Unsealed: What St. Luke's and Blue Cross of Idaho didn't want you to know

A federal judge denies requests from the health system to keep facts secret in his ruling.

adutton@idahostatesman.comJanuary 29, 2014 

As St. Luke’s Health System aggressively added hospitals and doctors over the past several years, it commanded more money from Idaho’s largest insurer, and it planned to raise prices in order to give a newly acquired group of doctors a 30 percent raise, according to newly released court documents.

Unsealed Tuesday, the documents explain why U.S. District Judge B. Lynn Winmill last week ordered St. Luke’s to nullify its year-old merger with Nampa’s Saltzer Medical Group.

Lawyers for St. Luke’s and Blue Cross of Idaho asked the judge not to reveal some facts in the documents, arguing that they contained trade secrets. But Winmill denied the requests.

“The facts and figures sought to be redacted are crucial to the court’s analysis, and their removal would render the decision indecipherable,” Winmill said.

Winmill immediately opened his entire decision.

HOW DID THIS HAPPEN?

The lawsuit stems from the St. Luke’s buyout of Saltzer, which at the time was Idaho’s largest private practice. Saint Alphonsus Health System and Treasure Valley Hospital sued over the deal, saying it harmed competition and would damage their businesses. The Federal Trade Commission and Idaho Attorney General Lawrence Wasden joined a lawsuit alleging antitrust violations that would erode competition for primary care medical services and result in higher prices.

Much of the four-week trial happened behind closed doors, and many documents were sealed or heavily redacted. Lawyers for the hospitals — and for insurance companies and local employers — marked those parts of the trial private because they said they needed to protect trade secrets.

St. Luke’s spokesman Ken Dey said some underlying data from Blue Cross of Idaho on which Winmill based his decision was sealed, and St. Luke’s lawyers could not access it. St. Luke’s is concerned that data might have led to some “misleading conclusions,” he said.

The Statesman and several other Idaho news outlets filed a lawsuit to pry open the court proceedings, and that lawsuit is now before the U.S. Ninth Circuit Court of Appeals.

Winmill said in his decision Tuesday to make his ruling public that when the trial started, he thought there were compelling reasons to keep parts of it veiled. But as it went on, those reasons seemed less compelling, he said.

WHAT DIDN’T THEY WANT REVEALED?

St. Luke’s told Winmill that he should keep statements such as the following out of his public ruling:

  • “By 2012, St. Luke’s had three of the top five highest-paid hospitals, and its top hospital was receiving reimbursements 21 percent higher than the average Idaho hospital.”

  • “After the acquisition, if St. Luke’s were to bill for (routine services such as lab tests or X-rays) at the higher ‘hospital-based’ rates, (Blue Cross of Idaho) estimates that costs ... would increase by 30 to 35 percent.”

  • “St. Luke’s own analysis projected that it could gain an extra $750,000 through hospital-based billing from Saltzer from commercial payers for lab work and $900,000 extra for diagnostic imaging.”

  • “Consultant Peter LaFleur prepared an analysis at the direction of St. Luke’s showing how office/outpatient visits could be billed for higher amounts if the visit was hospital-based rather than Saltzer-based. The hospital-based billings were more than 60 percent higher.”

St. Luke's officials responded after the ruling was made public: "We believe the judge applied an appropriate standard and we respect his decision to share additional detail and information."

Blue Cross of Idaho also asked Winmill to keep some facts away from competitors and the public. However, the insurance company filed its request under seal. That makes it impossible to know exactly what the insurer wanted to keep private.

But based on what Winmill said when he turned down Blue Cross of Idaho’s request, the company wanted to strike:

  • Any reference to its dealings with a medical group in Twin Falls nearly five years ago.

  • Statements that it needs to have St. Luke’s and Saltzer in its network and would be weaker without them.

  • The following paragraph explaining how Blue Cross, Idaho’s largest insurer, pays more than the average U.S. insurer:

    “Across the United States, the average commercial insurance plan pays about 120 percent of what Medicare pays. For overnight hospital stays in Idaho, (Blue Cross) pays between 150 percent to 200 percent more than Medicare pays. For outpatient hospital services, (Blue Cross) pays 300 percent more than Medicare. For routine office visits, (Blue Cross) pays 140 percent more than other commercial plans.”

Winmill went on to say that Idaho insurance rates for a routine doctor’s office visit are higher than 95 percent of those paid by other insurance plans nationwide.

HOW DOES THE JUDGE SUM IT UP?

In the now-unsealed documents, Winmill muses on the state of health care in the United States. He thinks that the industry is in an “experimental stage.” Health care spending is high and patient outcomes aren’t good enough, he said.

“This period of change might be best described as being in an experimental stage, where hospitals and other providers are examining different organizational models, trying to find the best fit,” he wrote.

If the U.S. didn’t have antitrust laws, it might be “the best result” to leave the St. Luke’s-Saltzer merger alone and watch to see what happens — to see, for instance, whether prices go up, as St. Luke’s opponents predicted they would.

“But (antitrust law) is in full force, and it must be enforced,” he wrote. “The (law) does not give the court discretion to set it aside to conduct a health care experiment.”

Audrey Dutton: 377-6448, Twitter: @IDS_Audrey

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