Fiscal Cliff Deal Good For Some Rural Hospitals

Posted on: January 4th, 2013 by SamTabes No Comments

The New Year’s Day “fiscal cliff” deal came with a lot of mixed emotions across the nation, but for some small, rural hospitals there was a sigh of relief.  As an example, Jones Memorial Hospital in rural upstate New York will be receiving an extra $450,000 this year thanks to the deal according to Phil Galewitz’s article on Kaiser Health News.  The CEO of the hospital, Eva Benedict, is very happy.

This is a different emotion than much of the hospital industry is feeling.  They are frustrated by the deal struct between Congress and the White House because their industry will pay about half the $30 billion bill to avert a 27% Medicare fee cut for doctors.  About 200 small hospitals in rural areas are happy about one aspect of the deal.  The deal extends for one year a program that pays smaller hospitals millions of dollars every year because of how small they are with less than 100 beds.  This is because they are paying a higher portion of Medicare patients.

This was a bit surprising for much of the industry and Michael Clifford, chief financial officer of Wayne Memorial Hospital in Honesdale, Pennsylvania says they will be out of a financial hole because of this extra money.  His hospital expects to keep about $2 million in extra Medicare funding because of the program extension.  This is a significant amount of money that is sure to affect overall operations, especially since the hospital is so small.

The program being extended is called the Medicare Dependent Hospital Program and was started back in 1990 to provide a payment program designed to assist small rural hospitals.  These smaller hospitals often struggle to deal with financial challenges that bigger hospitals don’t always have to handle.  Eric Zimmerman, a lawyer with McDermott Will & Emery in Washington, points out that this is because they have a larger percentage of Medicare patients and don’t receive enough money from private insurance companies to offset these costs.

The amount of funding these hospitals receive is up for debate and some experts believe the program is contributing to the drain on the industry.  The program expired in September of 2012, but senators Charles Schumer of New York and Charles Grassley of Iowa fought for the extension of the funds.  Maggie Elehwany, VP of the National Rural Health Association says these senators worked hard to ensure $100 million was included in the deal made just a few days ago.  Hopefully it serves its purpose well and does not end up being a waste of valuable funds that could go towards other programs such as Medicare Prescription Drug coverage.

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