New regulations work in favor of Memorial Hospital budget
December 1, 1999
Things are looking up at The Memorial Hospital (TMH) in terms of the Balanced Budget Act (BBA) of 1997. The BBA was wreaking havoc on rural hospitals because the numbers of Medicare patients continued to rise, but reimbursement payments did not keep up.
According to TMH Administrator Randy Phelps, the “real pain” of the BBA is being heard in Washington as 2 million postcards have been sent to Washington from health-care providers.
“Mission accomplished,” Phelps said. “There have been significant changes made to the Balanced Budget Act that are favorable to rural hospitals.”
Legislation has been introduced to ensure Medicare outpatient reimbursements are not reduced further. According to Phelps, there are many rural hospital relief bills pending as the bills have passed from the Senate Finance and House Ways and Means committees.
The American Hospital Association has suggested that hospital trustees send an emergency resolution to state and federal legislators, encouraging them to commit at least $25 billion in additional Medicare funding to hospitals and health systems.
In another positive move favoring TMH finances, the possibility of becoming a Critical Access Hospital (CAH) is becoming closer to reality.
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Phelps has said CAH designation would be a “10-fold improvement.”
Hospitals with CAH status are 45 miles from another hospital (15 miles if in the mountains), have maximum patient stays of four days, a maximum of 15 inpatients each night and have an exemption from the outpatient perspective payment system.
Regulations state all hospitals classified as CAH are exempt from some fees. For example, in the case of a Medicare patient suffering from pneumonia, if the hospital stay was in a non-CAH facility, Medicare would reimburse the hospital the same amount whether the patient stayed one or 20 days in the hospital. For a CAH, Medicare payments would be received for each day the patient is in the hospital. In other words, fees would be paid as regular insurance payments.
Proposed changes to the system include an average patient length of stay of four days and a cost-based reimbursement for lab work. The maximum number of 15 inpatients now has been changed to 25, with 10 patients being considered on swing bed. Swing bed is a patient not necessarily needing acute care and not needing nursing home care.
Based on the 1998 cost report, TMH has a potential of earning an extra $1.2 million per year.