Local hospitals to lose $43M in healthcare fees
Mar 09, 2013 (Dayton Daily News - McClatchy-Tribune Information Services via COMTEX) --
Local hospitals are facing cuts in reimbursements and other payments of more than $43 million over the next four years as a result of the American Taxpayer Relief Act signed into law in early January to stave off the so-called fiscal cliff.
The law was cheered by doctors' groups for delaying planned cuts in Medicare payments for physicians that were suppose to begin Jan. 1. But the law offset the delayed cuts in other ways, including documentation and coding adjustments that allow Medicare to reach back and recoup over payments to hospitals based on a new coding system.
In addition, the law extends by one year cuts to Medicaid Disproportionate Share Hospital (DSH) payments for treating patients with no insurance that were originally included in The Patient Protection and Affordable Care Act.
Combined, the payment cuts will cost area hospitals $43.4 million through fiscal 2017, according to the Greater Dayton Area Hospital Association, which represents 29 hospitals.
The area's largest hospital networks -- Premier Health Partners and Kettering Health Network -- will see reductions in payments by $23.8 million and $14.5 million, respectively, according to the hospital association.
Community Mercy Health Partners, which includes the Springfield Regional Medical Center and Mercy Memorial Hospital in Urbana, would see payments cut by $3.8 million.
"Certainly this presents a challenge," said Mercy spokesman Dave Lamb. "But we have anticipated state and federal cuts, and we are working to minimize the impact on the people we serve in Clark and Champaign counties and surrounding areas."
While most of the cuts will affect future payments to hospitals, some hospitals are already feeling the impact of the documentation and coding adjustments, said Bryan Bucklew, president and chief executive of the hospital association.
"They're both big issues, but the coding offsets provide more immediate challenges than the provider (DSH) cuts because you can plan for those," Bucklew said. Medicare "is retroactively saying we're going to pay you less for procedures that have already happened than what we told we were going to pay. That causes more problems for hospitals because they've already budgeted for those expenses."
Financial constraints could be compounded by an across-the-board 2 percent cut in Medicare payments set to take effect April 1 under the $85 billion federal budget sequester.
Hospital officials said it's too early to tell precisely what impact the payment cuts might have on employment or programs and services at their facilities, but they readily acknowledge that reducing government payments will undoubtedly have negative consequences.
"As we look at the decreases, I think we have to be concerned, not only at Kettering Health Network, but for the community at large because those are significant dollars going out of the Dayton market," said Kettering President Terri Day. "We look a those cuts, and we know that means we have to continue to provide quality care.
"Can we cut back on programs We just have to look at that," Day said. "I wouldn't say we have plans for any immediate impact...but we're certainly going to be adversely impacted if all of these (payment cuts) become implemented."
While the cuts won't impact benefits received by enrollees directly, experts say they will force hospitals to come up with new ways to provide quality care to the estimated 80 percent of local hospital patients on Medicaid or Medicare in the lowest-cost setting.
"When you think in terms of how you deal with that kind of situation, there are two basic ways you can look at it: You either need to reduce your costs or increase your volume or a combination of those two," said Nancy Thickel, a spokeswoman for Premier. "We're certainly always looking at how to improve and become more efficient. But it's challenging when you're looking at how to address these cuts."
Medicaid and Medicare payment cuts will cost area hospitals $43.4 million through 2017, according to the Greater Dayton Area Hospital Association. The cuts will trim:
-- $23.8 million in payments to Premier Health Partners
-- $14.5 million in payments to Kettering Health Network
-- $3.8 million in payments to Community Mercy Health Partners
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