The Enid News and Eagle, Enid, OK

Local and State News

August 24, 2013

Uncertainty: Rural hospitals struggle with Medicare cuts, low patient counts

ENID, Okla. — Many rural hospitals are struggling these days because of low patient counts, Medicare cuts and some Medicare definitions that affect how they are paid.

And, the future is uncertain as the sweeping new federal health care plan gets set to usher in a new concept in medical costs.

“There are a lot of different things affecting rural hospitals,” said Shelly Dunham, CEO of Okeene Municipal Hospital.

Hospitals in larger urban areas receive adjustments to their payments based on several criteria. Okeene is defined as a critical-access hospital by Medicare, and its payments took a 1 percent to 2 percent reduction April 1, due to the across-the-board federal budget cuts known as sequestration.

“That was one big hit to all the hospitals,” Dunham said.

Because patient numbers are low, it is a struggle for the Okeene hospital, she said, but there are other factors, too.

“We work really hard to keep expenses just as slim as they could be to help us make sure we will still be here,” Dunham said.

The average daily census for Okeene the past two months has been three patients.

“Looking at the year as a total, it’s more like one and a half or two,” she said.

Hospital payments

The critical-access hospital definition indicates the way Medicare pays the hospital. There is a difference between critical-access definitions and PPS, or prospective payment system, definitions. Prospective payment system definitions are intended to motivate providers to deliver patient care effectively, efficiently and without over-utilization of services, while critical-access payments may be up to 100 percent of the costs of services.

Dunham said PPS hospitals and larger urban hospitals have enough volume they can live off the payment system.

“Medicare is saying, if you have pneumonia and will pay this much, it’s up to them to do a good enough job to get patients well and out within that cost structure,” Dunham said about the PPS payment system.

However, Candace Allen, CEO of Share Medical Center in Alva, said her hospital is a PPS-designated hospital and the average daily census is about one to one and a half people. Share was denied the critical-access designation because it is too close to Kiowa, Kan., which is a critical-access hospital.

Critical-access hospitals can’t depend on volume, Dunham said, and are paid based on cost. During the past year, 65 percent of Okeene patients were Medicare patients, she said. Payment is made per item, and the percentage is examined during the year.

“Sometimes you get it back, and sometimes you lose it,” Dunham said.

The amount received was lowered from 102 percent to 99 percent this year due to sequestration. Hospitals must make sure enough of the other patients have commercial insurance or Medicaid, because they may be able to receive enough revenue to pay the rest of the costs, she said.

“More and more commercial insurance companies are curbing and reducing payment,” she said.

Dunham doesn’t know how the new federal health care act will affect her hospital. Gov. Mary Fallin refused to accept the federal governments Medicaid expansion proposal, which was allowed by the U.S. Supreme Court. That refusal will cost the Okeene hospital funding, but Dunham does not know how much. The new health care act will mean more people in the state will have insurance, Dunham said, but not as many as would have if the Medicaid expansion was accepted.

“Because the choice was made not to accept those federal funds, it makes what we thought we would get not happen,” Dunham said.

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