Memorial Medical Center could be negatively affected due to changes in the way three federal programs get paid.
The federal government changed the funding formulas for the Disproportionate Share program and the Uncompensated Care program but were unchanged by the state, said Jason Anglin, chief executive officer for MMC. This will result in MMC paying back close to $1.3 million combined for both programs over two years.
MMC received $3.47 million in 2018 and is expecting to have to pay back $505,000. In 2019, $3.79 million was received, and of that, $780,000 is to be returned.
“This is a major challenge for hospitals. You can’t plan for something like this,” said Anglin.
The hospital’s accounting firm told Anglin that the first repayment wouldn’t be expected until the end of 2021, with the second due in 2022.
“The state runs a couple of years behind doing audits on its programs,” he explained.
The hospital has a line of credit with the county of $4 million. Anglin said he had not been expecting to have to tap into the full amount, but with the paybacks he might have to use it.
The hospital is part of several supplemental programs to ensure it has funds to run, such as their nursing home program. The program requires two intergovernmental transfers each year.
Anglin said the MMC board of directors works hard to find funding for the hospital and how to help the hospital but that the “reality is for small hospitals in the state are districts that can fund significant dollars.”
Hospital districts bring Jackson County $5.7 million, $4 million for Cuero, and $3 million for Refugio.
“So far, we’ve been able to do without, but last year’s $100,000 for indigent care didn’t take us very far, and looking to the future, we’re trying to do everything we can in using some kind of assistance, but it’s just the cold hard reality of where we are as a small hospital,” he said.
Equipment replacement is one area he spoke of where they have tried to stretch the life of the equipment as far as they could. The board approved the replacement of stretchers purchased in the early 1990s as well as a portable X-ray machine bought in the late 1980s or early 1990s.
“These are extreme cases, but we try to keep stuff and get the most use out of it we can,” he said.
Another hit the hospital is expecting is a cap on reimbursements for rural health clinics that were certified after 2019. MMC’s second clinic, which is inside the hospital, was certified in January 2020.
Anglin said the legislation was retroactive to 2019 rather than 2020, and states are hoping to get the years changed.
The cost would be $170,000 less a month from Medicare.
The rate is determined by putting expenses such as maintenance, administration, or utilities, on a revenue-producing area, such as the clinic as overhead, and from that, the cost-per-visit is calculated. Anglin said currently, the cost per visit is $200, but the new calculations could drop it to $100 per visit.
Anglin is hoping the date will be changed but said it doesn’t necessarily put the second clinic in the clear because it was certified in January 2020.
But, he did note that if the final cost analysis was used to create the cap, that would work in the clinic’s favor.
Anglin told the Calhoun County Commissioners’ Court that the December census was the highest in four years. In addition, surgery volume was up to 111 cases, the second-highest of the year, and clinic volumes were on an upswing.
Another good indicator, Anglin reported, was that self-pay was at 12 percent for the month.