State Insurance Manager Suggests Providers, Facilities Causing Increase Costs To State

Ralph Hayes, seen here during the Natrona County Medical Society’s
Dinner June 8 in Casper, offered his testimony on the increased cost of
state health insurance to the Joint Appropriations Committee
Wednesday morning in Cheyenne. 

By Tom Lacock
Wyoming Medical Society

CHEYENNE – The Joint Appropriations Committee (JAC) of the Wyoming Legislature met in Cheyenne this week to address the need to make drastic cuts in the state’s 2017-18 budget due to lower than expected revenues from mineral royalties. In all, Wyoming Governor Matt Mead made recommendations for $248 million in cuts to the state budget.

In addition to listening to budget cuts, the JAC also heard an update on the State Employees Insurance Group and its pending RFP to administer the State employees group. Ralph Hayes is the manager of the state employees health insurance group and sat for the JAC. He said proposals are due back to the state by July 15.

Hayes added that the state is self-insured in that it pays just $.04 per dollar spent on administrative fees to Cigna. Hayes also offered his feelings to the JAC on why he thought the state’s insurance premiums are higher than other states, putting Wyoming physicians and hospitals directly in his crosshairs. He went on to say negotiation with physicians for network discounts is also been difficult.

“Doctors charge more here than they do in other states and our premiums reflect that,” Hayes said. “It is difficult to negotiate rates with these vendors because often they are the only game in town. I know of a surgeon in Casper who charges 600 percent of Medicare allowable. Our premiums are higher because of that.”

While telling the committee the state’s health insurance costs actually went down by 1.2 percent last year, Hayes added the state’s health care cost for the employees insurance group has trended up from $38 million in spending in 1999 to $204 million this year, suggesting costs are increasing.

“Our folks are not four times sicker than they were 14 years ago,” Hayes said. “We aren’t covering four times the people. We are seeing incremental costs in healthcare which is being passed on to our members and the plan.”

In later testimony, Hayes suggested one way to deal with the uptick in health care costs to the state was to get state employees to use mobile phone applications built by Cigna, which allow state employees to do cost comparison on physician pricing for up to a 100-mile radius for some procedures. While he said the application hasn’t received broad based appeal, the state is working with Cigna to develop treasure hunts on the application in an effort to get higher useage by state employees.

The State Employees Group Health Insurance Plan covers state workers in the executive branch, as well as those at the University of Wyoming, the state’s community colleges, Natrona County School District, the Legislative Service Office, Wyoming Community Development Authority, and the judicial branch of the state, among others. There are multiple deductible offers, though 59 percent of those covered opt for the $350 annual deductible. Hayes said Cigna is considering new deductible options in the next round of proposals and he hopes others would take more risk and live healthier.