THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Friday, October 20, 1995 TAG: 9510200480
SECTION: FRONT PAGE: A17 EDITION: FINAL
SOURCE: BY MARIE JOYCE, STAFF WRITER
LENGTH: Medium: 89 lines
At Norfolk Community Hospital, the Medicare debate is more than a question of public policy. It may be a question of survival. The hospital, like many, relies on some little-known provisions of the plan that reward institutions that care for poor people.
Medicare, the government health insurance program for the elderly, is not the same as Medicaid, the government health program for the poor. But the federal government uses the insurance for the elderly to help hospitals that see a lot of poor people.
The proposed changes in Medicare come at a time when hospitals are already under pressure from private insurers to cut costs.
The House Republican blueprint, which the Ways and Means Committee voted last week to send to the floor for debate, would provide savings largely by squeezing medical providers, such as hospitals and doctors, while raising beneficiaries' monthly premiums.
``The whole point is Medicare does not pay, in my opinion, their proper weight right now,'' said Randy Cromwell, vice president for finance at Chesapeake General Hospital. Cromwell pointed out that the cuts would come as the size of the elderly population is growing. ``They want us to do more, and pay us less.''
The impact could be greatest at hospitals like Norfolk Community, which serves the highest percentage of low-income patients in South Hampton Roads.
Medicare now pays an extra reimbursement to hospitals that see a large number of poor people. But that subsidy, known as ``disproportionate share,'' is in jeopardy. If reform plans circulating in Washington are adopted, Norfolk Community could lose half a million dollars or more for treatment of those patients, said James Sears, the hospital's director of finance.
``Just the basic cuts in programs would have an adverse effect. In a lot of cases, the reimbursement is not adequate as it is. It's a hardship,'' said Sears.
In the old days, said Sears, hospitals would simply have passed the costs onto the private insurance companies. But private insurers won't accept that anymore and are demanding that hospitals reign in their charges. Norfolk Community already operates with a slim margin. ``It would just cut that down to zero,'' he said.
The same is true at Portsmouth General Hospital, which also treats one of the highest percentages of Medicaid patients in South Hampton Roads. Officials at the hospital's parent company, Tidewater Health Care, said they expect to lose about $393,000 in disproportionate share payments the first year. All told, the hospital probably will lose about three-quarters of a million dollars under plans currently being considered.
And Tidewater's bigger and more financially successful hospital, Virginia Beach General, probably will lose about $900,000 the first year.
Hospital officials interviewed said cuts may require them to look at programs and jobs.
Norfolk Community may have to rethink some of the free care it gives at its clinics, said Sears.
``It's clear that the level of services you can provide just can't go on,'' said Kenneth M. Krakaur, Tidewater's senior vice president of corporate services. ``You can't pull $270 billion out of the health care system and not expect to have a trickle-down effect into services.''
At the same time, the Medical Society of Virginia, a professional group for the state's doctors, has endorsed the compromise worked out last week between Republicans and the American Medical Association, said Russell D. Evett, a Norfolk doctor who is president of the Virginia Association.
The American Medical Association endorsed the proposed overhaul on Tuesday, after extracting a promise from House Speaker Newt Gingrich that fees paid to doctors would be reduced by less than the Republican plan had originally proposed.
Evett pointed to improvements for beneficiaries: changes that would allow them to have some choice in picking health plans and to receive annual report cards on the quality, cost, benefits and outcomes of plans. He also lauded a cap on some types of medical liability and a measure that would allow doctors more leeway in referring patients to other services without fear of being accused of kickbacks.
``We're very pleased with what's come out of that,'' said Evett. ``We think it offers more to patients and physicians.'' But he acknowledged not all Medical Society members necessarily will approach it with the same optimism. ``Our dealings with Medicare over the years have drilled into us a certain sense of skepticism.'' MEMO: The Associated Press contributed to this story. ILLUSTRATION: Photo
HUY NGUYEN/The Virginian-Pilot\ Nurse Eric Cherry watches Medicare
patient Cora Owens, age 102, at Norfolk Community Hospital. The
hospital relies on provisions of the plan that reward institutions
that care for poor people.
by CNB