Montana Gov. Steve Bullock has introduced a hospital pricing initiative which health officials claim will save taxpayers up to $25 million during the next two years, reports Billings Gazette. But the medical cost savings plan could also raise out-of-pocket expenses for some state employees.
The new reimbursement model aims to resolve price disparities between hospitals for the same medical procedure. To do this, Allegiance, the state's third-party health plan administrator, has negotiated reduced payment rates with participating hospitals. Rates are based on a multiple of what Medicare pays for the same medical procedure. The plan only applies to state employees, former state employees and their dependents.
So far, Allegiance has negotiated lower reimbursement contracts with nine of the 10 largest hospitals in the state and 47 of 58 smaller critical access hospitals. Benefis Health System in Great Falls is the only large hospital not yet participating in the program, reports Billings Gazette.
Reduced payment amounts could save the state $25 million by the end of 2018, said state officials. But it could also drive up out-of-pocket costs for state employees who receive care at out-of-network facilities.
Allegiance said it will pay non-participating hospitals the same reduced rate as in-network hospitals. This means facilities and physicians that haven't signed on to the plan could bill patients for the difference between what the state's health plan pays and what the provider charges.
"As the largest state employer, it is critical that the state of Montana leads the way in managing rising healthcare costs and do so in a fiscally responsible way," Gov. Bullock told Billings Gazette.