Unless federal legislators reverse a change in how they calculate low-volume Medicare payments, St. John’s Medical Center will see a $1.3 million hit starting in October.
Other rural hospitals in Wyoming are expected to see similar if not greater losses.
“Nationally, every rural hospital will have an issue with this,” said Paul Beaupre, St. John’s CEO. “It could really adversely impact hospitals, and it could change their sustainability.”
The president of the Wyoming Hospital Association, Eric Boley, said his organization has been monitoring the change. Hospitals that have smaller margins, he said, might end up “in the red” from the change.
“It’s concerning for us,” Boley said. “It’ll impact a lot of our facilities around the state. But nothing really surprises us anymore back in D.C.”
Rural hospitals have fewer patients than their urban counterparts. Past guidelines said that if rural hospitals had fewer than 1,600 Medicare discharges they would be reimbursed. Medicare is the United States’ health insurance program for people who are 65 years old or older.
Since St. John’s has between 640 and 700 Medicare discharges a year, the hospital has applied and qualified for the financial assistance every year.
But last week, St. John’s CFO John Kren was informed by the Centers for Medicaid and Medicare Services that now only hospitals that served fewer than 200 discharges would be reimbursed.
That was the number in the original bill when it first passed in 2000. When few hospitals qualified because of the low number, it was bumped up to 1,200 in 2005 and has remained that way since. Now Congress has proposed going back to 200.
The timing couldn’t be worse.
“It happened after the whole budget had been approved,” Beaupre said, “so we couldn’t anticipate trying to do something different in the budget.”
Beaupre told hospital trustees during their monthly meeting last week that it “came as a complete surprise to us now,” even with the financial department being as “astute as it is.”
The losses are expected to start in October. If the wording isn’t reversed, the annual loss will increase to $1.7 million in coming years.
“It’s substantial,” Beaupre said. “When we break even pretty much every year, $1.7 million is a big hit. This is major for us.”
But Kren and Boley are hopeful it won’t get to that and that the change wasn’t malicious.
“I believe Congress had other things on its mind,” Beaupre said. “But I could be wrong.”
Boley said his organization is in touch with Sen. John Barrasso’s and Sen. Mike Enzi’s offices, and has had positive conversations.
“I think they’re going to fix it,” he said. “But if they don’t, it could have some really serious consequences for a lot of our facilities around the state.”
He believes that senators from around the country have been “so consumed with repealing the Affordable Care Act that they haven’t really worked on a lot of other things.”
“Now that they’re getting back in session and recess is over, they have a lot of stuff they need to fix,” Boley said.
The reimbursement system is complicated, Boley said. He thinks senators could have missed the language.
“I don’t think it’s intentional,” he said. “I don’t think they are trying to hurt the hospitals in this process. I think it was an oversight that they need to get fixed.”
If change doesn’t happen quickly enough and St. John’s does take a financial hit, this year or in the future, Beaupre reiterated that prices would not go up as a result.
“One of the things St. John’s doesn’t do automatically is just raise our rates and pass the loss off to other insurance companies or to the public,” he said. “We generally try to figure out ways we can make up for the distance when something like this happens. New revenue can offset a loss in income.”
The hospital is exploring offering services, such as the recently launched physical therapy program for oncology patients, that Beaupre hopes will bring more patients — and more revenue — to the hospital.
There’s also a high likelihood, Beaupre said, that the hospital will qualify for a new way of being reimbursed for Medicare discharges. It’s a pilot program through the federal government that reimburses hospitals on a cost basis.
“States that have a better opportunity for qualifying are states with low populations,” Beaupre said. “So we are in really good shape.”
But for now, renewal of the old Medicare reimbursement formula is out of the hospital’s control. And even if St. John’s qualifies for a new form of reimbursement, it likely won’t kick in until there is some financial loss.