Medicare claws back money from Petersburg's hospital as the island's new MRI takes off

Medicare has clawed back money from Petersburg Medical Center after cutting the hospital's outpatient reimbursement rate to 95% of billed charges, down from roughly 115 to 117%, the hospital's finance consultant told the PMC Hospital Board at its July meeting.

The consultant said the cut came out of an internal Medicare rate review he described as rushed, and that the hospital expects the rate to be restored. As a critical access hospital, Petersburg is ultimately paid 101% of its reasonable outpatient costs, and the billed-charges percentage is only an interim figure that gets reconciled later on the hospital's cost report. Roughly $600,000 in Medicare reimbursements remains pending while that plays out. The hospital and Medicare disagree over what's owed, with the hospital's position resting in part on depreciation from its new building.

The hospital's finances were otherwise strong. Gross patient revenue reached $33.2 million against a $32 million budget, up about 5% from the year before, with outpatient revenue climbing 15.5% even as inpatient fell 7.2%. The preliminary operating bottom line is $1.7 million — a number the consultant cautioned stays preliminary until the audit in early September and the cost report are done. The hospital finished June with 134 days of cash on hand.

Much of the outpatient growth traces to a milestone: the island now has its own MRI. After state certificate-of-need approval, the hospital began seeing MRI patients the week of June 25, giving Petersburg local MRI access for the first time. Imaging Director Sonja Paul told the board the scan count had already climbed from 34 when she wrote her report to 40 by the meeting, driven alongside lab, rehabilitation and home health services.

CEO Phil Hofstetter said the hospital "budgeted pretty conservatively, and it seems like it's already knocking it out of the park on the MRIs."

Paul said the gains come with administrative strain. "MRI is great for finances, but we do continue to have troubles and lots of time and energy put into pre-authorizations," she said, singling out Veterans Affairs authorizations as especially difficult — though "most of the claims with MRI that have gone out have come back with reimbursement."