Continuing cuts in Medicare reimbursement to hospitals are at the heart of a recent decision to lay off 14 employees at Hamilton’s Marcus Daly Memorial Hospital (MDMH) and reduce the hours of 11 others.
MDMH administrator John Bartos has been battling Medicare cuts for years. Several months ago he cut loose the hospital’s ambulance service in part because Medicare reimbursement for that service was so low it put the hospital deep in the red. Ambulances in the Bitterroot Valley are now run by a private company.
Medicare, the federally funded medical health care plan for senior citizens, is both underfunded and unfairly administered, says Bartos, and the biggest losers are rural hospitals like his.
Sixty percent of MDMH’s patients are covered by Medicare. Over the years Medicare has continually reduced its payments for medical services, so that MDMH today receives back from Medicare only 44 cents for every dollar it charges. The state agency, Medicaid, pays only 39 cents for every dollar of service.
Nor does Medicare reimburse hospitals equally. Urban hospitals are reimbursed at higher rates than rural hospitals, according to Bartos. For instance, Medicare pays hospitals in Missoula $465 more for a laproscopic gall bladder procedure than it pays MDMH, while hospitals in Billings are reimbursed $665 more than MDMH for the same service.
Medicare justifies these lower payments to rural hospitals by claiming that wages are lower in small towns, and thus small-town hospitals have lower operating costs.
But Bartos argues that MDMH is competing for registered nurses, physicians and other health care personnel from the same job pool as Missoula, and there is virtually no difference between urban and rural hospital wages.
Prior to the Sept. 11 attacks in New York City and Washington, D.C., Bartos had managed to attract the attention of Sen. Max Baucus (D-Mont.) and Medicare’s top budget official, both of whom spent a considerable amount of time at MDMH trying to forge fiscal and legislative solutions to the problem. Legislation that would have equalized funding between urban and rural hospitals has been pushed off the table following the Sept. 11 attacks.
With priorities shifting towards the war on terrorism, Bartos is not hopeful that the economic plight of rural hospitals will attract much attention in Congress anytime soon. In the case of MDMH, he says it may be “a good nine months” until the laid-off employees can be rehired.
“The hospital made every attempt not to cut personnel, but because of what Medicare is not paying us we had no choice but to cut employees. I would not be surprised to see in the next 18 months other rural hospitals doing the same,” he says. Ultimately, he adds, “the fear is that rural hospitals will be closing.”
For now, the solution is to get the word out to the public in the hope that citizens will pressure Congress to increase and equalize Medicare funding.