Grinnell Regional Medical Center is one of 20 hospitals nationwide chosen to participate in a demonstration project offered by the Centers for Medicare and Medicaid Services (CMS). The purpose of the project, called the Rural Community Hospital Demonstration Project, is to see how middle-sized rural hospitals would fare if they were reimbursed for their costs when caring for Medicare patients when they are hospitalized. This program does not include improving the payment for Medicare outpatient services.
“We’re pleased to be selected,” says Ed Hatcher, chair of GRMC’s board of directors. “For GRMC, this will improve reimbursement for Medicare inpatients and it helps the federal government gather information to see if cost-based reimbursement should be implemented on a wider scale for similar sized hospitals in America. We are proud to have been chosen to share what we know and to be a model for other hospitals.”
Jack Fritts, GRMC vice-president of finance and CFO, explains the change in reimbursement is helpful and positions GRMC for the future, but it’s not a windfall.
“The complete terms and conditions for the program are still being reviewed. It certainly puts GRMC in a better position going into all the changes which are part of healthcare reform,” Fritts says. “Under the current reimbursement system GRMC has been paid literally millions of dollars per year below our costs for providing care to Medicare patients. While we will see an increase in our Medicare reimbursement for inpatient care, the project is not a magic bullet that will solve all our financial issues.”
Todd C. Linden, GRMC president and CEO, says, “One reason for our selection in this project is because of our high quality and low cost care. Just like our recognition by the Leap Frog Group as a ‘Top Hospital’ several months ago, I believe we were chosen to be an example to other hospitals across the country. That is exciting.”
Linden credits years of community advocacy and several members of Iowa’s Congressional delegation for their work to get Iowa included in the demonstration project so that hospitals like GRMC would be eligible to apply.
“We want to thank our Washington delegation,” Linden says. “Senators Harkin and Grassley, and Representatives Boswell and Braley worked especially hard on the concerns of the inequitable payment for hospitals our sized in the reform legislation. Through the work of the community, GRMC staff, and supporters, they know our ‘tweener’ issue well.”
Tweener hospitals are disadvantaged because they fall between two special hospital designations. With 49 beds, hospitals like GRMC are too large to be critical access hospitals like those in Pella or Oskaloosa, which currently enjoy cost-plus-one-percent reimbursement for all Medicare and Medicaid services. GRMC is also too small to be classified as a rural referral center like in Marshalltown, which also receives special added payment from Medicare and Medicaid.
In addition to better reimbursement, rural hospitals greatly depend on recruiting and retaining the right physicians and mid-level providers who can meet the healthcare needs locally. Linden believes GRMC is poised for growth given this improved reimbursement from Medicare and for recent additions to our medical staff.
“We have two outstanding new internal medicine physicians joining GRMC medical staff within the next several months,” Linden says. “These doctors are joining an already extraordinary medical staff so that folks can stay in the area to get the top-notch medical care they need.”
The Rural Community Hospital Demonstration Program will begin in January 2012 and continue for five years.