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Hospitals fear federal budget cuts

Published 11:26pm Tuesday, November 8, 2011

Michigan Critical Access Hospitals (CAH) are focused on the shifting sands of health care reform, Borgess-Lee Memorial Hospital administrator and CEO Joy Strand said Monday.
In March, the U.S. Congressional Budget Office issued a report on ways to reduce the federal deficit. Included was elimination of cost-based reimbursement for critical access hospitals.
CAH facilities are small rural hospitals, less than 25 beds. As a result of low population density, lower inpatient volume and higher fixed costs (labor), small rural hospitals “cannot provide the care at these deep discounted payment rates,” Strand said.
There are more than 1,300 CAHs nationwide representing 25 percent of all community hospitals and 60 percent of rural hospitals. CAHs account for 5 percent of Medicare inpatient costs.

Ongoing losses
Even with enhanced payment methods, many critical access hospitals operate at a financial loss.
President Obama’s most recent deficit plan proposes to reduce payments in the following ways, as reported by the National Rural Health Association (NRHA):
n  Reduce bad debt payments to 25 percent, down from 70 percent, for eligible providers. This would save $20 billion over 10 years (CAHs currently receive 100 percent reimbursement for Medicare bad debt).
n Reduce CAH reimbursement to 100 percent of cost, down from the current 101 percent.
n End CAH reimbursement for facilities located 10 miles or less from another hospital.
Obama’s plan called for $6 billion in cuts over 10 years to rural hospitals, claiming the proposal eliminates “higher than necessary reimbursement.”
“Such devastating cuts will cause rural hospital doors to close, resulting in loss of access to health care and needed rural jobs,” an NRHA advisory comments.
The Congressional Joint Select Committee on Deficit Reduction, (“Super Committee”) which includes Michigan Congressmen David Camp and Fred Upton, has been provided recommendations to reduce or eliminate the CAH enhanced payment program.
“The CAH program is a safety net program that is working. Despite so many struggling financially, many rural hospital doors are able to stay open solely because of the CAH program. These hospitals provide vital care for the millions of our nation’s most vulnerable citizens – rural seniors who are on average, poorer and sicker than urban or suburban seniors,” she said.

Providing jobs
In addition to providing hospital and primary care services, rural economies depend on these hospitals for jobs, economic growth and revenue production.
Rural hospitals are often the largest or second-largest employer in rural America.
The average CAH supports more than 100 jobs and provides $5 million in wages, salaries and benefits to the local community.
In Dowagiac, Borgess-Lee Memorial Hospital employs 260 people with an annual payroll of more than $13 million.
It is the only hospital in Cass County providing health care services to thousands of area residents.
Yet, it is struggling financially. Any significant reimbursement cuts or changes in the CAH program will imperil the future of BLMH.
To help, Strand suggests contacting Upton and Camp and Sens. Carl Levin and Debbie Stabenow to support Critical Access Hospitals and to oppose any changes to the current CAH program.

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