WILLMAR -- For now, there's no financial advantage for Rice Memorial Hospital to become a federally designated sole community hospital -- but Medicare regulations could change this situation by next year.
Officials with the city-owned hospital plan to monitor any changes in Medicare reimbursement and analyze their impact later this year.
"If sole community hospital is better for us, we'll apply for it," said Bill Fenske, chief financial officer at Rice.
Until then, "we are better off doing what we have been doing, likely through 2008," Fenske said.
The recommendation is among several contained in a report reviewed last week by the hospital finance committee. The analysis, prepared by Larson Allen at the hospital's request, evaluates Medicare reimbursement issues and the pros and cons of specific payment categories.
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In most cases, Rice already has the most favorable payment rate it can receive -- a critical issue since Medicare accounts for around 40 percent of the hospital's yearly volume.
The sands are shifting, however, under a set of add-on payments, known as transitional outpatient payments, that are due to expire Dec. 31.
There's a chance that these payments will be extended. But if they're not, it would be to Rice's advantage to seek designation as a sole community hospital, Fenske said.
This move would allow Rice to recoup slightly higher reimbursement from Medicare for inpatient care.
Medicare's sole community hospital program allows special reimbursement advantages to certain hospitals that provide needed services in geographically isolated areas. Hospitals that apply for this status must be located at least 35 miles from a similar hospital, a provision for which Rice Hospital qualifies.
The report suggests no changes in Rice's status as a regional referral center. Indeed, this category allows Rice to receive some of the better reimbursement rates in Minnesota, Fenske said.
"We're getting the most we can get," he said.
Rice Hospital doesn't qualify for yet another category, that of the Medicare-dependent hospital. The report by Larson Allen found that Rice doesn't have enough Medicare volume to meet the threshold, but recommended monitoring the situation in case Medicare utilization increases.
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The report underscores how complicated the Medicare payment system is, said Lorry Massa, chief executive of Rice Hospital.
This can especially be the case for hospitals the size of Rice -- just under 100 beds and falling into a category that Massa described as "tweeners."
"We're not critical-access hospitals and we're not urban-metro hospitals," he said.
Doug Allen, a member of the hospital board and chairman of the finance committee, said it would be to the hospital board's benefit to have an education session devoted to reimbursement.
"I think it would be a very good thing. It's very complex," he said.
