Monterey County’s high hospital costs spurs state officials to come visit and learn more.

For over a year at monthly meetings in Sacramento, members of the state’s Office of Health Care Affordability Board have been hearing stories from Monterey County residents about the high cost of hospitals. So many stories came pouring out, combined with research data placing the hospitals in the top 10 and 15 percent of highest-priced in the state, that the board agreed it was time for a road trip.

On Wednesday, Aug. 28, the OHCA board will meet in Seaside and most of the day-long meeting is reserved for public comment. It will be a chance for local consumers, workers, providers and hospital executives to voice their concerns face-to-face with the eight-member board appointed by Gov. Gavin Newsom, after the board was created in 2022. Its chairperson is Dr. Mark Ghaly, secretary of the California Health and Human Services Agency.

Hospital executives are likely to reiterate a message they’ve already shared with OHCA about the pressure on them to overcharge private payers in order to subsidize government payers – that means charging more to insurers like Anthem and United Healthcare. Government payers (primarily Medi-Cal and Medicare) are unmoving, and they notoriously underpay for the actual cost of care.

A host of other interest groups, including labor unions and academics, are likely to speak up as well, raising questions about the story hospital leaders are telling.

Some researchers, like Laurel Lucia, the Health Care Program Director at the UC Berkeley Labor Center, are skeptical of the hospitals’ claim. “There has been a lot of economic research [about whether] hospitals try to set their commercial prices based on shortfalls from public payers. That research has failed to find evidence of that,” Lucia says. “Second, if this type of cost-shifting was occurring, you would expect those that serve the highest number of Medi-Cal patients to charge higher prices, but it just doesn’t bear out in the data.”

Lucia and her team are mining a wealth of data that is now available to the public, thanks to OHCA. Some of that data reveals that local hospitals are in line with the state average when it comes to their patient payer mix. For example, in 2022, 71 percent of CHOMP’s patients were insured by Medicare or Medi-Cal, slightly lower than 72 percent statewide; 76 percent at Salinas Valley Health were publicly insured; and 82 percent at Natividad.

There’s still Lucia’s unanswered question about pricing, which is not reflected in the OHCA data – hospital pricing is still treated as proprietary. But the RAND research group, relying on data voluntarily provided by self-insured employers, reveals that in 2020-22, local hospitals charged relatively high prices. Prices (both inpatient and outpatient services) at CHOMP were 4.7 times what Medicare pays; 4.2 times higher than Medicare at Natividad; and 3.4 times higher at SVH. The median California hospital charged 2.7 times higher.

Ahead of the public comment period, the board will hear reports about variation in health care prices across the state, along with a case study of Monterey County hospital prices and an explanation of OHCA’s statutory authority to address high costs. The meeting starts at 9am at Embassy Suites, 1441 Canyon Del Rey Blvd., Seaside. It’s also available online at hcai.ca.gov/public-meetings.