Treasure Valley hospitals dispute study of prices

They question the methods and motives behind a new insurance industry report.

adutton@idahostatesman.comMarch 22, 2013 

A news release arrived at the Statesman earlier this week from America's Health Insurance Plans, or AHIP, a trade association for insurers. It said hospitals in the Boise-Nampa metro area had the third-highest inpatient-care price increases in the nation. Hospitals in Idaho overall ranked sixth.

The association was announcing a study published in a health care trade journal. But the release contained an error. The Boise-Nampa area actually ranked seventh, not third.

St. Luke's Health System pointed out the mistake to the Statesman, which called the association about it. An AHIP spokesman looked into it, called back and acknowledged the error - indeed, several metro areas were accidentally overlooked - and the association corrected its news release.

But that wasn't enough for St. Luke's, the largest single health care provider in the state. The health system says the insurers' report as a whole is flawed. The Idaho Hospital Association and its national counterpart also question the analysis.

Researchers from AHIP drew from a sample of about 100 metropolitan areas and 26 states. Their sample size was limited by insufficient data from other states and metro areas, according to AHIP.

The research also showed Boise-Nampa averaging a more than 11 percent rise in inpatient prices per year between 2008 and 2010. But when those prices were adjusted for complexity - how risky or complicated patients' needs were - the Treasure Valley increase was 6.4 percent. The national adjusted average was a range: 6.2 percent to 6.8 percent.

The report did not report dollar amounts, just the rate of change.

To explain why complexity matters, Jeffrey S. Taylor, St. Luke's chief financial officer and senior vice president, offered an example. He said the Boise area has gained specialists from markets like Seattle, and those specialists can perform more complicated - and higher-cost - procedures than other local physicians could. Those prices are now reflected in price data for Boise, not Seattle or other cities where local residents previously would have traveled for such procedures, he said.

AHIP defends its use of the unadjusted numbers, saying it wanted to show the effect on real dollar amounts, which are reflected in premium increases, spokesman Robert Zirkelbach said.

But even the adjusted 6.4 percent is a big increase, right?

Taylor said it could be due in part to agreements between hospitals and insurance companies to charge in ways that better reflect the cost of procedures. That could mean that as some outpatient prices go down, inpatient prices go up.

Taylor said St. Luke's is reimbursed about 52 percent of the prices it sets for its services. Its reimbursements range from out-of-pocket patients paying 14.2 percent of what they're billed on average, to insurance companies and their insured members paying together 72.3 percent.

St. Luke's provided the Statesman with its "standard" yearly increase from 2008 to 2010, which averaged 8.17 percent for those three years. Its average rate of increase, after collecting payments on those charges, was about 0.67 percent.

"Our changes in pricing are defensible, given the changes in the environment in which we operate," Taylor said.

The Idaho Hospital Association found the analysis "really misleading," said President and CEO Steven Millard. That's because health care providers in Idaho are shifting routine care out of hospital settings and into outpatient clinics, he said.

Hospital-owned outpatient clinics can and do charge a hospital-facility rate for certain services, such as a doctor's visit for a Medicare patient. But Millard said hospital beds have been filled by patients with "more critical, more severe" issues during the past several years.

AHIP said it tried to adjust for that.

The hospital industry's national trade association weighed in earlier this week, saying the report was to further an agenda.

Rick Pollack, executive vice president of the American Hospital Association, called the report "a rehash designed to divert attention from the harmful consumer impacts of health insurers' own rising premiums. ... The annual report of national health expenditures released in 2012 by [the Centers for Medicare and Medicaid Services] office of the actuary found that premium rates for private insurers rose faster than underlying health care costs, and that for the first time in seven years, growth in total premiums exceeded growth in total benefits."

Audrey Dutton: 377-6448, Twitter: @IDS_Audrey

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