‘Egregious’: Idaho insurer says planned hospital’s practices could drive up costs

A mini-hospital company from Texas is trying to establish itself in the Treasure Valley. But Idaho’s largest health insurer says the company exploits its out-of-network status to seek reimbursement for medical services at rates sometimes 10 times as high as Medicare pays.

Unchecked, that could drive up health care costs for self-insured groups — or even push health insurance premiums higher, say officials with the insurer, Blue Cross of Idaho.

Nutex Health, based in Houston, operates boutique hospitals providing what it calls a “concierge” level of around-the-clock emergency care, plus some “specialty” services, according to its website. “In comparison to the traditional hospital systems, patients will be met with the convenience of emergency care in the comfort of a relaxing environment, a short wait time, and ample one-on-one time with a board-certified physician and emergency trained staff,” said the company in a 2024 news release announcing the opening of its sole Idaho hospital, the Post Falls ER & Hospital.

Now the chain wants to open up shop closer to Boise. On Dec. 10, Nutex filed pre-application documents with the city of Meridian indicating its desire to build a 21,400-square-foot “micro-hospital” on the northeast corner of Eagle and Overland roads, south of Interstate 84.

Early site plans show two possible layouts, each with a main and ambulance entrance, 57 parking spots and an adjacent auto shop. Roughly 1.3 acres of the undeveloped land off South Rackham Way is owned by Kum & Go LC, the former convenience store chain, according to property records from the Ada County Assessor’s Office.

The plans are preliminary, and Nutex would need to apply to the city before it could be considered for development.

Nutex, which has 26 hospitals in a dozen states, had previously applied to build a hospital in Southwest Boise, the Idaho Statesman reported in 2022. That hospital was anticipated to have an ER with eight exam rooms, an imaging department, and six overnight patient beds.

But while the planned Boise ER & Hospital is still listed as “coming soon” on Nutex’s website, it hasn’t come to fruition. The permit expired in February 2025, city records show.

A Nutex spokesperson did not respond to multiple email inquiries from the Statesman. In a statement reported by the Coeur d’Alene Press, Nutex said its reimbursement practices comply with federal law.

In letters to the Idaho Department of Insurance and the federal agency in charge of administering Medicare, Blue Cross alleged that Nutex is routinely overcharging the insurer for treatment at its Post Falls hospital and possibly misusing a federal process designed to help providers and insurers settle out-of-network claims.

According to Drew Hobby, Blue Cross’ chief strategy officer, the concerns began shortly after Post Falls ER & Hospital opened in August 2024, as the insurer tried to negotiate an in-network contract. These contracts involve health care providers offering services to an insurer’s members at prenegotiated rates.

“We were delighted that there was going to be, you know, expanded access to care in the state,” said Hobby in a phone interview with the Statesman. But the process of negotiating a contract with Nutex quickly proved “difficult,” he said.

Several of Blue Cross’s offers were refused, said Hobby, who noted that the nonprofit insurer has contracts with 100% of other hospitals in the state. At one point, he said, Nutex agreed to an in-network rate, only to back out.

“At the same time, what we saw was what we believe is inappropriate utilization of the (independent-dispute process),” he said.

That process was created under the federal No Surprises Act, intended to protect patients from surprise hospital bills when receiving treatment out-of-network, especially in emergency situations.

Hobby said Blue Cross of Idaho normally gets about 14 requests per month from providers seeking reimbursement through the independent-dispute process, about 170 per year. Now the Post Falls ER & Hospital sends roughly 75 requests per week, he said.

According to Hobby and Blue Cross’ letter to the state insurance department, over a six-month period starting in mid-April, that added up to roughly 2,800 requests. Hobby called that request volume an “outlier” and “operationally burdensome.”

“We have over two employees that are spending all of their time just managing the administrative logistics” of processing dispute requests from Nutex, Hobby said.

Many of the requests far exceed Medicare rates, said the insurer in a November news release. In one case, Blue Cross “received a claim for nasal congestion that was $2,872 to treat a runny nose,” Hobby said in the release.

“The median commercial rate is $376 for that service,” he said.

In a complaint to the Centers for Medicare & Medicaid Services, part of the U.S. Department of Health and Human Services, Blue Cross called the billing practices “egregious” and said about 60% of the requests from Post Falls ER & Hospital between April and August were ineligible because of late submission.

Ineligible requests are still required to be reviewed, Hobby said.

Hobby said that what he sees as excessive use of the dispute process is a “national issue.”

A Georgetown University analysis found that the number of dispute filings was up in 2024 across the country, as were the number of those filings that were challenged as ineligible by insurers. In the second quarter of 2024, the median prevailing provider offer, or amount providers won through dispute, was nearly 450% of the qualifying payment amount, a measure of how much insurers typically pay for a service in the same region.

Hobby raised concerns about health care affordability for Idahoans if Blue Cross continues to see the same rate of dispute requests from the Post Falls hospital. For example, self-insured groups like employers who provide group health insurance to employees could get stuck with excessive bills for an employee’s treatment at Post Falls, he said.

“It is increasing the overall health care costs for that employer,” he said.

He added that it could also affect individual Blue Cross members. If a patient gets non-emergency room treatment, such as imaging, out-of-network at a Nutex hospital, that could lead to higher coinsurance or co-pay costs for the patient, Hobby said.

And the costs could ripple out to health insurance premiums, Hobby said.

“On an annual basis, we have to take a look at our overall claims expenses, and depending on the area, if there’s a little bit higher claims cost, it could lead to some higher premiums,” he said. “So that’s where it would flush through financially on the fully insured.”

Asked about the possible effect of a second Nutex hospital in Idaho on Blue Cross’ claim bandwidth and health care affordability, Hobby said his concerns are “bigger than Nutex.”

“We’re absolutely concerned with the expansion” of the reimbursement practices in Idaho, he said, “whether it’s Nutex or someone else.”

According to Blue Cross of Idaho’s public affairs manager, Bret Rumbeck, the Centers for Medicare & Medicaid Services responded to the insurer on Dec. 10 that it had transferred the complaint to its No Surprises Act help desk for further review.

Blue Cross also petitioned the Idaho Department of Insurance in November to investigate Nutex’s business practices — or help nudge Nutex to the negotiation table.

“It’s really trying to bring both entities to the table to get an in-network contract, which is what we really want,” Hobby said.

A spokesperson for the Insurance Department told the Statesman by email on Dec. 16 that it had received Blue Cross’ request and is reviewing it. The spokesperson, Julie Robinson, declined to answer follow-up questions, including whether the department had contacted Nutex.

Hobby said he couldn’t comment “on pending review by the Department of Insurance.”

Pre-application filings from Nutex suggest that, to move forward with the Meridian micro-hospital, the business would need to apply for a development-agreement modification, or a divergence from a previous development plan for the land. That would require City Council approval.

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