Local hospital officials are speaking out against Gov. HaleyBarbour’s newest proposal to close Medicaid’s $90 million fundingdeficit and bring the program back under budget after getting theirfirst real analyses of the plan throughout the previous week.

Officials claim the plan – which will increase hospitalassessments, lower reimbursement rates by more than 96 percent andattempt to refund the difference through another reimbursementprogram – will distribute reimbursements unevenly and unfairly,generate cash flow problems and hurt more hospitals than it willhelp.

The plan is scheduled to go into effect on Sept. 1.

Officials with King’s Daughters Medical Center and FranklinCounty Memorial Hospital said their facilities stand to losesubstantial amounts of Medicaid reimbursement money, and althoughLawrence County Hospital will get back more money than it puts in,officials there say the final tally will still be in the red whencompared with the old reimbursement system.

“We think it’s uglier than what it shows,” KDMC Chief ExecutiveOfficer Alvin Hoover

said of the plan. “These are the governor’s numbers, and he forsure hasn’t given a lot of thought to what the impact on hospitalsreally is.”

Hoover said the estimates for KDMC under the new plan show thehospital receiving $44,000 more than it pays in. But when comparedwith the old reimbursement method, Hoover said the facility wouldactually lose at least $1 million per year if the plan wereenacted.

Hoover said a tax already paid into the system by KDMC thatresults in a roughly $500,000 reimbursement would be completelydone away with. On top of that, the governor’s plan calls forMedicaid reimbursement rates to be cut by 96.2 percent.

Hoover predicted hospitals around the state would sue thegovernor to stop the plan from going into action “fairlyquickly.”

“We’re gonna try to stop the cuts,” he said. “We think there’sprobably a better chance of getting this plan stopped through legalaction. Maybe we can get back into the Legislature again and see ifthose guys can take care of us.”

If the new plan is applied, Hoover said KDMC would likely haveto cut some services in an effort to make up the shortfall ofmoney.

Franklin County Memorial Hospital Administrator Sonny Dickeysaid the new cuts might force his hospital to close not some, butall services.

“I know that, for us, we’re fighting for our life,” he said. “Idon’t think the governor nor the Division of Medicaid realizes whatthey’re doing to health care in Mississippi.”

Dickey estimated that FCMH would lose approximately $300,000 peryear under the new plan, a hit that would likely force thealready-troubled hospital to close. He said the facility hasalready had to scale back the hours of some of its employees, andsome were temporarily laid off in June.

“We’re getting by,” Dickey said. “I think things will getbetter, but I don’t know if we will ever get back to what folksconsider normal. If this plan goes into action, we would just haveto go back and look seriously at what we could cut and stilloperate, and right now I don’t know.”

Dickey said the current Medicaid conditions should be left aloneuntil 2009, when the Legislature would have another shot atcorrecting the deficit that has brought the hospitals to thispoint.

Dickey believes hospitals will unite to sue the governor beforethe cuts are enacted to delay the governor.

Lawrence County Hospital, the only one of the three localhospitals that will come out ahead under the new plan, will stillsee a decrease in Medicaid reimbursements when compared with theprevious reimbursement method, said LCH Administrator SemmesRoss.

“I guess you can say we’re a winner,” Ross said. “But eventhough we are quote, ‘winners,’ cash flow is going to be a bigthing. I’m almost to the point where we’re just gonna wait and seewhat hits us.”

Ross said it is unclear exactly how much money LCH would loseunder the new plan, but he also believes that legal action willensue to stop its implementation.

“It will have to be resolved in the courts and by CMS (thefederal Center for Medicare and Medicaid Services),” he said. “Ithink there will be some kind of action done, because this planwill cause some hospitals to go out of business. You can’t put inmoney and not get back at least as much as you put in.”

Mississippi Hospital Association Vice President of Finance/ChiefFinancial Officer Mike Bailey said the major flaw in the governor’sproposal is its use of UPL (Upper Payment Limit) payments forreimbursements.

Bailey said UPL payments are calculated based on the three majorclassifications of hospitals – state, non-state and private – andthe payments will actually be distributed among the classificationsand not to individual hospitals.

“If you look at it like the governor looks at it, with all thehospitals aggregated together, then he’s right – dollar in, dollarout,” he said. “But there’s no guarantee hospitals that give up adollar will get that dollar back, and that’s what we’re seeing.It’s not a fair way to do things.”

Without specifying hospital names, Bailey said MHA’s preliminarycalculations show one 48-bed hospital that last year did $1.4million of Medicaid business receiving $21 million in UPL paymentsunder the new plan. This hospital, he said, does not have as manyhospitals within its classification with which to divide the UPLmass payment.

Likewise, Bailey said one of the state’s larger hospitals thattreated a large amount of Medicaid patients stands to lose as muchas $10 million per year under the plan.

Furthermore, Bailey said the UPL program is undependable as ameans of reimbursing hospitals. The governor’s proposal calls forthe UPL payments to be distributed to hospitals on a monthlybasis.

“Right now, hospitals are paid once a week – Medicaid has beenunsuccessful in paying UPL on time,” he said. “In the past twoyear, Medicaid has not been able to make a yearly UPL payment. Howcan they now make them monthly?”

Even if Medicaid was able to keep pace with monthlyreimbursements, Bailey said the UPL program could cause hospitals’cash flow to decrease as much as 75 percent.

“Some hospitals can absorb that; some live week to week,” hesaid. “The new plan is bad for hospitals, bad for the state and,most of all, it’s bad for the most vulnerable citizens in our state- the Medicaid population.”

Bailey said MHA is exploring all of its administrative and legaloptions to “stop the devastation from occurring.”