City of Seward, Health

Council agrees to $6.1 million settlement through fee increases at Mountain Haven

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.



  1. “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?”

    I belive the answer is not very many of us (I know I sure couldn’t). It doesn’t matter if anyone is making “huge profits”, unaffordable is unaffordable.

    • I totally agree! My husband and I have long tere care insurance and it only covers $300.00 a day. 🙁 I think only Medicaid recipients can afford it–anotherwards government. 🙁 🙁 This decision by the council was disappointing. Thanks for your common sense response, Brent. 🙁

      • Oops, the last face was supposed to be a smiley face! 🙂

        • Do you really think that the city should have turned down an offer of $6.1 million from the state to help cover the hospital budget’s shortfall and enter into a lenghty lawsuit that it could lose? I think it was the right decision, but it’s just too bad that health care and care facility costs everywhere, especially at modern facilities, are getting so far beyond most individual’s ability to pay.

  2. The facility rates are paid by medicaid. Persons qualified for medicaid are able to use the services there. A strange system of qualifications and reimbursements.

  3. You are both correct. (some might not choose Ron’s steps for getting to Medicaid! : – ) The rates are not affordable for most of the general public, but it is (of course) open to all. However, the persons we have in the facility now are almost all Medicaid. Insurance coverage for long term care usually covers for a period of ‘time’ or amount. Read your policy or check with your agent. Also, anyone can request a walk through with a call and an appointment. I would encourage all to do so. A wonderful facility. A great experience for those there. It’s just the regulations that are/seem to be bazaar. My father did not qualify for medicaid and his moneys would have run through very quickly, it is apparent that we have a huge gap between Assisted Living Care, Home Care and the long term care facility for our elders in Seward. There is not a hospice program in Seward yet either, but could be with some help and support.

    • Well written, Mary! Great suggestions too. 🙂

    • Couldn’t agree more about the need for Hospice. My mother died at Mountain Haven a year and a half ago allegedly on “Hospice” care. Translated that was the individual efforts of me and (pace) Regina Wright. I’d join any effort to establish Hospice in Seward.

      As to how great the experience is there for the elders is open to some debate-at least it was when my mother was there. $1000+ per person per day buys a lot of great experience. I’m not sure what my mother got was worth that.

      The key is control over patient admissions. When you have to take anyone to fill a bed and keep patient count up (including a convicted sexual predator from Spring Creek who was subsequently prescribed viagra) and/or dementia patients who require 24/7 one on one eyeball supervision, there isn’t a lot of staff time left to provide “great experience” for the other elders.

      Maybe things have changed since a year and half ago but the entire model is only workable with a relatively self sufficient patient (except for the reason they need 24hr nursing care which usually has something to do with bathroom functions).

      The concept was doomed from the start with the total transfer of old Wesley patients to the green homes-there should have been a Mothership holding facility for those high need patients. That said, we now have a facility that is limited to low resident numbers (10-12 per unit) with unrealistic staffing as soon as even one of those patients needs constant eyeball supervision. If one is on one patient 24/7 and the other one is cooking and serving meals that leaves (on the good staffing days) one other staff to run around and provide “great experience” for 9 other residents. The entire time my mother was there at least 2 residents required one on one and several others had special problems requiring special attention. The staff were for the most part living saints but any wheel that didn’t squeak couldn’t and didn’t get much attention at all and certainly not $1000+ per days worth.

      After the first series of Medicaid audits cosmetics were applied in terms of activities etc. but I remained unconvinced that this model can work at all unless you can control the level of care each admission requires and populate the houses according to resident needs carefully balancing the high/ low resident populations. As soon as you have to take whoever is next in line, no matter how they’re paying, you’re upsetting the balance of the unit.

      It’s a beautiful idea but I’m not sure it can work and this Green Home model’s success nation wide is up for serious difference of opinion by reasonable women and men of goodwill.

      Further your affiant saith not.