Delta County Economic Development, in the person of its vice president, Thomas Huerkamp, appealed to the board of trustees for help in obtaining an $85-thousand Health and Human Services grant as the first step in preserving local healthcare. DCED wants to research a way to cut operating costs for local healthcare services to keep them viable. Huerkamp explained the matter thus:
The need
DCED hopes to reduce overhead for physicians by pooling their purchasing power and centralizing billing operations at a county level. The grant will pay for the initial planning phase. DCED will apply for the grant and administer the planning stage. Huerkamp estimates it will cost $250-350 thousand to get the new system started, but he thinks funding can be found for that as well.
Mayor Don Suppes asked whether the hospital would act as the center of that new system, but Huerkamp used the hospital as an example of what DCED hopes to avoid:
“The hospital belongs to a GPO [Group Purchasing Organization] already... The way a GPO typically works is they represent a large pool of medical providers, and they contract with manufacturers based on hundreds and hundreds of practices across the country. The Delta hospital and other small rural hospitals don't have enough buying power by themselves, so they go through the Western Healthcare Alliance, who then has a contract with a group called Cardinal, who then finally has a contract with Premiere, which is one of the three big ones in the country. But it's tiered buying, so...now you have two middlemen... So the object is if you can bring everybody together, all the clinics, all the practices—we're talking about physical therapists, dentists, PAs, anybody that's providing medical services—and try to get enough mass that we could deal directly with one of the larger GPOs, such as Premiere or MedAssets. It's a significant difference in the pricing. And right now the hospital is in a two-middleman world, and they do not provide supply to any of the clinics—and really don't want to. ... They would probably be very interested in getting out of the billing role if they could."
Huerkamp added that part of the billing problem is that “under Obamacare, we're looking at huge amounts of both Medicare and Medicaid claims being pulled for audit." The audits are done by third parties who receive a commission for any discrepancies they find, and until the audit is resolved, no one gets reimbursed. For example, at Hospice, “beginning last August, we went from having six or seven a month pulled for audit to 80. Or 90.”
Trustee Jan Gage said that when a billing is pulled for audit, the auditors have 18 months to get back to the people involved, thus holding back government payments for that long. Huerkamp replied that the billions of dollars in Medicare savings claimed under the Affordable Care Act include the value of accounts pulled for audit. However, “it's an expensive process. Hospice in the three-county area had to raise an additional $1.2 million in donations in order to cover that gap...”
The trustees voted to provide the letter of support.
The need
- In the last 18 months, Delta County has lost seven family-practice physicians.
- On January 1, Dr. Serena Smith gave notice that she would no longer accept Medicaid, Medicare, or any kind of insurance, going to a cash-only basis.
- North Fork has only two physicians, one of whom is going on extended paternity leave.
- There is a definite possibility of losing healthcare service in North Fork.
- Family healthcare will probably be handled more and more by nurse practitioners and physician's assistants.
- “Nobody really has a handle on the consequences of the [Affordable Care Act], but all projections are not very encouraging. Right now, up until the first of the year, 11 percent of the hospital's revenue came from Medicaid, which is a dramatically reduced-below-cost reimbursement. The projection is that we're going to wind up, probably by sometime mid-year next year, with as much as 30 percent of that reimbursement coming from Medicaid. That, coupled with the reduction that has been done in Medicare, is going to impact all of our clinics and hospitals severely. We think there's a crisis at hand."
DCED hopes to reduce overhead for physicians by pooling their purchasing power and centralizing billing operations at a county level. The grant will pay for the initial planning phase. DCED will apply for the grant and administer the planning stage. Huerkamp estimates it will cost $250-350 thousand to get the new system started, but he thinks funding can be found for that as well.
Mayor Don Suppes asked whether the hospital would act as the center of that new system, but Huerkamp used the hospital as an example of what DCED hopes to avoid:
“The hospital belongs to a GPO [Group Purchasing Organization] already... The way a GPO typically works is they represent a large pool of medical providers, and they contract with manufacturers based on hundreds and hundreds of practices across the country. The Delta hospital and other small rural hospitals don't have enough buying power by themselves, so they go through the Western Healthcare Alliance, who then has a contract with a group called Cardinal, who then finally has a contract with Premiere, which is one of the three big ones in the country. But it's tiered buying, so...now you have two middlemen... So the object is if you can bring everybody together, all the clinics, all the practices—we're talking about physical therapists, dentists, PAs, anybody that's providing medical services—and try to get enough mass that we could deal directly with one of the larger GPOs, such as Premiere or MedAssets. It's a significant difference in the pricing. And right now the hospital is in a two-middleman world, and they do not provide supply to any of the clinics—and really don't want to. ... They would probably be very interested in getting out of the billing role if they could."
Huerkamp added that part of the billing problem is that “under Obamacare, we're looking at huge amounts of both Medicare and Medicaid claims being pulled for audit." The audits are done by third parties who receive a commission for any discrepancies they find, and until the audit is resolved, no one gets reimbursed. For example, at Hospice, “beginning last August, we went from having six or seven a month pulled for audit to 80. Or 90.”
Trustee Jan Gage said that when a billing is pulled for audit, the auditors have 18 months to get back to the people involved, thus holding back government payments for that long. Huerkamp replied that the billions of dollars in Medicare savings claimed under the Affordable Care Act include the value of accounts pulled for audit. However, “it's an expensive process. Hospice in the three-county area had to raise an additional $1.2 million in donations in order to cover that gap...”
The trustees voted to provide the letter of support.
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