As the cost of health care climbs, Montana’s insurance watchdog is weighing whether hospitals’ defense that their prices are designed to cover the cost of business rings true.

Global think tank Rand Corporation released a study this year that showed Montana hospitals charged private insurance two-to-four times beyond what Medicare pays.

During the annual Montana Insurance Summit in Helena on Wednesday, Deputy State Auditor Kris Hansen said the office found in recent years that one Montana hospital’s average reimbursement was 611% beyond Medicare.

“People are unable to afford care and they’re also very cognizant that the hospitals keep getting bigger and fancier,” Hansen said. “There’s a disparity there and nobody’s explaining it to them.”

Roughly 200 people attended the summit by the office of the Commissioner of Securities. State officials talked major steps over the last year and what’s to come. That includes the effort to understand how health care prices take shape, a longstanding black box within the industry.

Hospital officials have said government payment like Medicare falls short so they look toward private insurers to make up the difference.

Marilyn Bartlett, special projects coordinator for the Commissioner of Securities and Insurance, said the office is trying to figure out whether that’s true.

Bartlett said recent federal reporting rules will lead to better data on the difference between hospital prices and overall profit margins. The updated accounting standard narrows what hospitals can report as bad debt — payments expected but never received.

Bartlett said that change will make it easier to know whether the argument that prices are necessary lines up.

“This is the first time we’re really seeing people push in and say ‘let’s get this reporting right,’” Bartlett said. “We’re anxiously waiting to see these financials.”

Bartlett said the office recently reviewed national and state data for Montana’s 10 largest acute care hospitals. They found that last year, Medicare reimbursements covered on average 91% of the hospital’s Medicare costs.

At the same time, hospitals received payments from federal programs aimed at getting care to uninsured patients.

That includes a federal drug discount program called 340B that Bartlett said may actually drive up the cost of care as more players enter and take money out of the system.

She said the program has grown to the point it’s difficult to record whether health providers are sticking to its intent to help low-income people. Bartlett said the office is working with regulators and policy makers on a federal level to see how the program is playing out.

On a state level, Bartlett said as the office reviews the cost of care it should have enough information to help shape proposals for Montana’s next legislative session.

During the summit, Insurance Commissioner Matt Rosendale outlined some of the office’s successes and defeats around the cost of care.

Rosendale, also a GOP candidate for Montana’s U.S. House Seat, touted a reinsurance program lawmakers approved this year. The aim is to create a new pool of money that will help insurers cover high-cost insurance claims.

As part of the program’s ripple, the three Montana companies that offer health insurance policies on the individual marketplace are offering reduced rates in 2020.

Rosendale said the office will continue to work on proposals that didn’t become law.

That includes Senate Bill 71, which Sen. Albert Olszewski, R-Kalispell, sponsored at the request of Rosendale’s office. The bill would have increased oversight on pharmacy benefit managers — companies that help set health care prices.

The bill passed but was vetoed by Montana’s Democratic Gov. Steve Bullock.

Since, state officials have worked with other states like Maine to craft legislation modeled off Montana’s attempt. Rosendale’s staff said other states passing their own version of the law will help build the office’s case when Montana lawmakers meet next.

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

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