Micro-hospital CEO says Blue Cross of Idaho allegations ‘categorically false’
AI-generated summary reviewed by our newsroom.
- Nutex CEO rejects 'freestanding ER' label and seeks median in‑network pay.
- Blue Cross says Nutex sends hundreds of claims to arbitration every month.
- Senate committee advanced bill to tie freestanding ER pay to local rates.
The founder of a company that seeks to open a micro-hospital in the Boise area denies an Idaho health insurer’s allegations that it charges egregious amounts for emergency room services.
On Tuesday, a spokesperson for Blue Cross of Idaho testified before a state Senate committee that a freestanding hospital company with an emergency room in North Idaho was leveraging its out-of-network status to exploit a loophole in federal law.
The spokesperson said Nutex Health, based in Houston, is responsible for an outsized share of disputes in what’s called the independent dispute resolution process, where health insurers and providers go to settle disagreements over payment amounts. Nutex has one Idaho hospital, in Post Falls near Coeur d’Alene, and wants to build a second in Meridian.
The dispute process, established by the No Surprises Act, was intended to be a last resort. The law prevents health insurers and providers from penalizing patients who inadvertently receive out-of-network care. But insurers around the country, including Blue Cross, say a growing number of provider groups, some backed by private equity, are turning to the arbitration process as a business strategy to inflate reimbursement.
Nutex founder and CEO Dr. Tom Vo said his company does send claims from its Post Falls hospital through the independent dispute resolution process, but only because Blue Cross won’t pay it a fair amount.
“Because of that, we have to take it to arbitration,” Vo told the Idaho Statesman by phone. “All we want is for them to pay what they pay all the other hospitals within our region, and they’re not doing that. If they offer us something very close to the median in-network rate, as regulated by the federal law, then we will be happy, even if it’s slightly less.”
Nutex says it gets lowballed by Blue Cross
Mike Reynoldson, vice president of public affairs at Blue Cross, accused Nutex at a hearing Tuesday of sending every one of its emergency care medical claims, nearly 300 a month from the lone Post Falls hospital, through the dispute resolution process. He said all other emergency rooms in the state combined initiate only a dozen or so disputes a month. Blue Cross, a nonprofit, is the largest health insurer in the state.
“These entities refuse to contract with commercial insurers ... and so they submit a bill to us for an inflated amount, we do not pay that amount, we offer what our market rate is for those services ... and then we go to this independent dispute resolution process,” Reynoldson told state legislators.
He said the company’s Post Falls hospital, which he called a freestanding emergency room, charges six times as much as the in-network negotiated market rate for a urinary tract infection, and about five times more for sprained knee.
“This business model is replacing one surprise bill with another surprise bill,” he said.
Vo told the Statesman that Blue Cross pays it less than it pays other hospitals in Idaho. The two entities tried several times to iron out a contract to no avail. Blue Cross told the Statesman late last year that all of its offers were refused. Vo said the contract Blue Cross offered was too low to accept.
Hospital CEO says proposed bill is anticompetitive
Blue Cross and Nutex both argue that the other’s position is harmful to the public.
Blue Cross says the inflated reimbursements and costs it spends on arbitration with Nutex could lead to higher premiums for all its members. Nutex says Blue Cross wants to underpay it so severely that it could go out of business, which would lead to less competition and fewer options for patients.
“If we go out of business, then it basically takes the only competition away from the local hospital,” Vo said. “It becomes a monopoly. They’re inhibiting the free market, and they’re picking winners and losers.”
There are two hospitals in Post Falls: the small, physician-owned Northwest Specialty Hospital and the Northern Idaho Advanced Care Hospital, which provides long-term care for medically complex conditions. The city is just a 15-minute drive from Coeur d’Alene, home to Kootenai Health, a larger, community-owned hospital.
Legislation that would require freestanding emergency rooms to be reimbursed at the same negotiated local market rates as in-network providers passed the Senate Commerce and Human Resources Committee on a 6-3 vote Tuesday. Senate Bill 1319 would also require freestanding emergency rooms to disclose to patients if they do not participate in Medicare, Medicaid or Tricare programs. The bill was sent to the full Senate.
Vo plans to fight the legislation, saying it could impede Nutex if its opens in Meridian.
“The No Surprises Act basically states that patients are left out of it, and so the only tool that a provider has to dispute any kind of payment with the insurance company is the independent dispute resolution process,” he said. “When regulators put this rule in place, they foresaw that the insurance companies would play games and underpay hospitals like us. It’s the only recourse we have.”
He also rejected the notion that his hospitals are freestanding emergency rooms. Nutex’s hospital, called Post Falls ER & Hospital, offers 24-7 emergency care but also has on-site imaging, a laboratory, a pharmacy and inpatient care.
“It’s categorically false,” Vo said. “We are a full-service hospital licensed by the Idaho Department of Health and Welfare.”
Nutex can offer a better experience, CEO says
Nutex filed pre-application documents with the city of Meridian in December to build a hospital at the busy intersection of Eagle and Overland roads. Nutex has 26 hospitals in a dozen other states and previously applied to build a hospital in Southwest Boise, the Idaho Statesman reported in 2022.
“There’s demand for it,” Vo said. “All we want is just a fair opportunity to be in the market.”
The Meridian hospital is still advertised as “coming soon” on Nutex’s website, despite its conditional use permit having expired a year ago, according to city records.
Vo said the company is still planning to build the hospital, and that, in his opinion, patients could expect a higher quality of care there than at Saint Alphonsus or St. Luke’s. He said Nutex is able to provide a better experience because all of its patients are essentially walk-ins. The company boasts short wait times, one-on-one time with physicians and a relaxing environment including large, private rooms with baths and televisions, and catered meals.
“Ambulances typically don’t send patients to us; they send them to much bigger hospitals,” Vo said. “So when you have a smaller volume of patients, you can focus the care more individually than if you had to service a lot more people.”
Still, he said his hospitals have seen everything from gunshot wounds and knife stabbings to heart attacks, strokes and pregnancies.
Vo said Nutex would be able to attract local talent to staff the Meridian hospital despite the area’s physician shortage. He said the health care industry struggles with burnout, and his hospitals offer better work-life balance and less red tape, overhead and administrative interference than health care workers might encounter within a larger health system. He said his doctors have more control over who they hire and how they take care of patients.
The pay may also be better, he said.
“We make sure we have the best doctors on staff, and our retention rate is phenomenal,” Vo said. “You can come in and get competent care with the correct diagnosis and correct treatment, and believe it or not, that’s very hard to come by in America. If you talk with 10 people about their recent care at their local hospital, I bet eight or nine of them would give a negative experience.”
Nutex and Blue Cross disagree on treatment costs
It’s unclear whether Nutex and Blue Cross could ever come to an agreement on reimbursements.
Reynoldson, the spokesperson for Blue Cross, said during the Tuesday hearing that the in-network negotiated market rate for a urinary tract infection at an emergency room is $521 — that’s the price Blue Cross says it pays other emergency rooms in Idaho for that visit. Freestanding emergency rooms such as Nutex bill $3,187 for the same service, he said.
Vo said the $521 rate is more on par with that of an urgent care clinic or surgical hospital than a typical emergency room.
Goodbill, a platform that uses artificial intelligence to uncover errors, secure discounts and eliminate inefficiencies in hospital billing, says the average national cost for an emergency room visit to treat a urinary tract infection is $2,215 for patients with insurance and $2,474 for patients without insurance. Some hospitals push prices even higher than that, its website says.
A study published in 2017 in the National Library of Medicine said the median urinary tract infection hospitalization cost $4,500, though outpatient treatment for the same service is significantly less expensive.
“All we do is look at that payment and say, ‘You know what, that rate is low compared to our standard, to our normal, fair and reasonable rate, which we have data on,” Vo said.
This story was originally published February 28, 2026 at 4:00 AM.
