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Affordable Care Act repeal could cause problems for Ogdensburg and Massena hospitals

Posted 1/22/17

  By ANDY GARDNER MASSENA -- Proposed changes to the Affordable Care Act, colloquially called Obamacare, have Massena Memorial Hospital, Claxton-Hepburn Medical Center and Community Health …

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Affordable Care Act repeal could cause problems for Ogdensburg and Massena hospitals

Posted

 By ANDY GARDNER

MASSENA -- Proposed changes to the Affordable Care Act, colloquially called Obamacare, have Massena Memorial Hospital, Claxton-Hepburn Medical Center and Community Health Center of the North Country concerned that cuts could gravely harm local hospitals.

In the November general election, the Republicans won majorities in the House of Representatives and the Senate, plus the presidency. The party has vehemently opposed the ACA since its 2010 inception and is prepared to unravel it, potentially cutting off insurance coverage to thousands of St. Lawrence County residents.

Although they don’t know how exactly everything will shake out, MMH CEO Bob Wolleben and CHMC CEO Nate Howell each say they could be forced to make deep cuts if the federal government doesn’t do something to help smaller hospitals.

Bracing for the Worst at MMH

Wolleben said he is anticipating to lose $5 to $9 million annually, if the new GOP majorities repeal Obamacare.

“What they’re talking about … eliminating the taxes that employers pay and medical supply companies pay. That’s what funds subsidies for the uninsured. They’re talking about cutting hospital and physician reimbursements to a greater degree,” Wolleben said. “We expect Medicaid payments to go down, or individuals to go off (insurance rolls).”

In addition to cutting the Medicaid program, which insures the poor, ACA cuts would also affect one of the largest local insurance payers - Medicare, which covers the elderly.

“We’re going to see a reduction of Medicare revenue … of $5 million,” Wolleben said.

In addition to that, MMH benefits from two programs also on the chopping block -- Disproportionate Share Payments (DISH) and Delivery System Redesign Improvement Program (DSRIP). Those could cost millions more.

DSRIP was born out of New York State being overpaid $8 billion from the federal government. Instead of paying it back, the state was allowed to keep the money and redesign the Medicaid program.

“With the new incoming administration, they may decide ‘we want the money back’,” Wolleben said. “If they say that, the DSRIP program is going to fall apart. All bets are off with the new administration.

“If the storm hits, we think it’s going to be a $9 million (annual) impact.”

As it stands now, Medicaid here is funded partially by New York state income and property taxes and through a federal block grant, which the new majorities are talking about dialing back.

“The federal government is talking about reducing the federal payments to the states for Medicaid expenses. States like New York are going to have to make a decision … how the state is going to make up that money,” Wolleben said.

He said if the worse-case scenario hits and MMH were to lose up to $9 million, they would have to make deep cuts in order to stay afloat.

“To try to make up a gap of $7 to $9 million in one year would be extremely difficult. There are things we would do like looking at the price of our group purchasing and renegotiating contracts,” he said. “There is no way we can deal with that. It puts us in a deep, deep hole. We can’t handle a $7 to $9 million reduction.”

He said they would do everything they could to avoid closing.

“[We would] have to go back to the organization and redesign, reconfigure how we do things. We cannot close. This community has healthcare needs and this hospital is going to serve the community. We will do everything we can shorty of closing to work within the new rules. It’s going to be very difficult. It’s going to take a lot of work,” Wolleben said.

He said there is a glimmer of hope -- successful privatization and an affiliation or merger with a larger system. MMH has been going down that path for over a year now and is in line to complete the process later in 2017.

Although it wouldn’t negate the effects of losing millions in funding, Wolleben said being part of a larger system could “reduce the potential impact of a $7 million reduction.”

“The future of healthcare, at least for hospitals, size matters. So being in a system is an advantage. It’s going to be vey difficult to function in the new world we’re staring at based on the Republican plan,” he said. “It doesn’t look good. And we’re not alone. Doctors are in the same boat. It’s not going to be good for our communities.”

Losses on Top of Losses at CHMC

CHMC CEO Nate Howell is concerned that federal lawmakers may choose to repeal parts of the Affordable Care Act and stack those losses on top of cuts written into existing law.

“The ACA as it stands right now between 2016 and 2025 cuts market basket and DISH payments … It was sold saying ‘it’s going to cut your payments, now there are more people insured’,” Howell said. “The cut for my hospital between now and 2025 is in the neighborhood of $15 million. That’s what’s built into the ACA. Why this matters to the discussion … what is out there in terms now of the options is selective repeal. If we go through and take out part of that bill and don’t cut another part … we will lose payment and will have these people that are no longer insured. It’s a double kick.”

He said CHMC, along with other North Country hospitals, may be able to cover day-to-day expenses but don’t have much cash onhand for the long term. A repeal of the ACA would need to address long-term funding cuts or risk causing a local crisis, Howell said.

“There isn’t an institution in the North Country that is financially well off. There’s just different versions of ‘not well off’ … Relative to national averages, I have half the cash I should have to be liquid and sustainable,” he said. “If you remove a chunk of the Affordable Care Act without dealing with hospitals being cut funding over time … it’s not sustainable.”

“As long as it adjusts for the whole picture, it’s going to be ok, it’s this partial stuff that’s gorging to harm us, potentially.”

Howell said the government has already dealt local hospitals a financial blow. In late 2016, they retroactively changed their Low Volume Adjustment payments. The program gives money to hospitals who apply and have seen an inpatient volume drop of 5 percent or more in a given year. The government decided they overpaid and demanded large sums back from local hospitals, including MMH and CHMC, which had already been paid out and spent.

“They’re taking an institution in the North Country that doesn’t have a lot of cash onhand. You’re changing rules how you’re getting paid and doing it retroactive,” Howell said. “We don’t have the horsepower or the reserves to deal with government take-backs.”

He said although CHMC has made cuts since he took the reins, they may be forced to slash deeper if the government cuts payments.

“There’s only so far you can drive it down. When you reach that breaking point, you have to look at services rendered,” Howell said. “We could be in a situation where we make have to cut off what may be important from a mission perspective but doesn’t have any margin.

“Potentially longer term could be a loss of jobs that couldn’t come back to the North Country.”

He said although CHMC is affiliated with River Hospital, they are also exploring linking with a larger network.

“We all are looking at affiliations with a lot of attention. We’re more earnestly looking at that. You need a little bit more scale so you can continue to do some things you might have to do to keep services rendered,” according to Howell. “Effectively, River joined us with our parents and it was just renamed. So we as an institution, North Star, are looking at other institutions for further affiliations.”

Anxiously Waiting at CHCNC

The Community Health Center of the North Country is anxiously waiting to hear the specifics of Congress preparing to repeal the Affordable Care Act.

CP of the North Country, which operates the Community Health Center of the North Country, a federally qualified health center that is available to all residents across communities in Northern New York regardless of income level, served 12,000 patients last year.

They have locations in Canton, Gouverneur and Malone. Depending on location, patients can receive medical, eye care, dental and behavioral therapy.

Ray Babowicz, director of marketing and communications at the health center, says there is “so much uncertainty” involved in the possibility of the Affordable Care Act (ACA) being replaced.

The center is reliant on federal grants and Babowicz says the ACA “certainly helped” the center when it was implemented in 2009.

“We’ve been concerned – but we’re trying not to panic,” he said.

He said healthcare has had strong support on both sides of the aisle in government providing access and cost savings to the region.

The center offers a sliding-scale fee for people that are uninsured and qualify based on income and household requirements. For example, a family of four with a household income of $25,000 would pay $15 for an office visit.

Babowicz did not have hard numbers if sliding-scale payments had gone up or down since the ACA as been implemented.

But should people lose insurance, he wanted them to know the center is there for them.

“At the end of the day, the community health system was here over 40 years ago and we will continue to provide quality healthcare to the North Country,” he said.

From a specific financial standpoint, he said it was impossible to gauge how it would affect the center.