By Heidi Zemach for SCN
The Seward City Council unanimously passed a resolution authorizing the general terms to settle a dispute over Medicaid rate reimbursements between the State of Alaska and Providence Seward Medical & Care Center. The action was taken at special meeting Thurs Feb 29. The mayor was absent. The settlement would increase the rate charged for each patient each day by $137, and would bring in approximately $6.1 million more in reimbursements to Seward over four years.
Two million would go to the city to repay a loan made to PSMC to cover previous hospital’s shortfalls. The remainder would be available to cover the hospital’s ongoing operational shortfalls, costs and cash flow.
The city owns the hospital and new long-term care facility, but they are operated on the city’s behalf by Providence Health & Services, a non-profit.
Under the current terms, in FY 13 Medicaid would have reimbursed the city for the hospital by an estimated $754 per patient per day. That amount would have increased with inflation to $767 by FY 2014 or an estimated $24,300,000 in reimbursements over four-years.
With this settlement proposal however, in FY 13, Medicaid reimbursements would rise to $896 per patient per day, and to $913 by FY 2014. This amounts to an estimated $30,400,000 reimbursement over the four-year period, and represents a $6.1 million increase over what was being, or was to have been paid, based on a 30-patient average.
PSMC filed the dispute with the State Department of Health and Social Services over the FY 2011 Medicaid reimbursement which had been established using FY 2009 as the “base year,” and was therefore slated to have been used for the three additional fiscal years to follow. PSMC argued that Seward should not be held to costs of the lower reimbursement rate for entire full four-year cycle. That particular year, the year of the move to the new facility in October 2009, represented an anomaly, they said, as the lower priced old Wesley facility rates had been applied. The clients occupied Wesley for the first three-quarters of the year, but then most moved into the new Mountain Haven facility for the last quarter of the year, they said. Mountain Haven’s per-patient reimbursement rates should be significantly higher in subsequent years as they would have incorporated the cost of operating the new $27 million facility, its new model of care, and have included add-ons to help repay the bond for the cost of construction, the hospital nonprofit argued.
The state said that PSMC was not entitled to either a waiver of the lower cost, or the other charges issue because the methodology it uses allows Alaska to base its rates on the lowest rate of reimbursement if there are more than one facilities in use during the base year. The state said the city had chosen to charge client reimbursements at the lower rate that year, although its own costs were higher.
The state offered to settle negotiations by increasing the per-diem or daily base rate for Seward Mountain Haven by $137. Overall, the financial health of the facility will depend on its elderly population numbers, Erchinger said.
Seward still owes $25.6 million for Seward Mountain Haven. The city repays the bond with annual $1.9 million payments from facilities revenues.
Although the total disputed amount that PMSC (and city) felt entitled to receive was actually $12 million, after a lengthy negotiation process Providence recommended that the city support the settlement in order to avoid what may have been a very lengthy and expensive litigation process for both sides.
The amount that clients (or their families) are charged to attend the long-term care facility seems unreasonable. Who among us could actually afford to pay $896 a day, $26,880 a month or $322,500 per year out of pocket to live at Seward’s long-term care facility? But understand, nobody is making huge profits on the charges, not the City, nor PSMC, said City Finance Director Kris Erchinger. As other long term care facilities are replaced statewide – their costs also will rise significantly.
While the cost of staying at the Seward facility is more than staying at Anchorage’s aging facilities, the rates at facilities in Cordova, Sitka and Norton Sound are even more expensive, Erchinger said. Providence Anchorage has just opened a new long-term care facility, modeled after the Seward Mountain Haven facility, so their costs also will escalate significantly when the cost of the paying for the new facility are factored in. Kodiak also just breaking ground on a new $16 million facility, and its rates also will likely be comparable to ours when completed, she said.
In 2010, the City of Seward forwarded $750,000 to PSMC to fund the implementation of a new federally-approved electronic medical records (EMR) system, including $350,000 to cover operational shortfalls due to the rate reimbursement disputes. PSMC has since received the $400,000 federal reimbursement for its new records system, but the city has not asked the hospital to reimburse the general fund for that amount yet due to its other cash shortfall.