Legislation targeting a for-profit micro-hospital company seeking to expand in Meridian has been filed in the Senate.
The bill, backed by Blue Cross of Idaho, the largest health insurer in Idaho, would require freestanding emergency rooms to be reimbursed at the same negotiated local market rates as in-network providers. It also requires these emergency rooms to disclose information to patients who are not enrolled in Medicare, Medicaid or Tricare plans.
The bill passed 24 to 11 and was sent to the House. During Tuesday’s debate, some lawmakers disputed whether the bill would infringe on the free market.
Blue Cross Health said the legislation is aimed at cracking down on “excessive” reimbursement claims. Nutex Health two years ago added a hospital in Post Falls, the only one in Idaho, to join its network of micro-hospitals across the country. Nutex plans to expand at the busy corner of Eagle and Overland roads.
Post Falls Hospital also previously posted a notice on its website saying it does not accept Medicare, Medicaid or TriCare insurance, according to a screenshot taken on Nov. 17. The notification has now been removed.
Blue Cross confirmed that the bill does not target other hospitals or health systems in Idaho.
The insurer told a Senate committee hearing that Nutex abused the independent dispute resolution process, which is the purpose of the federal No Surprises Act and is a last resort when medical providers and health insurers cannot agree on how much to pay for out-of-network care.
Nutex CEO says: ‘We have to take it to arbitration’
Blue Cross said Nutex refused to enter into a contract with it and brought all claims, about a few hundred a month, through arbitration proceedings against the independent Post Falls hospital. The practice is an anomaly in Idaho, where Blue Cross contracts with all other emergency rooms and the state says claims from other hospitals rarely enter an independent dispute resolution process.
Nutex founder and CEO Dr. Tom Vo told the Idaho Statesman that his company did file a claim against the North Idaho hospital through an independent dispute resolution process, but only because Blue Cross would not pay a fair amount.
“So we have to submit it to arbitration,” Waugh said. “We just want them to pay all the other hospitals in our region, but they don’t do that. If they were offering us a rate that was very close to the median in-network rate under federal law, then we would be happy, even if it was a little lower.”
But Blue Cross spokesman Bret Rumbeck told the Statesman that the insurer made several efforts to bring Nutex’s Post Falls emergency room and hospital into its network, offering claim reimbursement on the basis of the qualifying payment amount plus 10 percent. The qualifying payment amount is the median in-network contract rate an insurance company pays for the same services in the same geographic area, adjusted annually based on the Consumer Price Index. He said the offer was rejected.
Rumbeck said that on another occasion last year, Nutex countered, Blue Cross accepted, and then Nutex went back on its word.
Blue Cross warns that Idaho insurance companies must consider exorbitant amounts paid to freestanding emergency rooms like Nutex when setting premiums and rates. Waugh, meanwhile, refuses to label his hospital a freestanding emergency room.
“This is absolutely wrong,” Waugh said. “We are a full-service hospital licensed by the Idaho Department of Health and Welfare.”
Meridian senator says Nutex is ‘defrauding’ insurance companies
On Tuesday, Meridian Sen. Treg Bernt, the bill’s sponsor, laid out examples of how Post Falls hospital charges for out-of-network services compare to charges for in-network services at other hospitals in Idaho:
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Urinary tract infection. Market price: $521. Freestanding emergency room cost: $3,187.
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Knee sprained. Market price: $1,700. Freestanding emergency room cost: $8,588.
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CT abdominal scan. Market price: $586. Freestanding emergency room rate: $11,718.
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Pregnancy test. Market price: $14. Freestanding emergency room cost: $144.
“These freestanding emergency rooms are defrauding health insurance companies and, in turn, Idahoans,” Berndt said. “This practice will force higher rates for the Idaho Workers’ Insurance Plan and other Idahoans who purchase health insurance through Idaho insurance companies.”
Republican Sen. Dan Furman of Moscow chimed in, saying that while he generally favors letting free markets “do their thing,” there are times when it’s necessary to step in.
“The free market can be manipulated,” he said. “The government does have an oversight responsibility to protect the public from exploitation.”
Sen. Brian Lenney, R-Nampa, said the government should not intervene in disputes between insurance companies and health care providers. He noted that patients who go to Nutex “can’t be shortchanged” because the No Accidents Act prohibits health insurance companies and providers from penalizing patients who inadvertently receive out-of-network care.
“I’m a free marketeer myself, so I’m going to be categorically opposed, and I urge others to vote no on this as well,” Lunney said.
Immediately afterwards, another lawmaker, Sen. Todd Lakey, told attendees that he was “also a free marketeer” but that he would vote for the legislation.
“The problem here is, this is not a free market,” Leckie said. “We have people abusing the prospective process and running everything at exponentially higher costs because they know out-of-state arbitrators will side with them and increase their profits. This legislation attempts to bring that back to the free market.”
CDA lawmaker says Nutex offers ‘better service’
For one legislator, the bill struck a chord with his heart. Sen. Ben Toews, D-Coeur d’Alene, said the Nutex emergency room in Post Falls only served his wife last year. Toth said they passed another emergency room on the way there because the couple had received “terrible service” elsewhere in the area.
In addition to Nutex Hospital, Post Falls has two hospitals: Northwest Specialty Hospital, a small physician-owned hospital, and North Idaho Senior Care Hospital, which provides long-term care for complex medical conditions. The city is just 15 minutes’ drive from Coeur d’Alene, home to Kootenai Health, a large community hospital.
“The reality is the free market works, and it creates better service,” Toews said. “My wife went to the doctor within about 10 minutes. She did an MRI. It was by far the best service I’ve ever received in an emergency room.”
Nutex advertises shorter wait times, larger rooms with bathtubs and TVs, meals and one-on-one time with doctors on its website, and it’s able to offer these in part because essentially all of its patients come by appointment. Ambulances typically take patients to larger hospitals, allowing it to focus care on a smaller number of patients, said CEO Waugh.
Berndt reiterated during the debate that he did not believe the bill would stifle competition.
“I’m not saying this freestanding ER is not doing a good job,” Berndt said. “Because it sounds like if you wanted caviar and mimosas, it might be a good place to go to the emergency room. But that’s not what we’re talking about.”
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