NVH, other Critical Access Hospitals face budget axe

TONASKET – Proposed cuts to state Medicare and Medicaid funding have North Valley Hospital District officials concerned about the future of health care in the region, the future of the hospital and the potential economic impact if enacted.

Officials from Critical Access Hospitals around the state, as well as legislators from the rural, low-income areas that most CAHs serve, are doing their best to make their voices heard before cuts are enacted that could gut rural health care facilities statewide.

NVH administrator Linda Michel recently wrote a letter to Governor Christine Gregoire outlining the potential impact of the proposed cuts.

“We provide much needed services to our community, and we work hard to provide both quality care and great customer service to our patients, visitors, providers and each other,” Michel wrote. “Our elderly population benefits the most, because often times they are unable to travel to a larger city, or must be separated from their spouse because he/she cannot drive such a distance. Rural healthcare also has lower care costs than the big city facilities, yet provides the same standard of care…

“Rural medicine is vitally important in our state, not only for healthcare, but for employment. In a time when employment is hard to find, we employ 200-plus in our CAH. Should the cuts be so deep that we cannot survive; our town will also not survive.”

The hospital district is Tonasket’s largest employer; the Tonasket School District, fighting a budget battle of its own with the state, is the second-largest.

Hospital CFO Bomi Bharucha said the district receives 65-70 percent of its income from Medicare and Medicaid reimbursements. Medicare accounts for about two-thirds of that amount.

House Bill 2130 would eliminate cost-based Medicaid reimbursement to all of the state’s Critical Access Hospitals, which accounts for about half of all Medicaid funding received by the hospitals.

It would be a huge cut in an area where there is little cushion.

“Cost-based’ doesn’t mean it covers all costs,” Bharucha said. “Many costs are excluded, such as professional fees to physicians, because we bill separately for those. It is the hospital technical side it covers.

“The problem in rural areas, with low volumes (of patients) and very low reimbursement rates for professional fees, many CAH hospitals lose a lot of money on professional fees. And the very definition of cost-based means that the best you’ll do is to break even. ‘I’m just going to pay your costs, there’s no profit there.’

“So if they take away the cost-based program it is a big chunk for a facility like ours. That is the big one to watch for.”

Michel wasn’t the only one writing letters. In December, shortly after the governor’s budget cut proposal was released, more than 30 legislators representing rural Washington districts — including District 7 representatives Joel Kretz and Shelly Short — signed a letter to the governor outlining the potential impact of her proposal.

In it, they point out that the cuts in state funding would be matched 1:1 by cuts in federal dollars, and likely result in further cuts to programs and services supported through Medicaid managed care.

“While the proposal represents only 3 percent of the state’s Medicaid budget,” the letter reads, “it represents a 48 percent reduction in Medicaid payments to Critical Access Hospitals. It’s difficult to identify another service that would be cut this dramatically.

“The real impact of these cuts is measured in lives, not dollars. It is not simply a convenience to have reasonable access to health care. Sometimes it is the difference between life and death.”

Bharucha pointed out that there are other areas that may be cut as well. For instance, the hospital can currently receive a 100 percent reimbursement from Medicare for bad debt; that could be reduced to 25 percent.

“The smaller cuts that may be coming as well,” Bharucha said. “A little cut here and chop there adds up. Sometimes, it’s the uncertainty that gets to you more than the knowing what will happen.”

Meanwhile, Critical Access Hospital facilities like NVH wait to see what happens in Olympia.

Note: The full text of the legislators’ letter can be found at http://houserepublicans.wa.gov/fagan/CAH.Letter.pdf