At the Iowa Board of Regents meeting June 12, University of Iowa Health Care requested approval for a 6% increase in chargemaster rates for its clinical services, citing factors such as health care inflation. “Each year, we go through and look at overall input analysis, look at supply cost inflation, labor cost inflation, at a […]
At the Iowa Board of Regents meeting June 12, University of Iowa Health Care requested approval for a 6% increase in chargemaster rates for its clinical services, citing factors such as health care inflation.
“Each year, we go through and look at overall input analysis, look at supply cost inflation, labor cost inflation, at a bottom up level,” UI Health Care’s associate vice president for finance and chief financial officer, Mark Henrichs, said. “We also look at a higher level, making sure as we benchmark and compare prices nationally versus other agencies, we are continually below the 50th percentile,” adding that the rate increase will help the medical institution “maintain that level.”
According to UI Health Care reports, the clinical enterprise’s rate comparisons to other peer academic institutions is one of the driving factors in the request for a rate increase.
The second factor is limits on charge increases in UI Health Care’s payer contracts. Many commercial payers cap annual facility charge increases at 6%, the request stated, and considering the medical institution's low charge levels, an increase beyond 6% would be reasonable.
“However, given the cap on charge increases in many of its contracts, it is most prudent to cap the increase proposal to 6%,” the request stated.
UI Health Care charges influence both future contractual rates set by payers – such as insurance companies – and current reimbursements for those using a percentage of charges in their payment structure. These charge rates can affect the overall payer methodology or specific contract carve-outs and outlier payments, according to the request.
During its presentation before the board, the medical institution touched on impacts of self-pay, using its charity care program as an example. The program shields the medically indigent from being impacted by charge increases, discounting service fees using a sliding scale based on 350% of the Federal Poverty Limit (FPL) and “basically sliding to the point where 100% of the charges are written off,” Mr. Henrichs said.
According to UI Health Care, the 6% increase proposal is identical to rate increases the board has approved in the past, and the board submitted the request for approval for the June 13 consent agenda.
