In Idaho, an insurer says health care costs may rise after hospital taps Congress’s billing tool

Insurer asks Idaho Department of Insurance to investigate hospital billing practice

In November, Blue Cross asked the Idaho Department of Insurance to investigate the hospital’s use of the tool. Since then, the regulatory state agency hasn’t released information about the status of its investigation.

By the spring, the Idaho Legislature was considering a bill to try to prevent freestanding emergency rooms, such as the Post Falls facility, from billing for high charges. But the bill failed, after one powerful lawmaker hoped the two businesses could resolve their dispute without legislative intervention. 

Now, Blue Cross is getting the word out to patients.

“You have in-network options,” a new billboard in North Idaho says. “Post Falls ER & Hospital isn’t one of them.”

A Blue Cross website calls the facility the only hospital in Idaho that isn’t in-network for the insurer.

In a July Facebook post, the hospital seemed to push back.

“We accept all commercial insurance regardless of network status!” Post Falls ER & Hospital posted. 

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How does the arbitration process work?

The Post Falls ER & Hospital opened in 2024. The facility was Nutex Health’s first micro-hospital in Idaho. The firm recently filed an application to add a micro-hospital in Meridian, the Idaho Statesman reported. 

In arbitration, which Blue Cross says it often loses, the hospital is often receiving payouts that are four to five times as much as the insurer typically pays other providers for the same services, the insurer recently told state officials.

In one case, the hospital charged more than $14,000 for a diagnosis code meant for treating a migraine, the insurer said.

“Post Falls ER and Hospital is not a victim of unfair reimbursement rates; rather, the numbers clearly show they are a statistical outlier using the (arbitration) process as a primary revenue strategy, not a last resort to obtain a fair and reasonable payment,” Blue Cross of Idaho’s Chief Strategy Officer Drew Hobby wrote in a May letter to the Idaho Department of Insurance, which the Idaho Capital Sun obtained from Blue Cross. 

After contract dispute with East Idaho hospital, Legislature’s task force to study health insurers

Nutex Health Chief Operating Officer Wesley Bamburg denied the company’s strategy was to rely heavily on the arbitration process, saying the company’s hope in every market it serves “is to be in network under fair, market-based contracts.” But he said its North Idaho micro-hospital is not in network for any health insurers. 

“We have several active and productive conversations underway with multiple health plans, at various stages, and we are encouraged by the progress being made,” he said by email. “Our goal is long-term agreements that support patient access while ensuring the services we provide to this community remain sustainable.

In Blue Cross’s letter to the state in May, the insurer described its difficulty negotiating with Nutex. The two companies only negotiated by email until March, when the Legislature considered its bill to force a deal, Hobby wrote. 

After a back and forth over several reimbursement rates — which are redacted in the letter — Blue Cross officials agreed to a rate proposed by Nutex on Sept. 4, according to the letter. Then almost a week later, Blue Cross says that Nutex “turned down their own offer.” One offer that the hospital previously rejected would’ve been “the highest rate in the state of Idaho,” the letter said. 

Since then, Blue Cross of Idaho Vice President for Provider Partnerships Todd York said the insurer has run into delays or non-responses. He said he’s had to hire two temporary workers and pull two other full-time staff off other work to handle the high load of arbitrations. 

Bamburg, with Nutex, said he wouldn’t comment on contract negotiations. Asked why the company turned down its own offer in negotiations with Blue Cross, he said, “What we can say generally is that a contract negotiation is never about a single number in isolation.”

“As discussions progress, it is normal for both parties to refine their positions and evaluate alternatives as additional information becomes available. That is how negotiations are supposed to work, and it is how durable agreements are reached,” Bamburg said. 

When Congress created the arbitration process, officials didn’t expect many claims. Then they ballooned.

Blue Cross’ issues with the hospital seem to be part of a bigger problem.

In 2021, when Congress first created the arbitration process — formally called Independent Dispute Resolution — through the federal No Surprises Act, federal officials only predicted it would be used 22,000 times each year. In the years since, 3.4 million disputes came through, according to the Congressional Budget Office. 

National news outlets have highlighted how the process is being used — including New York Times coverage about a surgeon earning up to $440,000 for breast reductions, and a STAT investigation into how Nutex Health’s finances have changed under the new arbitration process. 

Under the federal law, arbiters can only pick what the health insurers and providers claim is fair payment, not to meet their offers in between.

Idaho’s U.S. Sen. Mike Crapo, who chairs the Senate Finance Committee, said in a statement that he’d be open to revising the process.

“Allegations of misuse and abuse of the independent dispute resolution process are deeply concerning and risk undermining patient protections Congress intended with enactment of the No Surprises Act,” Crapo said in a written statement. “Congress and the Administration should work together to identify and close loopholes, hold bad actors accountable and ensure the law works for patients as intended.”

In an Idaho legislative hearing on a bill to attempt to rein in the practice, Senate Bill 1319, the state senator sponsoring the bill, Sen. Treg Bernt, R-Meridian, turned over much of his presentation time to Blue Cross.

“What we’ve seen is this business model is replacing one surprise bill with another surprise bill,” Mike Reynoldson, Blue Cross’s senior vice president of government affairs and public relations, told state lawmakers in a February committee hearing.

Under the federal law that created the arbitration, patients are protected from unexpected bills at hospitals. But, he said, insurers will likely need to pass on high costs from arbitrated health expenses to consumers. 

“Because when the price of emergency care goes up, the next year, when Idaho insurers set their insurance premiums and their insurance rates, we have to take into consideration those excessive amounts that were paid to these entities,” Reynoldson said. “This is a bill about controlling the cost of health care.”

Idaho lawmaker halts bill to intervene in Blue Cross’s dispute with Post Falls ER & Hospital

After the Idaho bill passed the Senate widely on a 24-11 vote, it never advanced out of the House Business Committee. The committee’s chairman, Rep. Jordan Redman, R-Coeur d’Alene, said in an interview that he’d met with the hospital and the insurer and hoped the two could reach a deal without the Legislature stepping in.

“You guys should be able to figure out how to work together and come to an agreement, right?” Redman said in an interview. “Where you hear one side of the story, you hear the other side of the story — it’s probably somewhere in the middle (of) where, actually, you guys need to meet.”

Redman saw the bill as forcing the hospital to enter an agreement for set pay rates. 

“If that doesn’t work for their business model, … the last thing we want is for hospitals to be closing around the state and not have services for the constituency,” Redman said. 

If the two parties can’t land on common ground, he anticipated the Legislature would revisit the issue next year. 

“And we’ll probably be having the same conversation,” Redman said. 

The status of an investigation by the Idaho Department of Insurance is unclear. The agency declined an interview but confirmed it is still looking into the issue.

“The Department can confirm that we are reviewing concerns related to Post Falls Emergency Room and Hospital and Nutex,” Department of Insurance spokesperson Julie Robinson said. “Once our review is complete, we will be able to provide a more detailed response.”

The Department of Insurance denied two public records requests for communications between agency staff and the hospital and insurer, citing an exception to the state’s public records law for documents related to reports by public agencies responsible for regulation of “financial institutions” as well as a state law related to the agency that exempts working papers from public release.

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