State Health Care Authority Chairman Jim Pitrolo didn't pull any punches Tuesday when state lawmakers asked what would happen if they pass a bill that would stop his agency from regulating hospital rates in West Virginia.
"You're looking at millions of dollars in cost increases to the citizens and businesses of the state," Pitrolo said.
The West Virginia Hospital Association wants to put an end to rate-setting, and it supports legislation (SB 68) to do just that. Only two states - West Virginia and Maryland - have state agencies that review and approve hospital rates.
"We really believe the program is obsolete and ineffective and ties our hands in the way we operate and provide care to patients," said Joe Letnaunchyn, president and CEO of the hospital association.
Members of the Senate Health and Human Resources advanced the bill Tuesday afternoon.
West Virginia has required hospitals to submit requests for price hikes since 1985. That year, 30 states regulated hospital rates, but most have gotten out of the rate-setting business.
The Health Care Authority typically approves hospital rate increases that range from 2.5 percent and 7.5 percent. Requests for double-digit hikes receive greater scrutiny.
"Just because West Virginia is one of only two states doesn't mean it's the right thing economically to do away with it," Pitrolo said. "Once we get into removing rate review, it will cause costs to increase, I'm fairly sure."
Letnaunchyn said government-funded health insurance programs like Medicaid and Medicare set hospital rates for 75 percent of patients. Those rates aren't negotiable. The Health Care Authority's rate review mostly affects patients with commercial insurance plans.
Hospital boards of directors already scrutinize hospital budgets and rate hikes, said Letnaunchyn.
"They don't take raising rates lightly," he said.
Under the Health Care Authority's watch, hospitals are forced to play a "catch-up game" to raise rates to cover higher costs, Letnaunchyn said.
"They haven't been able to get the rate increases when they needed them," he said. "We just don't think we should have to go through the process of having the agency tell us what we're allowed to charge."
All but two hospitals in West Virginia support repealing rate review. Raleigh General Hospital and Logan General Hospital have reservations about the bill's effect on insurance contracts, Letnaucnchyn said.
Pitrolo said it would make more sense to "modernize" the state's hospital rate review system rather than get rid of it. "We've held down costs for 20 years," he said.
The bill next moves to the Senate Finance Committee.
Reach Eric Eyre at ericeyre@wvgazettemail.com, 304-348-4869 or follow @ericeyre on Twitter.