Medicaid changes cost medical center $740,000

By Bob Steenson, bsteenson@charlescitypress.com 

The Floyd County Medical Center had an overall operating loss of more than $114,000 last year, according to a preliminary fiscal year report delivered to the county Board of Supervisors Monday morning.

One of the biggest impacts was the way the Medicaid system is now operated in the state, hospital officials said.

Medical center Administrator Rod Nordeng and Chief Financial Officer Ron Timpe presented the report, noting that total patient service revenues increased about 6.4 percent from fiscal year 2017 to fiscal year 2018, which ended June 30.

Total patient service revenues in the last fiscal year were $52.10 million.

The amount the hospital had to write off because of contractual allowances with insurance and Medicare increased about 4.8 percent, and bad debts and other losses increased about 9.7 percent.

Net patient revenue and other operating income totaled $27.64 million, but operating expenses were $27.88 million, resulting in an operating loss of $233,249.

When non-operating revenue was included, the hospital had an overall loss for the fiscal year of $114,405.

“The key pieces are we’re still debt-free. We still employ 218 staff and we’re still providing outstanding care in this county,” said Nordeng.

Timpe went through a number of areas where the medical center is seeing reduced revenue or increased costs.

The biggest one is Medicaid reimbursement.

Then-Gov. Terry Branstad ordered in 2015 that the state move to using private companies to manage the state’s $5 billion Medicaid system that covers about 600,000 Iowans.

Since then the system has become a political hot potato, with Branstad’s successor, Gov. Kim Reynolds, and many Republicans continuing to defend the change as a needed money-saving move, and many Democrats saying it has resulted in reduced quality or quantity of care.

Hard figures on whether the change has actually saved the state money have been elusive.

In any case, the impact on Floyd County Medical Center has been dramatic, Nordeng and Timpe said Monday.

In fiscal year 2017 and fiscal year 2018, the medical center billed almost the same amount for Medicaid services. But the amount disallowed by the Medicaid managed care organizations (MCOs) increased by $742,370.

“We had to write off $740,000 additional monies,” Timpe said. “Basically we had the same amount of patients, same billing, but they paid us $700,000 less.”

That change is reflected in the overall loss for the year, he said.

Nordeng said, “It’s unfortunate from a provider perspective, but we’re also hearing stories it’s unfortunate for those who are receiving Medicaid.

“It’s an absolute mess for everybody, and it’s impacting us significantly,” he said.

Supervisor Mark Kuhn, the lone Democrat on the county board, said he wanted to be clear: “Has the privatization of Medicaid services benefited or not benefited the financial impact of the hospital?”

Timpe said, “Oh, definitely the financial impact is a big negative.”

Nordeng said, “We always knew Medicaid was not going to pay 100 percent,” or would not paid as much as was billed, but “then you take another big chunk out of it, it’s even further back.”

Nordeng said some health care systems have considered or started lawsuits against the private management system.

“In some respects, the actions of the MCOs, and then also some insurance companies with clawbacks out of the ER, it’s bordering, I believe, on criminal,” Nordeng said.

Clawbacks refer to insurance companies paying for services, in this case emergency room services, but then later retroactively denying claims by saying that too much was paid or that some services were not justified, and asking for money back.

“On a more positive note,” Nordeng said, “as a medical center it’s important for us to provide the best staff and the best technology that we can,” and he presented a list of capital equipment purchases during the fiscal year, totaling $1.42 million:

• 3-D mammography unit — $381,600.
• Boiler and air handler units completion — $315,220
• Olympus scopes — $250,795
• Patient monitoring system — $216,874
• Endoscope — $44,643
• Coagulation machine in lab — $43,000
• Neoprobe — $39,975
• Clinic exam tables — $22,452.
• Other capital items — $108,763.

Nordeng also provided an update on the search for a new Meals on Wheels provider for Charles City.

The medical center had announced two weeks ago that it could no longer afford to continue operating the service out of its dietary department, because the meals provided to Meals on Wheels counted against the hospital for Medicare reimbursements, costing the hospital anywhere from $136,000 to more than $200,000 a year in lost revenue.

He emphasized that the program was important to the community and that some other provider that did not have the Medicare involvement that the hospital has could likely run it at a break-even rate or even make a small profit.

So far, he said, no organizations have approached him about the possibility of taking the program over, Nordeng said.

He said one transitional change that might be necessary is reducing the number of meals served from the current seven days a week to five days a week.

Nordeng said the hospital is committed to working with any group that comes forward for a smooth transition, but that at some point the medical center will have to set an end date when it will stop providing the service.

He also said that the medical center is searching for at least one family-practice physician who can also offer obstetrics services.