think that the final bill that was signed, I think yesterday by the governor, got us part of the way there and legislators know it was a step in the right direction, we probably have more work to do going forward.
MH: And if I understand correctly, Peter, part of the compromise that made it through into the final law was that there will be a rate sort of or guaranteed rate that hospitals would have to take from the insurers. But you won't be penalized if you don't take that rate, correct? That if you don't join that network, that plan, whereas before you would have been? So is that one of the key negotiating, points you went in with and why was that so important?
Banko: So we landed with a guaranteed premium savings. So it's landed at 15%. We found, in our experience, that Centura delivering hospital rates doesn't guarantee rate savings, because we're 40 to 50% of the picture. There's the other 50%. So we really as a provider wanted everybody as part of it, physicians, pharmaceutical, health plans. So there's now a guaranteed savings for consumers. That's one. Two is there's a floor on rates. And we didn't want to, we made some concessions to bump up some of the rates for rural facilities. So they weren't negatively impacted. So probably the larger health systems were more negatively impacted for the rates. But it's not, we're not talking about a significant dollar amount. We don't know how many people are going to sign up for this, but at a max it's probably 200,000. Washington State, I think, in their first year had 18,000. So there are mechanisms and processes with the concerns commission around rate hospital rates and premium reductions that go through an arbitration process. So we felt like there was it was a fair and balanced approach where all of us have a voice from day one through bringing these products to market.
MH: Got it. One of the other things I really want to delve into with you is the approach that this law is trying to get at with health disparities. Where it's written, I believe it's codified into the law, that the insurers are going to have to create networks that try to get at health disparities, and and certainly providers will be part of that. So how do you see Centura and other Colorado hospitals, helping to create, you know, networks that are going to try to get at health disparities, health outcomes, population health issues?
Banko: Yeah, this is a big one. So you know, last summer, our board codified that official social justice framework for us. And it's the number one agenda item at our board meeting. My long term compensation, and all of our executives are tied to it. So this was a welcome move in the law, to be able to start moving the needle, we were already headed in that direction. And it's really for us as a Christian health system, a mission issue. So we were happy to see, we've played the lead role of vaccination, equity in the state, running three of the state's mass vax sites, we're doing some work in maternal-child health outcomes and emergency department visits. So this, this was a welcome path for us. And we're going to continue to push for us and others to do more.
MH: As we think about, you know, the scope of the law and what it's going to mean in terms of payers, providers working together to create these networks. You know, we're coming out of a pandemic, where everybody on the whole industry is dealing with, trying to overcome some of the financial hurdles. Just from a leadership perspective, what kind of added stress that put on you and your colleagues across the state?
Banko: I would say the added stress was the hospitals battling within each other on our various positions on this at a time when we should be coming together. So that was it. It's kind of hard to argue about, for me, at least personally to say, well, we're kind of against affordability and increased coverage, that just doesn't fit. So like more of the stress was our internal battles in the industry or with health plans or with physicians. And for us not about the direction of the law. There's been some recent articles about this the business community and Colorado coming together to negotiate, we're the first and only health system in the state, we've got a business coalition partnership in Summit County, Breckinridge area that we've had for two, three years, we've had one in the four corners Durango area for the last year, we've got products in the market that actually already meet the, with Bright Health Plan and United Healthcare that already meet the year three goals. So for us, it wasn't a major shift. It was just continuing what we had been doing over the last two to three years.
MH: Okay. I also know one of the concerns you had going into the initial bill, certainly for the hospital association, was the financial health of the rural hospitals across the state. Does law do anything to help with their situation? Or are you going to need still need extra financial help for those hospitals?
Banko: From my perspective, it doesn't hurt. We've got rural hospitals in our system, it's not going to cause any of them to close, it's not going to cause them to change services. Rural healthcare still needs help. Operating on very thin lines. So we both own and manage rural hospitals, and I know the state's cognizant of that, I know the federal government, but there's more work to do there. This law is not going to play a role in making someone teeter one way or the other. But there is more work to do with rural healthcare.
MH: And lastly, Peter, you alluded to this a couple of times, obviously, with the ACA ruling that came down, you're expecting to see more states move down this road. Obviously in Colorado, Washington, Nevada is now looking at it as well. What do you expect to see across the country, and your experience in Colorado and your ability to reshape this bill provides some guidance to your peers across the country.
Banko: I think we've got it. There's two realities here. Right? The federal government stalled. So healthcare is a big part of the state budget. So they're going to look for solutions. The other political reality that I think we sometimes miss in the C-suite is 38 of our states have a state government trifecta where they control the governorship and both houses. So you can literally pass legislation, like it was here, it was passed along party lines, there were no Republicans that voted for the bill, at any step of the way from committee all the way to House-Senate concurrence. So we have to be politically savvy in our roles as healthcare leaders to understand the politics of this and how to play that out. Right? And you can't in this process, we really, we really tried to be bipartisan, so making sure while Republicans were not going to vote for it, they were aware of what we were doing and what we are pushing for. So understanding the politics, we spent a lot of time in '19 and '20 getting understanding, consider meeting with consumer groups, business community, chambers, other health systems, health plans, a medical society, because we come in sometimes with a myopic view of what the solutions are. So really understanding and for us, we engage national thought leaders from both parties. So doing your homework, being open to compromise, you know, you can't come in with a list of 10 things and expect all 10. You may get three or four, I think we got more than three or four at the end of the day. So for me, my biggest advice is be involved early on, understand all the variety of opinions, be open to compromise, and you're going to have to play politics on this and understand the dynamics in your state and your communities.
MH: Right. And regardless of what comes out, there still gonna be critics who say that it doesn't go far enough or, on the flip side, that it goes too far. So you're gonna have to have a thick skin as well I imagine.
Banko: You can't take it personally, right? And there were some tense times with our colleagues and also legislators around this where we had to be clear about what's going on. Yeah, to your point, I think now we're seeing people saying, well went too far or not far enough. The legislature and the governor knew that going on, right, this is a first step in the right direction. So the standardized benefit design is one of the flaws in ACA. So consumer groups here are going to help develop that. But there's other gaps in the ACA that need to be fixed. They just couldn't get to all of them this time around. So I suspect we'll see more legislation here in Colorado, as this Colorado option unfolds then to fix more of the gaps.
MH: Got it. Well, listen, Peter, we appreciate you taking some time to talk about complex law that went into place, what it means for the industry. We'd love to stay in touch as this goes forward to see how that unfolds over the next year, next five years, really, as you start to see some of the implications of going forward, but we appreciate you taking the time today.
Banko: Thanks so much. Thank you, Matthew.
MH: And I'm Matthew Weinstock with Modern Healthcare. Be sure to come back next Monday for another edition of the Check Up.
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