Medicare Cut Threatens to Cost Arkansas Hospitals $407M

by George Waldon  on Monday, Jan. 28, 2013 12:00 am  

Larry Morse

“At some point, if we continue to get cuts, we’re going to have to look at other issues.”

Johnson County Regional Medical Center is among four Arkansas hospitals that received a budgetary reprieve thanks to an 11th-hour deal to extend the Medicare Dependent Hospital Program.

Congress allowed MDH to expire on Sept. 30, but then the program was revived with funding of $100 million as part of the year-end fiscal cliff avoidance package.

“We were certainly facing a challenge up until that,” Morse said. “We were looking at a reimbursement loss of about $750,000, which represented our profit for all of 2012. That would’ve moved us into the red.”

Launched in 1990, MDH was established to aid small rural hospitals. In Arkansas, Baptist Health Medical Center in Stuttgart, Hot Spring County Medical Center in Malvern and NEA Baptist Memorial Hospital in Jonesboro also participate in the program.

The one-year extension of MDH put $461,000 back in the 2013 budget for Johnson County Regional Medical Center.

Morse estimates the looming Medicaid cut will hit hospital revenue somewhere under $200,000 year.

“For our hospital, it’s a significant amount of money, but we thought we could handle the additional 2 percent Medicare cut,” he said.

“What we weren’t prepared for was the major changes in payment rates for insured patients. That’s projected to reduce revenue by $350,000.”

While hospital revenue is getting squeezed from a number of directions, physicians gained another year of special dispensation from substantial cuts in Medicare reimbursement.

On paper, the accumulative cut amounted to somewhere around 29 percent, according to David Wroten, executive vice president of the Arkansas Medical Society.

“As part of the bill that was passed to avoid the fiscal cliff, Congress put off physician fee cuts for another year,” Wroten said. “It’s status quo for 2013.”



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