Underpayments by Medicare Threatening Viability of Rural Hospitals and Physicians on Arkansas Medical News Inc.

Underpayments by Medicare Threatening Viability of Rural Hospitals and Physicians

By: BECKY GILLETTE

Paul Cunningham

Healthcare Reform Adding to Concerns

President Obama recently called for more cuts to Medicare and Medicaid in order to help reduce the deficit. That adds to already significant concerns, particularly for rural hospitals and physicians who serve areas with a high percentage of Medicare patients.

Medicare reimbursements to hospitals are generally less than the cost of service. Paul Cunningham, executive vice president, Arkansas Hospital Association, said the deficit can range from as little as one percent to as much as ten percent.

“Hospitals are struggling because of inadequate payments,” Cunningham said. “In addition to the problem with Medicare, commercial insurers are ratcheting down payments. Hospitals are seeing more self-pay patients or uninsured patients through the emergency room and other avenues. So it is a financial struggle.”

Most hospitals in Arkansas are in rural areas, and there are 21 counties in the state that don’t have a hospital at all. If rural hospitals close because they don’t have enough money to cover operating expenses, Cunningham said that would create some real problems with Arkansas residents – particularly those without reliable transportation – having access to hospital care.

Adding to the mix is concern that federal healthcare reform will further cut revenues for hospitals.

“As revenues fall, and that is likely to be exacerbated under some of the cuts related to healthcare reform, I think there certainly are communities that face the possibility of losing their hospitals,” Cunningham said.

Inadequate Medicare payments in rural areas could also impact people having access to physicians, particularly primary care physicians. Wayne Smith, MD, Heber Springs, said he retired earlier than he would have otherwise because he was losing so much treating Medicare patients.

“I was going in the hole on Medicare,” Smith said. “And, overall, for my testing and services they did allow, I usually averaged less than 50 percent pay. In many areas, more and more doctors are refusing to accept Medicare patients because of that. I believe Medicare underlies most of our problems with healthcare, and in particular healthcare in rural areas.”

Smith said that under the mantra of providing the same care to Medicare and non-Medicare patients, rules and regulations have been put into effect that give doctors, nurses, and even non-medical people the power of rejecting the decisions of the doctor on the scene.

“Treating patients the same may sound like a great idea,” Smith said. “However, no two patients are the same and that means they can’t truly be treated the same and still be given proper care. The decision of a treating doctor should not be arbitrarily overridden.”

Smith said this same thinking greatly affects hospitals, and smaller hospitals—mostly found in rural areas – are particularly hard hit. He said the way costs are computed have made it difficult to maintain services not used by Medicare patients, so obstetric and nursery services ceased.

“This affected the doctors because those were vital parts of family care, as well as contributing to income,” Smith said. “Larger hospitals bought up rural hospitals and used them more as outpatient care and/or referral centers to keep up the census of the main hospital by referrals. Rural doctors came to the point where office labs were not allowed, except as the extension of a central (hospital) lab.” By becoming employees of a hospital, a doctor could have his “own” office and lab. This also provided a referral source for the hospital, as well as extra income.

Unjustified medical malpractice lawsuits also had a big impact.

“In the midst of all this, lawyers started suing for any and every perceived wrong,” Smith said. “No matter how long a medicine had been used, no matter how popular a treatment, no matter how honest and well-intentioned anything was, if a patient using, doing, or being exposed to something suffered some type of health problem, it was cause for a lawsuit. This type of thing drove malpractice insurance through the roof and rural doctors had to stop some procedures because of that.”

In the last of his 30 years of practicing medicine, Smith was seeing increasing interference from Medicaid that made it difficult to provide good patient care.

“When the 1998 changes were announced I decided I would have to either mistreat patients or lie to the government about what I was doing,” Smith said. “I chose a third step – retirement.”

Currently there are an estimated 1,000 vacancies for primary care physicians in Arkansas. Smith said that the two most important things that could address the shortages would be Medicare and tort reform.

“If it is ever going to be straightened out, doctors have to be able to go back to being doctors,” he said.