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Montana lawmakers continued their push to put a scope over the cost of health care Wednesday. Two bills — one to put a ceiling on hospital prices and another to force drug manufacturers to explain rate increases — survived their first round in the capitol.

The House Business and Labor Committee passed House Bill 747 with a 13-6 vote. The bill would set a range for what hospitals can charge for a service. Providers under the proposed rule would need the state’s permission to charge beyond that cap.

Rep. Tom Woods, D-Bozeman, said as is, hospitals can inflate prices and people who need care can’t predict what it will cost.

“If we don’t address this issue of cost, we will never fix the health care problem,” Woods said.

The system is called reference-based pricing and its range stems from Medicare rates. Woods said that national program already defines the codes and costs of procedures and offers adjusted rates based on population and hospital size.

Reference-based pricing is the same route the state used to save $13.6 million on employee health plans over the last three years.

Lobbyists representing hospitals around the state — including Bozeman Health — came out against the idea.

Rich Rasmussen with the Montana Hospital Association called the bill a government intrusion. He said it would set prices without changing the system that feeds into an overall hospital bill.

“It would fracture our state’s safety net in many of our communities and put critical access hospitals at significant risk and jeopardize the services that are offered by our larger hospitals,” Rasmussen said.

The state auditor’s office would oversee the new rules. Deputy State Auditor Kristin Hansen said for decades, medical costs have gone up without explanation.

“There’s a lot of wailing and moaning about the fact that costs are just out of control, ‘And there’s nothing we can do to stop it,’” Hansen told the committee. “Mr. Chairman, it’s not true.”

Woods proposed a similar bill last season, which fell flat.

He said in 2017, the idea seemed “too novel.” He said today, there’s more interest nationwide for politicians to step into the debate of how to get a handle on health care’s rising cost.

His bill is one of a handful this session in which lawmakers try to put reins on the health industry.

Wednesday, the committee also passed House Bill 710. The bill would mean pharmaceutical manufacturers have to explain to the state why they increase a drug price if it climbs by more than 10 percent within a year.

Sponsor Rep. Katie Sullivan, D-Missoula, said the bill would chart when and why prices climb and help Montana figure out how to respond. She said the state would keep trade secret information out of the public.

Similar to hearings on other price transparency efforts this session, industry players said it’s important to address health prices but argued lawmakers were looking in the wrong direction.

Sean Scanlon represented GlaxoSmithKline Global, which has a Hamilton location. He said the pharmaceutical company would continue to look for ways to help lower health costs but HB 710 wasn’t the answer.

“We oppose the bill because it would not impact what patients are paying for their medicines at the counter, nor would it help patients better understand the cost of their medicines,” he said.

That argument repeated by other opponents didn’t sell lawmakers. The bill passed out of the committee with an 18-1 vote.

Staff from the state auditor’s office called Sullivan’s bill a good companion to a Republican-proposed plan to put a check on middlemen companies that help set health care prices. Sen. Albert Olszewski proposed Senate Bill 71, which soared through the Senate in February and made it out of the House Business and Labor Committee on Monday.

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Katheryn Houghton can be reached at khoughton@dailychronicle.com or at 582-2628. Follow her on Twitter @K_Hought.

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