JOHNSTOWN — Local health-care leaders are joining neighbors and competitors pushing for reform that includes provisions to correct what they say is a disparity in how western Pennsylvania hospitals are paid by Medicare.
“It is very clear that we are very disadvantaged,” said Scott Becker, president and chief executive officer at Conemaugh Health System.
“The entire region is compromised.”
At issue is Medicare’s wage index, part of a formula the government uses to set rates it pays hospitals for care of those on Medicare.
Western Pennsylvania as a whole has lost funding in recent years because hospital workers’ wages and benefits went up faster in other parts of the country, said H.J. Harper, president of the Hospital Council of Western Pennsylvania.
The council is leading a push to restructure the wage index system and make it more fair.
“The clear consensus among hospital council members is the current wage index system is broken and beyond repair,” Harper said in a letter to the Centers for Medicare and Medicaid Services.
The wage index is based on reports submitted by each hospital, but western Pennsylvania has been shielded from some of the forces that pushed up wages in many parts of the country, Harper explained in a telephone interview.
“In the past few years, we have been given increases of 21 percent,” Harper said. “The national average is 40 percent, so we have been giving increases. For some reason the formula works against certain regions.”
“You are penalized for doing a good job of controlling your costs,” said Linda Fanale, chief financial officer at Windber Medical Center.
Western Pennsylvania escaped a national shortage of nurses and other workers that pushed up wages in other areas, Harper said. The 2002 closing of St. Francis Health System in Pittsburgh helped avert the shortage here.
“They didn’t move, they took jobs in other facilities,” Harper said.
By hiring a consulting company to go over hospital reports and procedures to be sure everything was being considered for the reimbursement formula, the hospital council was able to get an extra $26 million in reimbursements over two years.
It still is not enough, Harper said.
“We know that data is pristine,” Harper said. “We think we are doing everything right. We still can’t survive on a wage index that is lower than 22 states’ rural floors.”
The “rural floor” is the minimum reimbursement rate for the state’s small hospitals.
Although Pittsburgh hospitals have remained slightly above the state minimum, Conemaugh Health System was at the rural floor this year.
Major health-care providers that offer high-tech complicated procedures cannot survive if they are paid at the same rate as country hospitals, Becker said. The expert medical professionals are being recruited nationally, including hospitals in regions with significantly higher wage indexes. While Memorial is holding its own, it could begin to lose the ability to offer those tertiary services.
In other words, if area hospitals paid workers more, they would get more, but they can’t afford to pay more with what they are getting now.
“As we have to compress and do more with less, it becomes a self-fulfilling prophesy,” Becker said.
It will take an act of Congress to change the situation, and the hospital council supports wage index restructuring provisions in the Senate finance committee’s version of a national health-care reform bill.
But in the meantime, the council suggests realigning western Pennsylvania into neighboring regions with higher wage indexes. Either Cleveland or Harrisburg would be an improvement.
“It is real dollars for us,” Fanale said. “If we were in Harrisburg, it would mean $430,000 a year to us.”
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