Hospitals in Wyoming charged private insurance plans more than three times what Medicare would pay for the same care in 2017, according to a national study that looked at 14 hospitals here and nearly 1,600 facilities nationwide and found further evidence that the Equality State has a serious problem with health care prices.
“What this helps us understand is that yes, in fact Wyoming hospitals are charging significantly more above Medicare than hospitals in other states, even highly rural states,” said Anne Ladd, who runs the Wyoming Business Coalition on Health, an employer group organized to improve health care quality and pricing.
The report examined data from 25 states — including a number of rural states like Montana, Kansas, New Mexico and Washington — and compared what private health care plans paid hospitals versus what Medicare paid. Nationwide, the report’s authors found private insurance paid 241 percent what Medicare paid.
Of the 25 states, Wyoming had the second-highest disparity between Medicare and private insurance for outpatient services: Private plans were charged 302 percent more than Medicare, a difference of $8 million. Only Indiana had a higher percentage disparity.
The goal of comparing what Medicare paid to what private insurers paid was to set a benchmark — Medicare — and use it to weigh the more variable insurance payments. The numbers fluctuated significantly across Wyoming. Of the 14 hospitals surveyed, only two were within 200 percent of Medicare. Weston County Health Services charged private insurers just 128 percent of what they paid Medicare, while Washakie Medical Center charged 198 percent of the federal program.
But there were hospitals who were significantly higher. SageWest Health Care in Fremont County had the highest relative price in the state: The hospital charged private insurance more than eight times what the facility was paid by Medicare. Evanston Regional was 589 percent higher, and insurers paid Mountain View Regional — the Casper hospital that was acquired by Wyoming Medical Center last year — 424 percent more than Medicare.
Cheyenne Regional and Wyoming Medical Center — the two largest hospitals in Wyoming — charged insurers 480 percent and 392 percent of Medicare in 2017, respectively.
In all, only five of the 14 Wyoming hospitals surveyed charged private insurance less than 300 percent of what they would’ve charged Medicare.
Hospital group responds
Eric Boley, the president of the Wyoming Hospital Association, said one of the report’s broad conclusions — that prices are high — isn’t surprising. But he was broadly critical of the rest of the report. He noted that there’s data missing elsewhere — though not in the outpatient data that the percentages are based off of — and that the information itself is old.
Further, and more fundamentally, Boley took issue with using Medicare as a baseline.
“Medicare is not the gold standard,” he said. “It doesn’t pay the actual cost of delivering care. They’re using that as the measuring stick, but it’s a bad place to start, to begin with.”
But Medicare isn’t far off the cost of care in Wyoming, others said. A preliminary analysis of Medicare cost data by the state Department of Health found that Medicare, along with patient cost-sharing and third-party liability, pays about 98 percent of cost to critical access hospitals, which make up the bulk of facilities here (though the department stressed that how Medicare calculates cost may differ from how hospitals do it).
For the other, non-critical access hospitals in the state, the Medicare share pays about 90 percent of cost.
That meshes with a broader report by the Medicare Payment Advisory Commission from earlier this year, which found that Medicare paid not far off from cost for some hospitals, and that hospitals having low Medicare rates may be a result of them charging too much elsewhere.
“In other words, when providers receive high payment rates from insurers, they face less pressure to keep their costs low, and so, all other things being equal, their Medicare margins are low because their costs are high,” the report stated.
Ladd, of the business coalition, said in an email that there was no mix of Medicare and privately insured patients “that justifies charging 399% of Medicare, much less 400%, 500%, 600% and even over 800%.”
She said that Wyoming’s rural nature wasn’t a satisfactory explanation for the high hospital costs; she pointed to other rural states like Michigan, which had hospitals that paid closer to Medicare. But there were rural, Western states like Montana and Colorado that had high costs closer to Wyoming.
Evidence of high costs
Still, the study is not a surprise in that it shows Wyoming has high health care costs. That was anecdotally considered true for some time, and recent data has provided further evidence to show that Wyoming has some of the highest health care costs in the nation. And the RAND report doesn’t offer solutions — one of the report’s authors told the Star-Tribune that they didn’t look at why or what’s next.
What the report does is give policymakers here — and Ladd’s group specifically — more evidence that the insurance they provide is being charged significant amounts.
“Employers can exert pressure on their health plans and hospitals to shift from (the) current pricing system to one that is based on a multiple of Medicare or another similar benchmark,” RAND researcher Chapin White said in a statement.
“The purpose of this hospital price transparency study is to enable employers to be better shoppers of health care on behalf of their employees,” said Gloria Sachdev, who runs a employer coalition in Indiana, in a statement. “We all want to know which hospitals provide the best value. Numerous studies have found that rising health care costs are due to high prices, not because we are using more health care services.”
Chris Whaley, another RAND researcher, told the Star-Tribune that employers can pressure hospitals to lower their prices or those employers can start sending their workers elsewhere to get care. That may be harder in rural places like Wyoming, he said, but it remains an option.
Ladd said that’s an option employers have — to start providing coverage for cheaper, larger hospitals in Colorado or Utah. But that doesn’t solve the problem of basic care.
Therein lies a central question for all Wyomingites, whether they’re policymakers, hospital CEOs, patients or employers. It’s a question both Ladd and Boley agree that the state must pose if it wants to address cost: What services should communities have immediate access to, and which should patients have to drive for?
“Which community’s ready to start deciding which services should and should not be provided?” Boley said. He stressed that many of the facilities he represents operate on thin margins and aren’t flush with cash. “It’s a really difficult decision that needs to be made from a regulatory or a governance standpoint for each facility and for the communities. If you take that service out of the hospital line, who’s going to pick it up?”
He added that Wyoming hospitals “absolutely care about the businesses and the communities that we serve.”
“My hope would be that employers would start working together to go to their local hospital and say, ‘We don’t want to put you out of business, but you are putting us out of business,’” Ladd said. “We have got to come to some kind of reasonable middle ground, where you’re viable and you’re functioning and you’re good, and I can also make my next hire and I can expand my business because right now, frankly, that’s not happening because of health care costs.”