Federal proposal would reduce hospitals' reimbursements

Administrators don’t think proposal will pass, but worry about future

News editor

St. Luke Hospital and Hillsboro Community Hospital administrators aren’t worried by a recent proposal from the U.S. Department of Health and Human Services that would reduce the amount they are reimbursed for Medicare services, but they do see it as part of a trend of seeking to cut rural health care.

St. Luke and HCH are both designated as critical access hospitals. That designation, designed for rural hospitals, gives them higher reimbursement rates for Medicare services, specifically 101 percent of the cost of services.

Normally, a hospital must be at least 35 miles from the nearest hospital to receive that designation, but states can give exemptions for “necessary providers.” The proposal from the federal department was to eliminate the exemption for necessary providers.

That would strip 72 of Kansas’ 83 critical access hospitals of that designation.

“Hillsboro, Marion, and Herington, for instance, would lose their designation,” Marion Regier of HCH said.

Losing that designation would be a severe blow to both hospitals. Regier estimated 70 percent of HCH’s services are for Medicare. Jeremy Armstrong estimated 75 to 80 percent of inpatient and 60 to 65 percent of St. Luke’s outpatient services are for Medicare.

Armstrong said the extra reimbursement from the CAH designation is significant.

“Two years ago it was $1.1 million,” he said. He expects the difference has increased since then.

Armstrong and Regier doubt the proposal will be passed, since it would affect so many hospitals across the country. Making such a change would require congressional approval.

“Thankfully for us, it’s not something they (Health and Human Services) can do unilaterally,” Armstrong said.

Kansas’ congressional delegation strongly rejected the proposal. A letter signed by both senators and all four representatives dated Thursday said that the proposal, if approved, would likely result in the closure of many hospitals in the state. The letter was addressed to Kathleen Sebelius, Secretary of Health and Human Services and former Kansas governor.

“Based on your unique understanding of these important rural health issues, we urge you to consider other options than those presented in the report for any future proposals you would suggest be enacted into law,” the letter said.

However, Regier and Armstrong expressed worries that the proposal would be used as a bargaining chip for other cuts.

“If they ask for the whole cake and get half, they’ll be happy,” Armstrong said. “Rural health care has a target painted on its back.”

 

Quantcast