The start of the 2023 legislative session is just five days away, and issues surrounding the state’s health insurance program have now been pushed to the forefront by a stunning announcement. Wheeling Hospital, which is part of the WVU Medicine Health System, said Thursday that, as of July 1st, it will not longer accept PEIA patients.
WVU Medicine said in a prepared statement that it made the decision because PEIA reimbursements for services are substantially lower than the costs. “PEIA’s practice of underpaying West Virginia hospitals and not covering the actual costs has had an especially hard impact on Wheeling Hospital, which has lost $56 million over the past three years,” WVU Medicine said.
West Virginia Hospital Association President and CEO Jim Kaufman said on Talkline Thursday that the PEIA reimbursement rate is equal to only 49 percent of the Medicare rate, which he said is also lower than the actual cost of service.
Kaufman said Wheeling Hospital may not be alone. “Wheeling is the first, but I do know different hospitals that are talking about a similar effort, but nobody has made that decision other than Wheeling at this point.”
Kaufman and WVU Medicine point to the discrepancy in the payments made to out-of-state hospitals, compared with in-state providers. According to WVU Medicine, PEIA figures show that for 2020, the average payment for inpatient services at out-of-state hospitals was nearly 600 percent higher than what PEIA paid to West Virginia hospitals. In 2021, the average was nearly 475 percent.
In real dollars, that means in 2020, PEIA paid in-state hospitals $3,628 for the average inpatient stay, while hospitals outside the sate were paid $25,107. The following year, an inpatient stay at a West Virginia hospital averaged a reimbursement of $4,580, while that same care out-of-state resulted in a PEIA payment of $26,258.
The higher reimbursement rate is because out-of-state hospitals can negotiate price, while the rates paid to West Virginia hospitals are determined by the state. WVU Medicine said its mission is to provide excellent health care, but it needs PEIA to step up.
“Health insurance companies, like PEIA however, must be good partners by supporting their members—our patients—by adequately reimbursing their hospitals and caregivers,” the statement said.
The simplest way is to raise the reimbursement, and that costs money. Last year, the state Senate passed SB 574 calling for PEIA to reimburse hospitals at a rate of 110 percent of the Medicare rate. That would have cost the state $40 million. It passed the Senate, but then failed in the House.
Kaufman hopes the bill gets a second chance in this year’s session because the current model is not sustainable. “We’ve seen huge increases in costs, and PEIA has traditionally underpaid hospitals,” he said.
The timing of the Wheeling Hospital announcement is significant. It will raise fears among the 230,000 West Virginians insured by PEIA that their hospital or health care provider will be the next to reject the state’s health insurance.
That will bring public pressure on Governor Justice and lawmakers to fix the problem.