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To The Point

High-Need, High-Cost Patients: An Important Stress Test for ACA Replacement

Today, the U.S. House of Representatives may vote on a bill to repeal and replace the Affordable Care Act (ACA). As lawmakers consider the American Health Care Act, they will need to tackle a major conundrum: how to make health insurance more affordable while tending to the needs of very sick patients who may incur high costs.

In this respect, it may be instructive to consider the experiences of Denver Health, which has built on the ACA’s Medicaid expansion and federal investments in health care delivery innovation to improve care and lower costs for high-need, high-cost patients.

Denver Health is an integrated delivery system and Colorado’s largest provider of care to uninsured and Medicaid beneficiaries. Following national trends, just 3 percent of adult patients account for 30 percent of costs, mainly from repeat emergency department visits and hospitalizations.


Prior to the ACA, about one of four Denver Health patients in this group of high-cost patients was uninsured. Most were older adults who suffered from multiple medical conditions such as heart failure, diabetes, and lung disease. However, they also included patients who had orthopedic complications, cancer, or serious traumatic events. Many had significant mental health conditions that impeded their ability to care for themselves.

Before Colorado’s Medicaid expansion in 2014, approximately half of patients in this group did not have a medical home and instead relied on the emergency department for care. Denver Health used federal hospital subsidies and federally qualified health center payments to piece together care for the uninsured. These payments, while critical, did not always grow with changes in demand, particularly during economic downturns. As a result, Denver Health and other safety-net providers experienced high levels of uncompensated care, the costs of which are ultimately passed through to taxpayers and to insured people via higher premiums.

The Medicaid expansion brought sea changes in how Denver Health was able to care for the uninsured, including very sick patients. The proportion of uninsured patients in that 3 percent bracket declined by 80 percent—from one of four patients to one of 20, as most now qualified for Medicaid coverage.

New Medicaid coverage helped patients gain access to a broader set of benefits, increased provider capacity to serve them, and helped fund new services for complex patients. With new revenue from uninsured patients enrolled in Medicaid, Denver Health was able to hire additional providers and eliminate its 10,000-person waiting list for primary care, which benefited complex patients and the broader community.

Beyond providing coverage, the ACA also funded new models of care that emphasize proactive, coordinated care, especially for those at risk of avoidable hospitalizations. In 2012, Denver Health received a $20 million federal grant from the Center for Medicare and Medicaid Innovation to redesign primary care services, especially for complex patients. An algorithm was developed to identify those who may be at risk for poor outcomes and provide real-time information to their providers so that they can anticipate needs and reach out to patients.

Denver Health also hired new staff in nine primary care clinics, including nurse care coordinators, clinical pharmacists, behavioral health consultants, social workers, and patient navigators. These team members help complex patients understand their diseases and treatments and ensure they are able to access needed services, including social and behavioral health services. It also created the Intensive Outpatient Clinic, designed to help high-risk adults avoid hospitalizations.

By providing more comprehensive primary care and related services, Denver Health has lowered costs. For example, Milliman actuaries estimated that per- member per-month Medicaid costs for highest-risk adults declined by 2.1 percent in 2013. In 2014, they declined 5.6 percent and 7.2 percent for regular Medicaid and expansion groups, respectively. (All reductions are relative to an inflation-adjusted 2012 baseline.1) Statewide, uncompensated hospital care declined by more than half from 2013 to 2014.

Denver Health programs for complex patients are now self-sustaining through regular Medicaid funding, including expansion dollars. Interviews with beneficiaries served by Denver Health demonstrate that patients are generally satisfied and engaged with their care. Colorado’s federally funded State Innovation Model is implementing similar models of care statewide.

Denver Health’s experience offers lessons to inform any future health redesign effort, including the repeal-and-replace effort:

  • A focus on high-cost patients with preexisting conditions needs to be central, as it was in the ACA. Patients with multiple hospitalizations are medically fragile, with a mortality rate of nearly 10 percent. A poorly designed replacement plan could result not only in higher costs but also in an unnecessary loss of life.
  • Publicly funded programs, such as Medicaid, are vital to vulnerable populations. While safety-net providers have always cared for patients with complex needs, they have not always had sufficient financing. The Medicaid expansion has enabled better access and care for all.
  • Federal investment in innovation and development of new care models pays dividends. Changing care models to emphasize delivery of the right care, at the right place and time, requires front-end investments in staffing, information technology, and clinical transformation. However, innovation can lead to self-sustaining care models that save money and lead to better patient experiences within a few years.

While this is not a comprehensive list of considerations for the ACA repeal proposal, we believe that high-cost, high-need patients are a critical group with which to “stress test” the effects of various proposals.

Yet, the current language in the repeal bill ends Medicaid expansion funding in 2020 that has covered more than 400,000 uninsured in Colorado. Denver Health’s chief financial officer predicts that the bill might lead to as much as $85 million in lost revenue for the institution. Repealing the ACA without adequate replacement for many of its key provisions that provide better care at a lower cost for the sickest patients is concerning for these patients, and for providers like Denver Health.

1 T. L. Johnson, M. van der Heijde, S. Davenport et al., “Population Health in Primary Care: Cost, Quality, and Experience Impact,” American Journal of Accountable Care, 2017 5(3) (in press).

Publication Details

Publication Date: March 23, 2017
Contact: Tracy L. Johnson, 2016 - 2017 Australian-American Fellow
Director, Health Care Reform Initiatives
Denver Health and Hospital Authority
Assistant Professor, Colorado School of Public Health

T. L. Johnson, H. A. Batal, and P. Gabow, “High-Need, High-Cost Patients: An Important Stress Test for ACA Replacement,” To the Point, The Commonwealth Fund, March 23, 2017.


2016 - 2017 Australian-American Fellow
Director, Health Care Reform Initiatives
Denver Health and Hospital Authority
Assistant Professor, Colorado School of Public Health
Associate Medical Director of Integrated Behavioral Health, Denver Health
Chief Executive Officer and Medical Director, Denver Health