The Transylvania Times -

Hospital Cost Differences Looked At - Brevard, NC


July 13, 2017

The question of cost differences between Transylvania Regional Hospital and Mission Health was recently brought up in a letter by Meredith Brooks, which was published in Monday’s edition of The Transylvania Times.

In the letter, Brooks wrote that, because Transylvania Regional Hospital is classified as a Critical Access Hospital (CAH), Medicare reimbursement rates are higher for the hospital, resulting in high out-of-pocket expenses.

“I would respectfully warn anyone who needs an X-ray, mammogram, MRI, etc. and emergency room treatment if time allows to drive to Mission,” Brooks wrote. “Your out of pocket expenses will be much less there, sadly, than here at our own hospital.”

In an email interview, The Times presented the question to officials at the North Carolina Hospital Association (NCHA).

Stephanie Strickland, director of communications for NCHA, described a CAH as “a rural hospital that is reimbursed based on reasonable cost methodology rather than being paid a prospectively determined amount under the outpatient APC (Ambulatory Payment Classification) or inpatient MS-DRG (Medicare Severity Diagnosis Related Groups) payment systems.”

She said a CAH must follow licensure limitations, which include operating a maximum of “25 acute care beds and swing beds used for skilled nursing services,” and that it is limited to an annual average per patient length of stay of 96 hours.

“A CAH is reimbursed 101 percent of its reasonable costs for inpatient and outpatient services,” Strickland said. “Each CAH submits a cost report on an annual basis, which is used by the MAC (Medicare Administrative Calculator) to identify its reasonable costs and create the CAH specific annual interim payment rate.”

She said the patient’s deductible and coinsurance for inpatient services is calculated in “exactly the same manner” as a PPS (Prospective Payment System) hospital based on a benefit record.

“However, when the patient is receiving outpatient services, the patient pays 20 percent of the CAH’s reasonable charge rather than a predetermined amount that is a portion of the total APC payment, which is generally 20 percent of the APC payment amount,” Strickland said. “Thus, it is possible for a patient receiving outpatient services at a CAH to have a higher coinsurance than a patient receiving the same outpatient services at a PPS hospital.”

Julie Henry, a spokesperson for the NCHA, said, historically, rural hospitals opted for the CAH designation because “it was a way they could stay open.”

“The federal government said, if you become a critical access hospital, you will get paid 100 percent of what it cost you to take care of Medicare patients,” Henry said. “But what that means now, in an environment where a lot of people who are on Medicare who have supplemental plans, is that they are seeing their co-pays higher in critical access hospitals because the copays are based on that 100 percent payment number, so it’s not like other hospitals.”

Henry said rural hospitals in North Carolina get 70 percent of their revenue from Medicare, Medicaid and the uninsured, or self-pay, so getting a CAH classification ensured their getting reimbursed 100 percent in “at least one of those categories.”

“And that’s the reason it would be different at Mission, because their fee structure is set up differently than at a critical access hospital.”


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