Hospital CEOs testify about effect of reduced Medicaid payments

Three local hospital administrators testified before the Joint Labor, Health and Social Services Committee of the Wyoming Legislature last week that if planned state budget cuts mean cuts to Medicaid distribution, as well, the cuts could be very harmful for Wyoming Critical Access Hospitals and their associated nursing homes.

Rick Schroeder at Committee meeting

North Big Horn Hospital CEO Rick Schroeder speaks to the Joint Labor, Health and Social Services Committee Thursday at the Lovell Community Center as consultant Steve Bahmer looks on.

Rick Schroeder, CEO of North Big Horn Hospital and the New Horizons Care Center in Lovell, CEO Jackie Claudson of South Big Horn County Hospital and CEO Bill Patten of Powell Valley Health Care in Powell spoke to the committee meeting in Lovell, flanked by Steve Bahmer of the Bahmer Consulting Group, who works with the Wyoming Critical Access Hospital Network and is a former vice president of the Wyoming Hospital Association.

After an introduction by Bahmer, who spoke of the “downward pressure” Medicaid reimbursement cuts would place on critical access hospitals, Schroeder spoke about the issue.

Gov. Matt Mead has directed all state agencies to prepare for possible 4 and 8 percent budget cuts due to the declining price of natural gas and the corresponding affect on state revenues, and one of the agencies most affected due to its size, Schroeder said, is the Wyoming Dept. of Health, which, among other things, administers the federal/state Medicaid program.

Realizing the effect Medicaid reimbursement cuts would have on small hospitals, Rep. Elaine Harvey of Lovell, chairman of the House Labor, Health and Social Service Committee, asked the local CEOs to testify at the committee meeting in Lovell.

“That was insightful on her part,” Schroeder said in a followup interview, “that maybe the committee should hear from the people who depend on Medicaid reimbursement about the practical impact. I really appreciate that.”

During Thursday’s testimony, Schroeder noted that 83 percent of the elders at the New Horizons Care Center rely on Medicaid to pay their expenses at the long-term care facility, calling 63 of the 76 residents “Medicaid dependent.” He said 30 percent of the hospital district’s gross revenue and 35 percent of the district’s expenses come from the care center.

Already, he said, Medicaid does not meet the expenses of the care center, covering 96 percent of the cost of each elder or resident. That means the facility loses 4 percent on every resident.

“It’s worth it as a district to provide this service to our community members and to keep it open and rely on the profits from the clinic and hospital, small though they may be,” Schroeder said. “It affects so many families. We feel we provide a service. It’s part of our mission.”

Not only does the Medicaid reimbursement not cover the “actual costs” of resident care, it does not cover the cost of needed capital equipment from beds to specialized equipment like resident lifts or a walk-in tub the district purchased recently for around $20,000.

“We’re operating on a very, very thin margin (as a district) of around 2 percent,” Schroeder told the committee, noting that the district has, thus, also focused on cost savings such as hiring Licensed Practical Nurses instead of Registered Nurses for some positions at the care center, as well as some Patient Care Assistants instead of Certified Nursing Assistants at the facility, both of which are allowed under nursing home regulations. And the duties performed by the LPNs and PCAs free the RNs and CNAs to offer more resident centered care.

“We put a lot of time and effort into making our facility nice,” he told the committee. “We run a very, very tight ship. We’re very pleased to offer the care that we do. We do a good job in the right way for the right reasons.”

In a later interview, Schroeder noted that saving $2 is about the same as making an extra $100, noting that the district receives about 80 cents for every dollar it bills. Annually, he said, the district has about $3.2 million in the budget for budgeted contractual adjustments, agreements with insurance companies, charity care and patients who cannot pay their bills. Money from the local mill levy pays for some of the charity and indigent care.

“We’re very pleased to be able to provide care for those who are unable to pay but still need health care,” Schroeder said.

Schroeder emphasized that, contrary to a local rumor he heard, if the district is hit with a decrease in Medicaid reimbursement, it would not lead to the hospital or the care center closing.

“We would deal with it,” he said, “and are gearing up right now to cut all unnecessary costs. Little, everyday things make a difference. We are in no danger of closing.”

South Big Horn County Hospital CEO Jackie Claudson echoed Schroeder in her comments to the committee last week, stating that 95 percent of the Bonnie Bluejacket Nursing Home residents are Medicaid dependent.

Claudson said Medicaid pays only 75 percent of the billed rate for nursing home residents and the district loses about $41 per day per resident or $786,000 per year in nursing home revenues.

“The nursing home’s relationship with the critical access hospital is important because of the shared staff and the fact that we can spread costs among the different revenue centers,” Claudson said.

Powell Valley CEO Bill Patten said his facility’s situation mirrors the North and South Big Horn circumstances, calling the financial situation “serious.”

Patten says Powell Valley loses $64 per day overall for nursing home resident care, in large part due to Medicaid reimbursement rates, for a grand total of $2.1 million during the last fiscal year. He said continuing to increase private rates to offset the low Medicaid reimbursement rate is not a sustainable model, noting that the district collects about 65 cents for every dollar billed.

“The only way to survive is to share costs (with the hospital),” he said. “We have to maintain certain staffing levels, and sometimes we have to use temporary, traveling staff.”

Noting the importance of the hospital and care center in the community, Patten said the money generated by the medical facilities is sometimes the “difference between a community that thrives and a community that fails,” but he added that shifting costs to the critical access hospital is a short-term solution that would eventually “threaten the viability of the health care center.”

Rep. Harvey said the Health Committee will consider the level of Medicaid reimbursement rates as part of consideration of Wyoming Dept. of Health funding levels by November 12-13, when the 2013-14 supplemental budget is due. She said some parts of the budget are so fragile that they cannot take an 8 percent cut, and thus, the Dept. of Health is being considered for only a 4 percent cut instead.

The Health Committee will make a recommendation to the governor’s office, which will make a recommendation to the legislature via the appropriations committee, which will then bring the supplemental budget to the full legislature in January.

By David Peck

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