Medicare bill could aid YVMC

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— A bill that would aid rural hospitals beleaguered by inadequate federal health care payments is moving through Congress.

Congressman Scott McInnis introduced legislation last week that would offset the toll unpaid Medicare expenses take on rural hospitals.

Medicare continues to shortchange hospitals in the state. Rural hospitals such as Yampa Valley Medical Center feel the biggest blow from government shortfalls.

"Many rural and frontier healthcare providers depend on reasonable Medicare reimbursements to provide quality health care to their communities," said McInnis, a Republican from Grand Junction. "Without reasonable reimbursement levels, small hospitals can be forced into difficult cutbacks that cause severe physician and nursing shortages -- decreasing rural citizens' access to emergency care and routine services."

The Colorado Health and Hospital Association reports Medicare accounted for $3.5 million lost in unpaid hospital charges at Yampa Valley Medical Center in 2000.

Medicare, a federal program, provides health insurance for people 65 and older, as well as certain disabled persons.

Federal law requires hospitals to charge the same amount for all patients for the same service. What a hospital actually collects is quite different.

McInnis plans to use his position on the House Ways and Means Committee to increase reimbursement rates for sole community hospitals, home health care services in rural areas and home hospice services in frontier areas.

"The costs of delivering health care are significantly higher in rural than urban areas," he said.

While most insurance companies pay a certain percentage of hospital charges, Medicare pays a flat rate.

Under-funded charges are complicated by the fact that direct patient care costs as well as indirect overhead costs are not adequately covered, said Frank May, chief financial officer for Yampa Valley Medical Center.

According to the Colorado Health and Hospital Association, Yampa Valley Medical Center lost $2.5 million in the unpaid costs of Medicare in 2000. Data for 2001 is forthcoming.

Larger hospitals fare somewhat better with Medicare because they deal with a larger patient base and medical staff and expanded programs, Peg O'Keefe said last year. O'Keefe is the former vice president of public affairs and education at the Colorado Health and Hospital Association.

Rural facilities often receive smaller Medicare payments because the federal government determines the cost of living is higher in urban centers.

"The way Medicare is calculated, rural hospitals are put at a disadvantage," said Karl Gills, chief executive officer of Yampa Valley Medical Center.

The governing philosophy at Medicare's induction said hospitals' cost of doing business in rural areas was less than their cost of doing business in metro areas, he said.

"While it may have been true to some extent then, it has certainly changed over time," Gills said.

The cost of living is much higher in a rural community like Steamboat Springs than in a metro area like Denver, he said.

Medicare reimburses hospitals by paying a fixed amount for each of 511 categories of illness.

These "diagnostically-related" groups should theoretically even out the cost of care for patients whose illnesses require fewer resources and patients whose illnesses require greater resources.

O'Keefe said earlier the theory doesn't always work out because it's based on thinking that averages will average out.

Just a few patients with severe needs can tip the scale in smaller hospitals.

The effects of under-funded Medicare programs trickle down to local businesses that must deal with the costs passed on to paying patients.

Every hospital, O'Keefe said, regardless of its infrastructure, must be able to maintain a bottom line that allows it to pay its shareholders and taxes, and put resources into infrastructure and the community.

Yampa Valley Medical Center doesn't have shareholders or pay and collect taxes, but it does have to pay its expenses and put resources into infrastructure and the community.

"Failing to strengthen these hospitals through the Medicare program threatens their viability and the overall health of the communities they serve," McInnis said.

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