WV Senate Health and Human Resources Committee passes SB-574

CHARLESTON, W.Va. — Counties and municipalities that still receive health insurance coverage for their employees through the West Virginia Public Employees Insurance Agency (PEIA) may face a rise in premiums if Senate Bill 574 is passed during the 2022 legislative session.

Members of the Senate Health and Human Resources Committee engaged in a spirited discussion during Thursday’s meeting on SB 574, which would allow PEIA administrators to negotiate the reimbursement level to hospitals that provide inpatient care to non-state employed beneficiaries. This would ultimately raise the PEIA reimbursement rates paid to hospitals in a “take one bite of the apple” approach to save both hospitals and the PEIA program in West Virginia.

Jason Haught, interim executive director of WV PEIA, was present during the committee meeting to take questions from members. He was able to explain what this bill would mean to non-state entities should it be passed.

“We’re not talking about PEIA negotiating with hospitals in general,” Haught said of the bill. “This bill strictly deals with PEIA’s negotiations in a non-state pool for inpatient rates only, nothing else.” Inpatient rates are currently not allowed to be negotiated in West Virginia, he added.

Haught stated that the current reimbursement rate for all state PEIA employees for an inpatient hospital stay is close to 60 percent of the Medicare level. He prepared a fiscal note for the committee, which included a projection of increased claims expenses for the non-state employee pool.

According to the fiscal note summary, provided on the West Virginia Legislature’s website, the costs “will not affect the state.” Instead the costs will be “borne by entities and/or members participating in the non-state plan,” which consists of those employed by counties and municipalities. The projected model shows that if PEIA were to reimburse in-state hospitals at 125 percent of Medicare reimbursement levels, instead of the current 60 percent reimbursement level, annual claims expenses would increase by $11,478,773.

Haught said that there are 14,800 policy holders included in the non-state employee fund with 30,600 members. PEIA charges each county or municipality a certain fee to be included in PEIA, and it is up to each county or municipality to determine how much their employees are required to contribute.

Committee Chair Michael J. Maroney, R — Marshall, and lead sponsor of the bill, asked Haught if he thought that it was fair to say “that the state, via its laws, has been subsidizing the cities and counties on the backs of [commercial insurance] providers.”

Haught responded that he believes that is a fair statement.

Senator Ron Stollings, D-Boone, added that he is concerned that an increase in county or municipal rates would be financially harmful, especially since some counties “cannot afford their jail bills.”

“There is no question in my mind that we need to get a real fix, and get the entire hundreds of thousands of people paying being reimbursed at a fair rate. But … I’m not sure how big of an impact that is going to make on the overall picture,” Stollings said. “I just wonder if we are not aiming too low.”

Stollings later attempted to amend the bill to include not only non-state employees, but state employees as well. The amendment was voted down.

Dan Lauffer, president and CEO of Thomas Health, was also present to answer questions from committee members.

He noted that hospitals are facing increasing costs for both supplies and staffing. As is often the case, hospital staff will leave the state for larger paychecks elsewhere, creating a staff shortage at hospitals throughout West Virginia.

“A problem we have, obviously, if we are receiving less reimbursement, the fact that we are getting reimbursement below cost, our ability to even recruit people becomes a question because we can’t compete,” Lauffer said.

He explained that if a person were to be admitted to the hospital for an uncomplicated inpatient procedure “the revenue generated from commercial insurance is about $10-12,000 for the hospital. With Medicare, it drops to $4,800, and Medicaid is around $3,000 for that care. PEIA is less than that.” He added that about 80 percent of statewide care is insured by either Medicaid, Medicare or PEIA.

“There’s not enough commercial payers in the market for us to cover our costs,” Lauffer continued. “Why can I say that? We filed Chapter 11 a couple of years ago.”

Jim Kaufman, president of the WV Hospital Association, while answering a committee member question, stated that at some time in the 1990s providers had stopped seeing PEIA members due to low reimbursement issues.

“You may get to a point that individual hospitals start to say ‘You know what, we can’t accept that anymore,’” Kaufman said, discussing provider financial challenges. “I can’t say that’s been a discussion within our board members. However, I would not be surprised if individual hospitals are considering that.”

“I don’t think any provider wants to not serve their community,” he added. “However, you may get to a point financially where you can’t afford to.”

After discussion, where it was noted that this bill, if passed, is just a small step toward saving hospitals and PEIA, committee members voted to move SB 574 to the full Senate with the recommendation that it do pass.