Article as seen on July 15th, 2016 in blog.riskmanagers.us.
Montana adopts reference based pricing model for state employees. Will other states follow?
Montana says health plan contracts will save $25 million
From Tribune reports 3:27 p.m. MDT July 8, 2016
Montana will save more than $25 million by the end of 2018 through changes to the state of Montana’s health care plan, Gov. Steve Bullock said.
“This change will save taxpayers and employees money, which means more money in the hands of hardworking Montanans being spent on Main Streets all across the state,” Bullock said. “As the largest state employer, it is critical that the state of Montana leads the way in managing rising health care costs and do so in a fiscally responsible way.”
The state of Montana is implementing transparent pricing, a new way of paying state medical costs, based on paying a multiple above what Medicare pays for health care services.
“Until we manage health care costs, they will continue to eat away at employee salaries and family budgets,” said Sheila Hogan, director of the Department of Administration. “This change will put money into the pockets of our employees for everyday needs.”
Contract talks with Benefis Health System in Great Falls failed and Benefis is the only one of the top 10 health care providers in Montana that is not participating in the state health plan program.
Under the former model of payment, hospitals and facilities could charge the state’s health plan dramatically different amounts for the same service. For example, a hospital in Montana could charge $25,000 for equivalent knee replacement surgery, while another charged more than $100,000. The new form of reimbursing hospitals changes that model. Allegiance is contracting with facilities for more comparable costs by anchoring pricing to a national point of reference, Medicare, then paying hospitals a multiple above that. This will make medical costs more predictable, consistent and comparable among facilities.
“This change in reimbursement method is game-changing for the state of Montana,” said Ron Dewsnup, president and general manager of Allegiance.
Transparent pricing is one of the upcoming efforts by the state’s Health Care and Benefits Division to manage health care costs. An additional resource, Healthcare Bluebook, will be available through Allegiance later this summer, which allows members to compare medical price ranges and quality.