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HRH Becomes Critical Access Hospital

September 13, 2010
By AMANDA BREITBACH RAGSDALE Star Staff Writer On July 13, Holy Rosary Healthcare qualified for Critical Access Hospital status. The change in status will allow Holy Rosary to be reimbursed more fully by the MedicAid and MediCare programs without impacting patient services, explained Chief Executive Officer Ron Webb. Critical Access Hospitals are reimbursed by MedicAid/MediCare based on the actual cost of providing care, the way all hospitals were reimbursed when the programs were created in 1965. MediCare reform changed that system of reimbursement for most hospitals in 1983, creating the Prospective Payment System, which reimburses hospitals based on the diseases and diagnosis treated rather than the actual cost of care. Because reformers recognized that the new payment system would be unsustainable for small and rural hospitals, the CAH program was implemented at the same time. In order to qualify as a CAH, a hospital must meet three basic criteria. First, it must be at least 50 miles from the next nearest hospital, a condition that HRH met easily. Second, the average length of inpatients' hospital stays must be less than 4 days. This is not a limit for any one patient, Webb noted, but an average for all inpatients seen during the year. The average patient stay at Holy Rosary is already well under that number – at 3.3 days. Finally, to be a CAH, the average number of medical/surgical, ICU, OB and swing beds must be under 25. That number excludes observation, labor and delivery and extended care beds. The final qualification is the only one that may require any change at HRH. While the average census is 15 patients per day at Holy Rosary, on rare occasions there are more than 25 patients in the hospital. "This past year, I think there were only two times that we had 25 patients in the hospital," Webb said. On those occasions, efficient and effective case management will help the hospital avoid going over the 25-bed limit. "We must make sure our patients are in the right setting and type of bed, that they get the right treatment, with the right resources, at the right time," he stated. "With good management, we feel that this will have very minimal – if any – impact." Jackie Muri, HRH director of strategy and development, noted that the hospital's average census has been falling over the last few years as outpatient services increase and inpatient services decrease. Webb stressed that the CAH status will not dictate any change in services offered at Holy Rosary or in the payments required from patients. It is strictly a change in federal reimbursement. "Nine-nine point nine nine percent of patients will never know (the hospital's reimbursement status has changed)," he said. "Critical access is strictly a reimbursement model with the federal government. It has nothing to do with the services offered," added Monty Lesh, chairman of the HRH Board of Directors. Lesh said the board first started looking at applying for CAH status about two years ago. As hospital admissions dropped nationwide along with the economic recession in 2008 and 2009, the board began examining the option more seriously. "We looked at a lot of different things," said Lesh. "If you look at critical access just from the money side of it, that's not the whole picture." With increased reimbursement, the hospital will also be able to spend more money on equipment and technology, which is vital for provider recruitment. The board made the decision to apply for CAH in November 2009 and qualified following a survey on July 11. Together, patients covered by MediCare and MedicAid account for over 70 percent of services provided at Holy Rosary, so this change in reimbursement will have a significant effect on the facility's bottom line. "It will have about a $2 million yearly impact on the organization," Webb stated. That percentage could increase with health care reform, as more people become eligible for MediCare/MedicAid. Most other hospitals in Montana are Critical Access Hospitals, including Sidney, Glasgow and Glendive. Prior to this change in status, HRH was the smallest PPS hospital in the state. The facilities in Sidney and Glasgow are both good examples of hospitals that have benefited from qualifying for CAH status, Webb said, with recent expansion projects attesting to their financial health. HRH administrators expect this change to help HRH prepare for the future, to be more flexible and efficient. "It really is a boon to us," said Webb.