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Governor Bullock Announces State Health Plan Change Will Save Taxpayers More than $25 Million by End of 2018

Friday, July 8, 2016/Categories: Governor's Office/Tags:

BILLINGS—Governor Steve Bullock today announced the State and taxpayers will save more than an estimated $25 million by the end of 2018 through an innovative change to the State of Montana’s healthcare plan. Governor Bullock was joined at Billings Clinic by representatives of Billings Clinic and Anaconda Community Hospital and Department of Administration Director Sheila Hogan for the announcement.

This change will save taxpayers and employees money, which means more money in the hands of hardworking Montanans being spent on Main Streets all across the state,” said Governor Bullock. “As the largest state employer, it is critical that the State of Montana leads the way in managing rising health care costs and do so in a fiscally responsible way.

The State of Montana is implementing Transparent Pricing, a new way of paying State medical costs that will save the State and taxpayers more than an estimated $25 million by the close of 2018, based on hospital cost projections. Transparent Pricing will help keep rising healthcare costs under control while promoting comparability and cost fairness.

“Until we manage health care costs, they will continue to eat away at employee salaries and family budgets,” said Sheila Hogan, Director of the Department of Administration. “This change will put money into the pockets of our employees for everyday needs. We are grateful for the partnerships shown by our local Montana hospitals and the State’s third party administrator, Allegiance, in this shared effort to manage health care costs in our state.”

Under the old model of payment, hospitals and facilities could charge the State’s health plan dramatically different amounts for the same service. For example, a hospital in Montana could charge approximately $25,000 for equivalent knee replacement surgery, while another charged more than $100,000. The new form of reimbursing hospitals changes that model. Allegiance is contracting with facilities for more comparable costs by anchoring pricing to a national point of reference, Medicare, then paying hospitals a multiple above that. This will make medical costs more predictable, consistent and comparable among facilities.

Nine of the ten largest hospitals in Montana have partnered with the State of Montana and Allegiance to implement Transparent Pricing contracts. Those ten hospitals comprise nearly ninety percent of what the State of Montana spends on Montana hospital costs. Allegiance is working with all of the smaller local hospitals, which continue to sign on to this new reimbursement model.

"This change in reimbursement method is game-changing for the State of Montana,” said Ron Dewsnup, President and General Manager of Allegiance. “It is a great step forward in the ongoing effort by providers, payers and employers alike to manage costs. But it's just part of the process of collaboration among the interested parties to improve consistency, comparability, transparency, and predictability."

Transparent Pricing is one of many upcoming efforts by the State’s Health Care and Benefits Division to manage health care costs for employees and their families and save taxpayer money. An additional resource, Healthcare Bluebook, will be available through Allegiance later this summer, which allows members to compare medical price ranges and quality. These changes at the State echo statewide efforts of self-funded employers to find ways to manage the rising cost of health care.

“Billings Clinic is adapting to changes occurring with health insurance plans. We look forward to continuing to deliver health care services to the State of Montana employees covered by this new plan,” said Julie Burton, Director of Communications for Billings Clinic.

“Community Hospital of Anaconda is committed to providing the highest quality of health care at the most affordable price, and in that spirit we are pleased to participate with the State of Montana in providing services in concert with these values,” said Steve McNeece, President of Community Hospital of Anaconda.

“Bozeman Health is pleased to work collaboratively with the State of Montana as they try to better understand and predict their costs of providing healthcare insurance coverage for their employees,” said Gordon Davidson, Interim Dyad President & CEO of Bozeman Health.

“We are pleased to be participating with the State of Montana in making health care more transparent and more affordable," says Fred Olson, M.D., interim chief executive officer for St. Peter's Hospital. "This program is valuable not only for customers in managing their health care costs, it also is helpful for hospitals in ensuring that our prices are competitive and fair for the people we serve.”

For more information on Transparent Pricing and an FAQ, visit:


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