Petersburg Medical Center disputes Medicare cut to its outpatient reimbursement rate

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

The consultant said the cut came from an internal Medicare rate review he described as rushed. He said the hospital expects the rate to be restored. Roughly $600,000 in Medicare reimbursements remains pending through an interim rate review and a desk review, according to the Resource Committee report read at the meeting. Additional recoveries are expected through the cost report process. The hospital and Medicare disagree over what is owed, and the consultant said the hospital's position rests in part on depreciation expense from its new building.

The dispute comes as the hospital reports a strong fiscal year. Gross patient revenue reached $33.2 million against a $32 million budget, up from $31.5 million the prior year. That is an increase of about 5 percent, following a 5 percent Chargemaster increase. The preliminary operating bottom line is $1.7 million, a figure the consultant said stays preliminary until the audit in early September and the cost report are finished. The total bottom line for the year came to $5,149,000, reflecting about $5 million in capital grant revenue tied to the Work Building and the HRSA grant. Days cash on hand stood at 134 at the end of June.

MRI was one of several drivers of volume, alongside lab, rehabilitation and home health services. Imaging Director Sonja Ford told the board that "as of time for writing my report, we had done 34 MRIs." The count reached 40 by the meeting. Ford said she had "2 more tomorrow and another 4 next week." An earlier Alaska News article noted the hospital began seeing MRI patients the week of June 25, giving the island local MRI access for the first time after state certificate-of-need approval.

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."

Ford said reimbursement is arriving, but prior authorizations continue to require substantial staff time. "MRI is great for finances, but we do continue to have troubles and lots of time and energy put into pre-authorizations," she said, adding that VA authorizations have been particularly challenging. "But so far, I think most of the claims with MRI that have gone out have come back with reimbursement."