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Health care prices are higher in Wyoming than elsewhere. But no one is sure exactly why.

Health care prices are higher in Wyoming than elsewhere. But no one is sure exactly why.

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Medical

Attempt to diagnose the reason for high health prices in Wyoming and you’ll find no shortage of supposed causes.

There are the insurance companies — which one Casper doctor called a “bloated sucking worm,” but other officials said lacked the power here to dictate pricing, and one insurer said are critical to delivering care to Wyomingites.

There’s the hospitals, which a legislative committee is examining to determine their role in driving up prices.

Others in the health sector said the facilities have an outsized role in determining costs, though advocates say they’re actually operating on thin margins and just trying to provide services needed by their communities. They’re not the source of the pain, this theory goes; they’re suffering from it.

There’s of course the state itself, which is effectively composed of isolated hospitals that struggle to provide the services their communities want at the prices those communities can afford.

Reimbursement rates, pharmaceuticals, the cost of medical devices, uncompensated care — they all play a role in the condition of Wyoming’s expensive health ecosystem. While debate may rage on who’s exactly to blame, the disease is undeniable: Costs here are high.

A database examining what was paid in Wyoming for care bundles — like wrist x-rays or hip replacements — found that of 254 services, 242 were more expensive here than the median national price.

Put another way: A Wyomingite and his insurer may pay $21,287 for an appendectomy. The median price in the US is $15,595. In Colorado, $16,429. In North Dakota and Utah, less than $12,000.

The median price for a breast biopsy here? Just over $7,300. That’s about $2,300 more than in Colorado and $2,700 more than the US median price.

The list goes on.

The effect is felt by more than insurers or employers. The high prices can lead to depressed wages and higher premiums paid by employees, health care’s own version of trickle-down economics.

“How bad is it?” asked Anne Ladd, who is the executive director of the Wyoming Business Coalition on Health, a group of employers jostling to lighten the load of health insurance costs. “I answer that by saying, the fact that I have a job is a big indicator of how bad it is. The fact that employers are willing to fund an organization aimed at helping them coordinate this conversation, educate them, get them organized, is an amazing indicator of how bad this is.”

The disease

In 2016, the Wyoming Legislature approved in a budget footnote the creation of a multi-payer claims database. The description may be boring, but the goal was interesting: gather evidence to see if Wyoming health prices truly were higher than elsewhere.

“Too many of the decisions being made at a policy level or from an operations point of view are based on anecdotal data,” then-Department of Health Director Tom Forslund said in 2014. “Consequently, we’re shocked when a lot of things don’t work, but that decision-making process isn’t based on data. We’re trying to do as much as we can to make a move to be more data-driven.”

The data, as critics will note, is not complete. The database does not include every claim from Wyoming. It does include those from the state’s insurance plan, which covers a large swath of Wyomingites, as well as a limited number of other claims. But supporters say it’s enough to indicate that there’s a problem here that should be addressed.

It also showed that the problem wasn’t Wyomingites using health care services at a significant pace, said Franz Fuchs, the state Health Department’s policy coordinator, who helped develop the database. It was the prices themselves.

“We’re probably first or second most expensive in the country,” said Sen. Charlie Scott, a Natrona County Republican who chairs the Senate’s Labor, Health and Social Services Committee.

The state’s database shows that Wyoming employers and employees together pay more for nearly every service tracked than much of the nation. That goes for x-rays, pregnancy tests, shoulder surgeries, vasectomies, and on and on.

The evidence isn’t isolated to the state’s own database, either. The Health Care Cost Institute, which helped put together the database, issued a separate report just last month that showed Wyoming spent the fifth-most per person in the nation. The Equality State ranked in the top 10 for highest paid per person for professional services, as well as hospital inpatient and outpatient care.

What’s more, it doesn’t appear that Wyoming — like the United States as a whole — is doing better for the money it spends on health care. The state is routinely ranked near the middle of the pack for health in a national report by the UnitedHealth Foundation.

It’s tempting to write this off as an issue for employers and insurers to sort out. But the effects are far-reaching. As care grows more expensive, premiums get heftier. Employers, then, are likely to pay a smaller share of premiums. If they have to pay more for health benefits, that leaves less for salaries. If they stop expanding because of premium prices, that’s fewer jobs for Wyomingites.

According to a report by the Commonwealth Fund, a national health foundation, the cost of premiums for employee coverage rose 11.5 percent here between 2016 and 2017. In the five years previously, premiums had risen a total of 4.1 percent.

Ladd said the attitude of “go ahead and get it, what do you care, your insurer will cover it” is one of her “pet peeves.”

“We need to help people understand the nexus between high health care, high benefit and no money left over,” she said.

Possible causes

That’s not to suggest there aren’t theories, especially more than two years after the department wrote that report. But the theory shifts, as does the target of the theory, depending on whom you speak to.

Scott believes the issue with prices comes from the providers.

“Our problems are in the hospital area,” he said. “Now, the question comes, why are our hospitals so much more expensive here?”

Fuchs said that hospitals have more power when negotiating terms with insurers. Most facilities are the sole or main provider in town, he said, and insurance companies can’t offer a plan to residents of Casper without including Wyoming Medical Center, for instance.

“Generally speaking, the insurers are in a weaker position,” he said.

National experts agreed.

“If there’s only one hospital in a wide area, then that hospital is going to have more leverage in negotiating with payers, whether that be insurers or employers, and that can lead to higher prices,” said Cynthia Cox, who studies health reform and insurance at the Kaiser Family Foundation.

“This is a constant tension, and usually insurers feel like they are not able to squeeze rural providers enough, especially specialists, because they are not able to exclude them from networks,” added Katherine Hempstead of the Robert Wood Johnson Foundation.

Ladd and Fuchs both noted hospitals’ propensity to buy new equipment or build new facilities, rather than cut prices, when money is freed up. Wyoming Medical Center just spent $37 million on Mountain View, for instance, while Converse County Memorial has a Da Vinci robot — as do others — despite little evidence that the device improves outcomes (though surgeries using the robots typically cost insurers and patients more).

Wendy Curran, a vice president with Blue Cross Blue Shield of Wyoming, said she “disagreed” with the suggestion that hospitals had a stronger hand in negotiating with hospitals. But she acknowledged that her company provided what consumers wanted — if a certain hospital is what Blue Cross members want, then the insurer has “limited options,” she said.

Hospitals, naturally, don’t agree. Eric Boley, the president of the Wyoming Hospital Association, said his facilities were operating on razor-thin margins. He noted that a small hospital in Wyoming doesn’t have the buying power that a major system — like UC Health in Colorado — has, meaning that a hospital here pays the asking price for equipment or for a doctor and has to fund it by raising prices.

In other words, a big hospital system may buy 15 MRI machines at a bargain price, with enough patients to quickly offset the already discounted price. But a small facility somewhere in Wyoming pays what the manufacturer wants, full stop.

“I’ve got other small critical access hospitals that are expected to have a CAT scan for all facilities,” he said. “They’re seeing 15 ER patients a day. You have to look at the ability to spread that expense or that cost over people and still be able to afford it.”

He said he disagreed with the suggestion that hospitals are “in the driver’s seat” when it comes to negotiating with insurers.

Those insurance companies didn’t escape without some of the blame, either. David Wheeler, a Casper neurologist who runs a clinic here and provides services for much of the state, saved much of his criticism for the industry.

“We’ve got this giant bloated sucking warm living between (patient) and (physician) that bastardizes the system,” he said. Insurers are paying less, he continued, for seemingly arbitrary reasons, while his practice is too small to be able to negotiate with the companies for better rates. Money is wasted on the bloated structures of insurers.

“I think hospitals have created a business model that was necessitated ... by the insurance model,” Wheeler added.

Wheeler said doctors routinely bill insurers more than they knew they would be paid to ensure insurers didn’t underpay. Doctors here are not as well paid as it would seem, he added, though others noted that part of the price issue may be that hospitals have to pay more to doctors to attract them to rural Wyoming.

Curran, the Blue Cross vice president, said Wheeler’s criticism seemed to be of the health care system more broadly, and that most people would agree with him. But she said Blue Cross couldn’t pay whatever every provider or hospital demanded and that it was a challenge to balance the needs of the state with keeping the industries viable.

The list of potential factors driving up prices goes on: Scott said he suspects Medicare is “actively discriminating” against Wyoming, which causes hospitals to mark up other services to make up for lower rates from elsewhere. As evidence, he noted that Wyoming is one of the most expensive states for private insurance but spends one of the fewest amounts of money on Medicare. Another national expert, David Radley of the Commonwealth Fund, said that very stat was evidence of the inverse: a problem with the private market, not the public program.

Treatment

With no shortage of causes comes no shortage of remedies.

Ladd, who runs the business coalition, believes that employers can come together and lobby providers for better prices. Her group works to educate both employers and workers on how to best spend health care dollars.

The Legislature just passed a law authorizing a hospital study to address this very issue. Scott said it’s difficult to give an exact solution before those results are in, but he offered options. For instance, if the study revealed that the state’s facilities were disadvantaged by the prices they have to pay for equipment, then the Legislature could debate a tax to publicly fund those devices. If recruitment was an issue, a program to prioritize doctors could be introduced. If Medicare is indeed discriminating against Wyoming, lawsuits could be filed.

“That would be a major expensive undertaking, but if that proves to be a major cause of the problem, then you gotta think about it,” he said. “But you can’t think realistically about it until you know what the problem is. We know there’s a problem. We’ve got to see what it really is quantitatively.”

Wheeler, the Casper neurologist, said he support a single-payer system that would clear away the insurance companies — who “need to go away” — and give providers a clear sense of how much they would be paid. But he acknowledged there was no such system that would be introduced anytime soon. As a short-term solution, he recommended “significant regulations” on insurers to track how money was spent and transferred.

The national experts mentioned Maryland, where hospitals are given essentially a block grant for the year. Medicaid expansion likely wouldn’t help, Fuchs, of the Health Department, said, noting that Colorado had recently found that it hadn’t driven hospital prices down by broadening the program.

For his part, Fuchs said there are policy decisions that could be made. But more practically, the state — and its individual communities — need to have conversations about whether they can afford every specialist available to them, though he stressed that emergency services should be everywhere.

“How much do you really need, right? If you live in Baggs or you live in Dubois, is it your God-given right to have a knee specialist to live there?” he said. “Or is the trade-off that you accept you’re going to have to drive?”

Follow education reporter Seth Klamann on Twitter @SethKlamann

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Education and Health Reporter

Seth Klamann joined the Star-Tribune in 2016 and covers education and health. A 2015 graduate of the University of Missouri and proud Kansas City native, Seth worked for newspapers in Milwaukee and Omaha before coming to Casper.

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