How can a rural agricultural community nearly 100 miles west of Chicago keep getting Medicare payments on par with urban facilities? The answer is, by having House Speaker J. Dennis Hastert (R-Ill.) as its representative.
Katherine Shaw Bethea Hospital in Dixon, Ill.-Lee County's only hospital-will retain $750,000 a year in Medicare payments under a provision tucked away in the fiscal 2000 budget bill that Congress passed last week. The provision reclassifies the 100-bed hospital as part of the Chicago metropolitan statistical area, which entitles it to higher Medicare payment rates.
The hospital is among dozens across the country to benefit from the clout of their federal lawmakers, who grabbed extra money for facilities in their home districts. Those millions of dollars come on top of the facilities' share of the $18.1 billion in general Medicare payment relief they'll receive as part of the same legislation (See story, p. 3).
A loud, unrelenting outcry from providers about the Medicare reductions coupled with an expected federal budget surplus appears to have put lawmakers in a giving mood.
"It was Santa Claus time," said Larry Oday, a healthcare lawyer at Vinson & Elkins in Washington, who lobbies for various healthcare interests. "There is always a fair amount of targeted fixes in these types of bills, but this (bill) has far more than I can ever remember."
Several of the benefiting institutions were featured in the American Hospital Association's "Real Pain for Real People" lobbying campaign, which profiled hospitals struggling with Medicare payment reductions imposed by the Balanced Budget Act of 1997.
An AHA spokeswoman said the purpose of the campaign was to show that all hospitals were suffering from the reductions, not to help individual hospitals.
Yet the publicity paid off for featured hospitals such as 162-bed Mercy Medical in Daphne, Ala.
Mercy, a Roman Catholic hospital operating skilled-nursing facilities in two counties, won an exemption from the Medicare prospective payment system implemented last year for skilled-nursing facilities.
Instead, Medicare will pay Mercy using a cost-based formula for fiscal 2000 and 2001, said Dennis Brown, Mercy's assistant administrator for development and marketing.
"Because 80% of our patients are on Medicare, we saw (the PPS) as not adequately covering our costs," Brown said. "This change gives us the opportunity to (avoid) a loss."
Brown did not have an estimate on how much more money the health system will get in 2000 and 2001 as a result of the change.
"We really don't know what had the most effect (in our lobbying Congress), because there really was a collaborative effort with national and state organizations," Brown said. He said he was sure participating in the ad campaign had some effect. "It certainly didn't hurt."
He said he hopes that Congress will enact broad changes in the skilled-nursing PPS before fiscal 2001, when Mercy's exemption expires. It was the only facility to receive such an exception in this year's Medicare bill.
"Just because we've received this good news doesn't mean we won't continue to advocate with local, state and national groups for changes that are probably necessary," Brown said.
Congress also reclassified at least 18 hospitals from rural or small metropolitan areas to larger urban areas. Such a reclassification allows the outlying hospitals to qualify for higher Medicare reimbursement because urban hospitals compete for staff and patients.
For 481-bed Fletcher Allen Health Care in Burlington, Vt., the move into the Boston metropolitan statistical area means about $5 million a year in additional Medicare revenues.
The provision came courtesy of Sen. James Jeffords (R-Vt.), influential chairman of the Senate Health Education Labor and Pensions Committee.
"Although we're in rural northern Vermont, we're an academic medical center providing care for the same level of complexity as the metro Boston hospitals," said David Demers, vice president of planning and business development at Fletcher Allen. "This change levels the playing field."
Demers said that Fletcher Allen stood to lose $13.7 million in anticipated Medicare payments by 2002, when the Medicare reductions mandated by the budget law are fully implemented.
"This (change) is going to help take some of the sting out of the cuts," Demers said.
Like Mercy, Katherine Shaw Bethea Hospital in Dixon, Ill., was featured in the AHA's public relations campaign.
The hospital is in Lee County, which is contiguous to DeKalb County, on the western edge of the Chicago metropolitan area.
Darryl Vandervort, the hospital's president and chief executive officer, said Katherine Shaw needed the legislative reclassification into the urban Chicago market because the budget law eliminated an avenue the hospital had used to qualify for the higher urban reimbursement rates. That avenue took into account the hospital's occupational mix and the difficulty rural hospitals have in recruiting highly skilled workers, Vandervort said.
"I don't think it's pork barrel, and I think we would have gotten it whether (Hastert) was speaker or not," he said. "It was the right thing to do."
The federal spending package spelled relief for eight hospitals in Lake County, Ind., also by reclassifying them into the Chicago statistical area for reimbursement purposes.
The hospitals had been classified as part of the urban Chicago market since 1991, but that designation was dropped as of Oct. 1 through a flaw in the formula used for comparing the hospitals' costs with those in Chicago, said Dale Baker, an Indianapolis-based healthcare consultant who worked with the hospitals.
"What looks like pork barrel isn't as pork barrel as it might look," Baker said.
Losing the classification would have cost the eight hospitals $20 million annually in reimbursements, Baker said.
A handful of hospitals got their dose of pork through federal funding of research projects at their facilities. One, 521-bed Avera McKennan Hospital in Sioux Falls, S.D., received $2 million to conduct a study of Gulf War Syndrome with Georgetown University in Washington.
"The study is already going on now, but the legislative language ensures that the right funding mechanism exists to extend the research that's already been done," said Richard Molseed, the hospital's vice president of marketing and strategic initiatives.
It is not clear which of South Dakota's three congressional members are responsible for the provision funding the project. Sen. Thomas Daschle (D-S.D.) is the powerful Senate minority leader.