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Rice seeks to maximize reimbursement

WILLMAR -- If patient volume is down, you look for other ways to enhance your revenue and help wring the most from complicated reimbursement formulas.

That's one of the strategies being taken by Rice Memorial Hospital as the city-owned hospital copes with a continuing decline in patient admissions.

The hospital is pursuing extra dollars and cents on several fronts, ranging from speeding up the billing and collection process to maximizing the amount of money it can claim through the Medicaid Disproportionate Share Hospital formula, which allows hospitals with higher Medicaid utilization to claim extra reimbursement.

Members of the hospital board's finance committee heard an overview Friday on what Rice is doing to maximize its reimbursement.

It's hard to know exactly what impact these measures will have on the bottom line, since other changes in payment formulas -- for instance, Minnesota's decision earlier this year to eliminate the General Assistance Medical Care program, which covers some of the poorest patients -- are reducing the money the hospital receives.

Extra dollars add up, however, said Bill Fenske, chief financial officer for Rice.

So far, Rice has been reaping the largest benefit from its new status as a Sole Community Hospital under the federal Medicare program. Rice applied for the designation last year and received it in October. It allows a higher rate of reimbursement for care provided to Medicare patients. Medicare is the federal health insurance program primarily for people 65 years of age or older.

Hospital officials initially thought Rice would gain an extra $300,000 to $400,000 a year in Medicare payments once it became a Sole Community Hospital. But it now appears the benefit could be much larger -- as much as $1.75 million a year for inpatient care and possibly another $285,000 for outpatient services.

"It's going to be a big deal for us," Fenske said. "We're seeing some of it already."

Jackie Hinderks, the hospital's reimbursement and reporting manager, said Rice saw a 10 percent increase in its Medicare payment rates between November, when the Sole Community Hospital designation went into effect, and March of this year.

"It's a positive outlook on our inpatient payment rates," she said.

Medicare is Rice's single largest payer, accounting for 45 percent of inpatient business.

Another avenue being pursued is a geographic reclassification based on the local wage scale. This option allows hospitals to capture federal reimbursement rates at levels that match their labor market.

As of the end of May, Rice and its associated entities, Rice Home Medical and the Rice Care Center, were in the black with a $213,000 profit.

"When all three entities have a positive month, we're feeling good," Fenske said.

It's likely that Rice will show a profit for June as well, he said.

Emergency-room use remains unusually high. It's typical for the emergency-room staff to see 40 patients a day, but for the past four or five months the average has been closer to 60 or 70 patients a day, Fenske said. "I think we'll continue to see that trend go up."

The hospital's inpatient census continues to lag, however. A year ago the average daily census was 49. This year's budget is based on a census of 48, and the actual patient count is around 43, Fenske said.

The steady decline in patient volume makes it more important than ever for the hospital to maximize what it can be paid for providing patient care and to seek more efficiencies in productivity and billing, he said.

Anne Polta

Anne Polta covers health care, business/economic development and general assignment. Her HealthBeat blog can be found at Follow her on Twitter at @AnnePolta.

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