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UIHC to raise rates by 6 percent

BY NORA HEATON | APRIL 29, 2010 7:30 AM

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The University of Iowa Hospitals and Clinics will increase rates by 6 percent beginning July 1, after the state Board of Regents approved the change during its Wednesday meeting in Iowa City.

One key issue with the current fixed-reimbursement system comes with outliers — those payer groups that fall beyond the normal scale. The new increase will help the UIHC manage those payments without losing too much money, said Ken Fisher, the chief financial officer of UI Health Care.

“If we do not increase our prices, we give money back to those payers,” Fisher said about outliers.

More than 3.5 percent of Medicare and Wellmark charges are outliers, as well as 16.4 percent of Medicaid charges.

Wellmark has decided to implement a state-approved rate increase of 18 percent this year.

Medicare, however, is planning a rate reduction, UIHC spokesman Tom Moore said.

Since most of these outliers are covered by Medicare and Medicaid, patients themselves would not likely be responsible for extra payments.

Only those patients without any type of insurance would see direct effects of the increase.

“It’s only with regard to those people who are paying their own health-care costs at the hospital, which is a relatively small part of the total patient census,” Regent Robert Downer said.

By increasing prices, the UIHC will be able to capture money normally claimed by outliers’ unusually large charges.

“Essentially, we would lose less money taking care of those patients,” Moore said.

Jean Robillard, the UI vice president for Medical Affairs, spoke to regents on behalf of the increase, saying it was justified based on the UIHC’s incurred expenses.

“This was essentially based upon the cost increase that the hospital is incurring for salaries, supplies — all of those expenses,” said Downer. “It’s consistent with the rate of increase for the past several years.”

The increase was unanimously supported by the regents.

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