The Public Employees Benefits Program board was promised if it stuck with Hometown Health and Renown as exclusive providers, canceling a pilot program with St. Mary’s Health in Reno, rates for medical services would be held flat for 20 months and capped at just 2 percent in 2020 and 2021.
But just before the board was to vote, it discovered a gaping hole in the deal that could allow Renown to dramatically increase rates over the next three years.
The issue was exposed after member Leah Lamborn asked if the deal applied to all services including those where the hospital reduces the price by a percentage of the billed charge.
Ty Winfeldt of Hometown Health said the agreement offered a week ago applies to “areas where you have direct costs.” If the contract reduces billed charges for a given service by 25 percent, he said that percentage wouldn’t change. But he said if the billed charge for that service increased, the cost to the plan would go up.
“That is not what I was led to believe,” said Executive Officer Damon Haycock.
He said his understanding was billed charges would be held flat and capped so if a given service was billed at $100, that wouldn’t change.
“If not, what’s to stop Renown from charging $1,000? I don’t think this is a cost control at all,” he said.
Winfeldt said every hospital changes its charges for different services and they would never raise a charge from $100 to $1,000.
“The most it would increase in any one year is 5 percent,” he said.
“That’s not in your offer,” said Haycock. He said he believed “every charge PEBP gets to reimburse will be held to zero.”
“I’m unable to tell you we can hold those areas where you pay a percent flat for 20 months,” said Winfeldt.
Haycock then asked about the Exclusive Provider Organization (EPO) PEBP is creating to replace the HMO plan and whether those members would be able to join the current contract.
Wilfeldt said if the Renown contract remained exclusive, yes, drawing groans and cries of “extortion” from the audience.
“So current HMO members are not going to be allowed to continue on your network unless the board stops the pilot program with St. Mary’s,” Haycock said.
Winfeldt said that was correct.
“This was not my understanding,” said Board Chairman Patrick Cates. “The EPO population frankly is being held hostage.”
The discussion prompted a 15-minute timeout during which Haycock and board lawyer Dennis Belcourt met with Renown and Hometown Health officials. When they returned, Winfeldt put on the record Renown would hold the rates consistent across the board for the entire duration of the contract.
With that statement, the board voted to put the Saint Mary’s pilot on hold and approved the plan to stay with Hometown Health.
Hometown Health officials said during the March meeting where the Saint Mary’s pilot was first approved if their contract was no longer exclusive, they would raise rates. Haycock said Friday he was advised those increases could be double-digit, increasing costs far more than the plan can afford.
The Saint Mary’s pilot program was an attempt to create some controls over rate hikes. It was designed as a Medicare-Plus plan that covers what Medicare would pay for a given service plus a fixed percentage increase.
Carson Tahoe Hospital is included in that plan.
Haycock said canceling that program “isn’t a one and done,” that PEBP would be looking at those sorts of options down the road in an attempt to control rate hikes.
But he said the board was in a huge bind with Hometown Health threatening rate hikes and potentially terminating the contract just four days before open enrollment for 26,000 state employees and their families.
“In this very, very imperfect world today, this is one of the few options we have,” he said.