The price of receiving health care in Utah hospitals could change over the next year regardless of whether the Legislature passes a bill that would fix hospital prices for certain medical services.

House Bill 113, sponsored by Rep. Rebecca Lockhart, R-Provo, was sent to an interim committee Friday morning so health insurance providers, Intermountain Health Care representatives and lawmakers could try to resolve their disagreements.

"I am hoping that we can work some things out," Lockhart said. "I believe IHC is in complete contradiction with their charitable origins."

Lockhart sponsored the bill after insurance providers in Utah County complained they were being charged more for medical services because of a lack of competition among providers.

The bill requires hospitals to charge all health insurance companies fixed fees, 20 percent above Medicaid costs, for unique medical services.

IHC, which owns Utah Valley Regional Medical Center, said it would renegotiate contracts on its own, giving all providers a 10 percent discount and making legislation unnecessary.

One of IHC's contracted providers is the BYU Student Health Plan, an affiliate of Deseret Medical Benefits Association.

Bryant Larsen, spokesman for IHC, would neither confirm nor deny whether BYU's health plan would be affected by the bill or by IHC renegotiations.

"Our intent would be to offer the same discount to all carriers," he said. "We would work with all carriers to negotiate new rates."

The rate changes would only apply to medical services defined as unique, which include newborn and pediatric intensive care, cancer treatments, neurosurgery and heart surgeries.

The services are considered unique if only one hospital in a county can offer them because of the costs.

The fixed prices would not apply in Salt Lake County where multiple hospitals provide unique services, Lockhart said.

In other counties, insurance companies cannot offer competitive premiums when the only hospital providing unique services charges some providers significantly more than an affiliated provider, she said.

Lockhart said patients with providers who are charged higher rates must go to hospitals in other counties to receive affordable care.

"It is my understanding that one hospital and its affiliates control about 80 percent of the lives in Utah County," she said.

IHC objected to the bill for many reasons, from the definition of a unique service to the concept of price fixing.

Larsen said the bill unfairly targeted hospitals when some clinics offer services included in the definition of a unique service.

"Why not include the burn center at University of Utah if you are using that same logic?" he said.

Larsen also cited a cancer clinic being built across the street from UVRMC that would offer the same treatments the hospital offers but would not be subject to the price fixing.

Lockhart said the unique services defined in the bill could not be offered by a clinic.

"I am not aware of any clinic that offers these services," she said. "They are in-patient, high-level, tertiary care services."

John Neilsen, senior legal counsel for IHC, said the problem should be solved by renegotiating contracts, not by legislating fixed prices.

"We are not a monopoly," he said.

IHC has signed contracts in the last two months with providers they typically do not work with to even the playing field, he said.

Larsen denied that the new contracts were negotiated because of the threat of fixed prices.

"We are seeing unprecedented competition," said David Clark, CEO of the urban south region of IHC.

He said IHC collects about 64 cents on the dollar from Medicaid, and if all prices were fixed at 20 percent more than Medicaid, or 77 cents per dollar, IHC could not continue to operate.

"Last month, we barely broke even," he said.

IHC's prices are approximately 20 percent lower than its competition in Utah and significantly lower than national averages, Clark said.

He promised the committee that if the legislation were not passed, IHC would continue to sign contracts giving all health insurance providers a 10 percent discount on unique services.

"This seems like a way for some deeper interior manipulation of fees," said Rep. Mike Morley, R-Spanish Fork. "I don't see that as a very palatable alternative."

Keith Tittle, CEO of Timpanogas Regional Hospital, said his hospital was started to provide patients an alternative to UVRMC, but they only control 10 percent of the beds in Utah County, compared to 70 percent that IHC controls.

"If this bill is not passed, it will promote duplication of services," he said. "That is not in the best interest of the community."

Lockhart said reducing competition by providing more facilities for these unique services is not feasible because of the cost.



Copyright Brigham Young University 25 Feb 2003