How to make up those shortfalls?
“You hope to make it up through cost shifting,” Simmons said, defining cost shifting as using profits earned through other hospital services and subsequent reimbursement sources to help defray costs for and maybe even generate a modest profit on Medicare patients.
At present, DCMH’s biggest cost-shifting generators are insurance companies covering insured patients as part of normal coverage. Such companies are known in the healthcare industry as commercial payers.
The problem, Simmons explained, is that commercial payers are constantly trying to renegotiate the amounts they reimburse hospitals for given services. According to Simmons, those companies point to Medicare – even to Medicaid – reimbursement rates and try to use those for leverage when negotiating rates.
“They know the rates we’re being reimbursed by Medicare and Medicaid,” Simmons said. “That creates constant pressure, and I’ve got to give somewhere. We have to improve efficiencies, drive down waste and make tough decisions regarding what we can or can’t do without. I’ve got to make sure my costs come in at about Medicare reimbursement rates. The goal is to be able to live on Medicare subsidies.”
The recent opening of health insurance exchanges through the Affordable Care Act (a.k.a. ObamaCare) has made the situation even tougher, Simmons said.
The reimbursement amounts paid by companies participating in the government-run exchanges has been set at Medicare rates. Moreover, the exchanges are being handled by the Federal government as expansions of Medicaid, meaning individuals previously uncoverable through Medicare will now be welcomed into Medicaid expansion. Granted, the Federal government will be subsidizing the Medicaid expansions and the reimbursement rates are set at Medicare rates, but this will still mean an influx of patients on whom hospitals lose money. For DCMH, that influx is apt to be particularly high.
“Fifty-two percent of students in Decatur County qualify for reduced lunches,” Simmons said, suggesting that those numbers portend to a high number of Decatur Countians who will sign up for insurance through the exchanges. “We’re very thankful that the reimbursement rate wasn’t set at Medicaid rates. That would have been devastating.”
Contact: Rob Cox 812-663-3111 x7011