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Proposals could shut rural hospitals

  • Hutchinson News
  • Published Saturday, Nov. 19, 2011, at 6:23 a.m.

Several proposed Medicare-related rule changes being considered by the Congressional "super committee" tasked with cutting the federal deficit could hit rural hospitals in Kansas pretty hard, industry officials said.

The affect on individual hospitals varies, but at least one hospital administrator says it could eventually force closure of both hospitals in Harper County.

The Joint Select Committee on Deficit Reduction must come up with $1.2 trillion in proposed cuts by Nov. 23. That means proponents of rural hospitals have just over a week to lobby Congress to keep the proposals from coming out of the committee, said J. Bryant Anderson, administrator at the Anthony Medical Center in Anthony.

Several of the proposals under review by the committee target "critical access hospitals," which is a designation for 83 rural Kansas hospitals and some 1,327 in the nation, including both the Anthony Medical Center and Harper County District Hospital.

The designation allows those hospitals to be reimbursed at 101 percent of the actual costs for care, versus an average national cost reimbursement. Without the CAH designation, the Anthony hospital, for example, would get only about 85 percent of its actual cost for Medicare patients, Anderson said. The national average is 94 percent reimbursement of actual cost.

The Medicare and Medicaid repayment system, said Fred Lucky, senior vice president of the Kansas Hospital Association, is based on patient diagnosis, rather than the treatment. Based on volume, larger hospitals can shift costs to survive with the underpayment, but smaller hospitals have limited ability to do so.

"It’s more heavily weighted to procedures based on admissions like surgery," Lucky said. "CAHs don’t generally do those."

One of the most concerning proposals, Anderson said, is the so-called "15-mile rule." That rule says no hospital within 15 miles of another hospital can carry the critical access or CAH designation.

"In Harper County both Anthony Medical Center and Harper Hospital would lose their CAH designation and no longer receive the necessary funds from Medicare to maintain the care they give to rural Americans," Anderson said.

The proposal submitted to the super committee by the Obama administration, Lucky said, is actually a "10-mile rule," stating no hospitals within 10 miles of each other could have the CAH designation.

The two hospitals in Harper County are 10.83 miles apart, so they wouldn’t be impacted by that rule.

There has been discussion in Congress repeatedly over the past five years, however, Lucky said, for a 15-mile rule, so there’s considerable concern it will end up being the rule formulated. A 10-mile rule would impact only one hospital in Kansas, while the larger distance would impact 16, having much broader budget implications.

"We’re pretty scared," Anderson said. "We’re worried. In our situation, the Anthony Medical Center would cancel the Harper Hospital’s designation and Harper Hospital would cancel ours. Come Jan. 1, 2013, when all this would take effect, we’d both slowly die. The cash would go away. Without that (designation), we’re not able to provide the care."

"We’ve cut and cut and cut," Anderson said. "I’ve cut $1.8 million out of our operation budget over the last three years. I don’t know what else I can do. I guarantee if we go through this, there will be hospitals that close. "

While conceding that some may question the need for two hospitals within 11 miles of each other, Anderson said it’s a matter of quality of life and being able to provide emergency care in a timely way.

"Take someone who has a stroke or heart attack," he said. "They might make it to Wichita and live, but at what cost to their quality of life.... It’s just bad policy."

"This is a very serious threat," Anderson said. "In Harper County alone it would impact 476 jobs and more than $23 million in annual income."

At Ness County District Hospital in Ness City, they don’t expect as dramatic an impact as in Harper County, but it would hurt the hospital financially and could result in lost jobs, said administrator Curt Thomas.

"We estimate it would cost us $60,000 to $70,000 per year," Thomas said. "That’s about 1 percent of our budget."

There would also be costs in figuring out a new billing system and lost productivity, he said.

"It would go back on the local people," Thomas said. "Eventually we’d be one to have to increase our mill levy. We may be talking about laying off more people. It could be a couple of full-time equivalents."

A second proposal before the committee would simply reduce the reimbursement for critical access hospitals from 101 percent to 100 percent. That would impact all 83 CAH hospitals in the state and 1,350 nationally, said Chad Austin, vice president of Government Relations with the Kansas Hospital Association.

That would have an impact on the Ness County Hospital of about $30,000 a year, Thomas said.

Other proposals are to reduce hospitals’ ability to recover bad debt expenses, cutting it from the current 75 percent reimbursement to 25 percent, Austin said.

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