Critical time for critical access hospitals

CHARLES TOWN — Officials from area critical access hospitals are asking the Centers for Medicare and Medicaid Services to re-evaluate its proposed change to a longstanding policy of considering state provider taxes as allowable costs fully reimbursable by the Medicare program.

The proposed change’s annual impact out of the pocket to each hospital would be in the hundreds of thousands of dollars, according to hospital officials.

Jefferson Memorial Hospital stands to lose $300,000 in lost reimbursement under proposed change in Medicare.

The critical access hospital program is a federal program established in 1997 for the purpose of recognizing small, rural hospitals as essential providers of care to rural populations.

The program aims to ensure access to quality health care in more remote settings through hospital payments based on actual incurred costs.

“The new interpretation impacts all cost-based reimbursed hospitals and providers across the country, including Jefferson Memorial Hospital and 17 other Critical Access hospitals in West Virginia,” said Teresa McCabe, vice president of marketing and development at West Virginia University Hospitals East.

Historically, Medicare has interpreted that the provider taxes are an allowable cost, and CAHs have claimed the provider tax paid to the state as a cost to be reimbursed by Medicare.

“Following extensive review of the issue, we believe this change in interpretation will have a devastating effect on Jefferson Memorial Hospital by essentially penalizing us for our contributions toward funding the state Medicare program,” Knight said.

A critical access hospital is one that furnishes no more than 25 inpatient beds and provides 24-hour emergency care services.

CA hospitals are typically located in rural areas.

“We have grave concerns that this payment reduction policy coming down from the federal government will have a significant impact on JMH and all CAH hospital in West Virginia,” Knight said.

Knight said the annual impact of this disallowance would be more than $300,000 in lost reimbursement to Jefferson Memorial and more than $5.5 million annually to all CAHs in West Virginia.

The disallowance is expected to be applied to multiple years going back to 2009, resulting in a total negative impact of $1 million to Jefferson Memorial Hospital.

“We are very concerned that reductions in federal Medicare payments to Jefferson Memorial Hospital as a result of his policy, will severely impact our ability to provide quality health care to the residents of the community,” Knight said. “When you’re a small hospital with limited cash flow, you don’t have a lot of ability to absorb the kinds of cuts resulting from this policy.”

Knight said critical access communities must ban together and contact their congressional delegation to support passage of the Rural Hospital Protection Act.

The American Hospital Association and the West Virginia Hospital Association say they are working with West Virginia’s congressional delegation on the issue.

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