Feds cutting safety-net payments
Floyd Medical Center officials say they’re prepared to lose about $5 million a year for charity care.
Floyd Medical Center is expecting to lose reimbursements of about $5 million a year under a provision of Obamacare linked to expanded Medicaid coverage.
“We have known it was coming and we knew that we had to continue to work hard to learn how to do things more effectively and efficiently,” said FMC President and CEO Kurt Stuenkel. “That has been an ongoing effort.”
A provision of the Patient Protection and Affordable Care Act calls for the reduction of Disproportionate Share Hospital allotments beginning in the fall of 2017. The DSH program reimburses hospitals for a portion of the costs associated with providing care to Medicare, Medicaid or underinsured patients.
Redmond Regional Medical Center also is facing cuts that CEO John Quinlivan called “very mate- rial.”
The federal DSH program, which has been around since 1981, has become the largest source of funds for uncompensated care to these health care facilities.
There are two types of DSH programs — one administered through Medicare, the other administered by the state Medicaid program.
Kenneth Metteauer, chief financial officer at Redmond, said the stateadministered program tied to Medicaid will be most problematic for many Georgia hospitals.
Georgia did not expand its Medicaid program to include the working poor, as was anticipated by the ACA. The expansion was supposed to lead to a dramatic reduction in the number of uninsured patients across the country.
Metteauer said that Medicaid DSH payments to Redmond totaled $681,382 in 2015 and are at $443,876 so far this year.
FMC Vice President for Finance Rick Sheerin said the latest plan from Washington is to reduce the DSH allotment budget by up to $2 billion in the 2018 fiscal year that begins Oct. 1, 2017. The cuts are slated to increase to $8 billion by FY 2025.
The county’s public, nonprofit hospital received $4.5 million in DSH payments in FY 2012. That increased to $5.7 million in FY 2013, to $6.8 million in FY 2014 and $5.8 million in FY 2015.
FMC officials anticipate getting $4.4 million for FY 2016 — which runs through Sept. 30 — and $3.4 million in FY 2017.
But Sheerin said care for uninsured and underinsured patients costs the hospital more than that.
He said unreimbursed charity care was roughly $13.5 million in FY 2015. Writing off bad debt was another $13 million, and FMC’s loss on Medicaid patients was about $9.7 million. However, he noted that the total losses were down about $4 million from the previous fiscal year.
Stuenkel said the numbers are high, but have been fairly predictable in recent years. And officials have been preparing for the DSH cuts.
“The way you post a profit in running a hospital is you get paying patients who are willing to come,” Stuenkel said. “That’s been our volume increase, that’s really the answer.”
FMC reported a profit of $32.9 million for FY 2015. Stuenkel said patient volume was up 10 percent, net revenue increased $51 million but net
expenses were up only $27 million.
Stuenkel said the hospital also has focused more on how it confirms patients’ insurance and helping enroll uninsured patients who are eligible for some kind of plan.
“Those things we did to improve the revenue cycle had a very dramatic effect,” he said. “We also eliminated a lot of positions through attrition, we renegotiated supply contracts — and all of (the changes) hit in full force in a positive manner in 2015.”
Stuenkel said the hospital did not increase its rates any more than normal to generate additional revenue.
“Blue Cross, United Healthcare and all the others — we have contracts with them and you can’t arbitrarily increase your rates, it’s a very small amount each year,” Stuenkel said.
“And Medicare and Medicaid increases are set by the federal and state budgets. So to increase your revenue you’ve got to do the things that we did, collect better and increase your volumes.”