The area’s one hospital spent $8 million last year helping uninsured patients who couldn’t pay their bills. The federal government helps the hospital meet the special challenges present in the Rockbridge area.
By Katy Stewart
Lexington’s Carilion Stonewall Jackson Hospital serves just about everybody in the Rockbridge area, whether or not they can afford to pay for their treatment.
That includes the nearly one in five Rockbridge area residents with no insurance, and another 30 percent or so who are covered by public insurance programs.
For uninsured people needing treatment at Stonewall Jackson, the hospital provided $8 million in charity care last year, hospital officials say. Patients can receive charity care — meaning the hospital doesn’t collect for the bill — if they meet certain criteria. The hospital writes off that care and is not reimbursed for it. Tax-exempt hospitals have to budget for providing free care to those who need help in order to maintain their nonprofit status.
Though the hospital gives away millions of dollars of care, the federal government helps the hospital with its bills.
Stonewall Jackson’s rural location and role in the community qualified it to become a critical access hospital. That means it gets federal funding from Medicare. But Medicare is also keeping its eye on the number of patients coming back to the hospital for care after being discharged, and might start penalizing the hospital if too many people come back too quickly. The emergency room might also see changes in whom it can help if Virginia chooses to embrace the Affordable Care Act.
Name changes and what they mean
The hospital has gotten two new names since 2000: the Carilion Clinic emblem and a “critical access” designation. Both have helped the hospital stay in the black, said Stonewall Jackson Utilization Review Coordinator Bob Capito.
Critical access means that there’s no other hospital within 35 miles, and that without the hospital, residents would have to travel too far to get care. The designation is meant for rural hospitals, and by having it, hospitals get help funding operations that might otherwise be too expensive. The U.S. Department of Health and Human Services started the program in 1997.
But the money comes with a set of rules.
The hospital can have only 25 beds for inpatients, must have a 24/7 emergency department, and the average inpatient stay must be four days or less.
Stonewall Jackson became a critical access hospital in August 2004. Virginia has seven critical access hospitals, and there are about 1,300 nationwide.
Because Stonewall Jackson is a critical access hospital, Medicare reimburses the hospital at a higher rate than it does for non-critical access hospitals, said board member Laurent Boetsch.
Medicare pays the hospital 101 percent of “allowable and reasonable” costs of caring for Medicare patients, according to the Virginia Department of Health.
The hospital used to be reimbursed according to Medicare’s price tags on different “diagnosis-related groups,” meaning that all diagnoses were assigned average values for reimbursement.
So, for example, a patient with pneumonia would earn the hospital a specified dollar amount, regardless of how long, short, simple or complex the hospital stay was.
But reimbursement based on diagnosis-related groups often left the hospital short on money because the cost of treating patients might exceed the amount Medicare paid back.
“This put pressure on hospital physicians to get them out quicker,” said retired Lexington doctor Malcolm Cothran, who practiced primary care internal medicine in town. Cothran, a native of a small South Carolina town, started his own practice in Lexington in 1975 and retired in 2008.
Now the hospital can afford to be flexible about how long patients can stay. But the four-day average stay requirement still encourages the hospital to send away patients with more complicated cases to other hospitals.
That is because the hospital is meant to meet general needs.
“It’s important for people to realize that a small hospital, by definition, can’t be all things to all people,” Cothran said.
And sending patients to other hospitals is easier because the hospital is now part of a network. That’s the second change.
Carilion Clinic absorbed the independent Stonewall Jackson Hospital in June 2005. Had the Carilion Clinic not acquired the hospital, Cothran said, the hospital would have struggled to stay alive.
And though Stonewall Jackson doesn’t offer as many services anymore, like a birthing center or mental health care, being part of the Carilion network gives patients access to the services offered at other Carilion hospitals.
“You will not get everything out of this hospital, but you do have access to a much larger system,” Boetsch said.
Cothran served on the hospital’s board of directors before the independent hospital was purchased. He also was involved with starting both the emergency department and the alcohol- and drug-treatment program.
He said that over the years he’s seen administration that was “good and not so good.” Joining Carilion helped the hospital gain the expertise it needed, he said.
“The hospital becoming a part of the Carilion system was a very smart thing to do,” Cothran said. Being part of a chain helps hospitals share the costs of lawyers, accountants and management, and helps build purchasing power.
The Carilion network, based in Roanoke, employs 575 physicians and has 160 practice sites in western Virginia and southern West Virginia, including eight nonprofit hospitals and two specialty hospitals.
“The Walmart example is not lost on hospital administration,” Cothran said.
Readmissions rate goals
The help Medicare offers through the critical access program might have more strings attached.
A new Medicare regulation, adopted in October 2012, requires hospitals to be mindful of readmission rates, or the number of patients readmitted to hospitals within 30 days of discharge. The Hospital Readmission Reduction Program will penalize hospitals whose readmissions rates exceed what Medicare deems an “expected” level.
Almost 20 percent of all Medicare patients nationally are readmitted to hospitals within 30 days of discharge.
The mandate is meant to discourage redundant or unnecessary rehospitalization, a cost Medicare is saddled with.
This first year, the maximum penalty for exceeding the expected level is only 1 percent, said Abraham Segres, vice president of quality and patient safety with the Virginia Hospital and Healthcare Association. But next year the penalty will be 2 percent, and the following year, 3 percent.
Stonewall Jackson won’t face the penalty this year. The critical access designation means the hospital is exempt. But Capito said the hospital is working on its readmission rates “altruistically,” not because of the mandate.
But the exemption won’t last long. It ends in 2014, Boetsch said.
Readmission rates were not always something hospitals paid attention to.
Like an auto repair shop, hospitals are compensated whenever patients come in for treatment. And like a repair shop, some people pay their bill out of pocket, but many rely on insurance to take care of it. Americans older than 65 are covered by the federal government’s Medicare program.
Before the Hospital Readmission Reduction Program, there was no real incentive to limit readmissions, Segres said.
“So the financial penalty is driving this work,” he said.
The Virginia Hospital and Healthcare Association represents 38 Virginia hospitals by lobbying the federal and state governments on their behalf. The organization also tries to help hospitals become more efficient and effective in providing services to the community, Segres said.
Segres is leading a project to help 34 participating Virginia hospitals, including Stonewall Jackson, lower their overall 2010 readmission rates by 20 percent by the end of 2013, even though the Medicare policy limits the readmission rates of Medicare patients only after heart attacks, pneumonia and heart failure.
He said that unnecessary readmissions aren’t good for patients’ health, either.
“If you can be out of the hospital, it’s best not to come back,” Segres said. “We all know it’s the right thing to do.”
Stonewall Jackson averages between a 12 and 13 percent overall readmission rate, Capito said. The state average for 2010 was a rate of 10.3 percent, and the target is 8.3 by the end of the year, according to the Virginia Hospital and Healthcare Association. But those rates reflect the readmission of all patients, not just Medicare patients.
It’s harder to keep readmissions rates down for Medicare patients, Segres said. Stonewall Jackson’s rate of Medicare readmissions was about 20 percent in 2012, according to the Virginia Hospital and Healthcare Association.
That’s because Medicare patients’ cases tend to be more complex, Segres said.
“The older the patient is, the more medicine they have to manage,” he said.
And with the Rockbridge area’s aging population — 20.7 percent of Rockbridge County residents are 65 or older — readmission rates reflect that statistic.
Another reason readmission rates are higher here: The shortage of primary care doctors in the area means that fewer people can keep an eye on discharged patients in case their health starts to deteriorate.
“It may be difficult to get in with a physician, assuming they have one,” Segres said.
Cothran said that some readmissions are inevitable. And sometimes doctors can’t be sure when patients are safe to be discharged.
“Most of the time you can be fairly sure if it’s safe to send people back,” he said. “But sometimes your crystal ball doesn’t work better than anyone else’s can.”
The Virginia Hospital and Healthcare Association offers webinars for hospitals on reducing readmissions rates. Segres said the organization is focusing on two main ways to keep the numbers down: helping patients understand their medicine, and helping community care partners, like nursing homes, understand their role in supporting a patient’s health.
Both strategies are designed to help patients have a better chance of maintaining their health after discharge.
Since applying the Virginia Hospital and Healthcare Association guidelines, Virginia hospitals have seen the average overall readmission drop to 9.3 percent, Segres said. But he doesn’t think the state will hit the 8.3 percent goal.
While it’s heading in the right direction, “it’s probably unlikely by the end of the year. We’re fairly low compared to other states.”
While it’s tricky to track overall readmissions rates without a statewide organization like the Virginia Hospital and Healthcare Association, The Dartmouth Institute for Health Policy and Clinical Practice estimates the national average of readmissions is about 15.9 percent.
Emergency room reliance
When Stonewall Jackson Hospital needed help staffing the emergency department in the 1980s and early 1990s, Cothran stepped in to help while still keeping up his private practice.
When ER patients couldn’t pay him with dollars, they would sometimes use firewood or wild game like venison as compensation.
He stopped manning the ER when the hospital hired ER professionals to take over. But the ER still helps patients who need assistance paying for their care.
Stonewall Jackson’s emergency room sees between 40 and 70 patients a day, said Holly Ostby, Stonewall Jackson’s community health coordinator. In 2011, the ER treated about 16,000 patients, according to the hospital’s financial documents. About 70 percent of those are Medicare patients, Ostby said. But almost 20 percent of ER patients were uninsured, according to the hospital’s financial statements.
Ostby said the vast majority of ER cases could be taken care of in an urgent care clinic. But there are none in the area.
The Rockbridge Area Community Health Needs Assessment, an extensive survey spearheaded by the Rockbridge Area Health Center in 2012, said that of the top eight diagnoses in the Stonewall Jackson ER, several are not emergencies: dental and oral diseases, ear infections and upper-respiratory infections.
According to the document, these and some of the other diagnoses “could be managed more efficiently and cost-effectively through an Urgent Care or Convenient Care clinic model.”
Ostby said that if Virginia chooses to expand Medicaid under the Patient Protection and Affordable Care Act, more people will be covered, which means the hospital will be reimbursed for some of the previously uncompensated care.
In other words, patients might no longer qualify for charity care — but they might have a better shot at qualifying for federal aid. And if those patients qualify for federal aid, the hospital will get paid back at least something for the care it provides.
“This is why hospitals are interested in universal health care,” Boetsch said.
But the Affordable Care Act won’t solve the problem entirely. If formerly uninsured people gain coverage, they won’t qualify for free nonemergency care from the hospital. And most family practitioners in the area limit the number of Medicaid and Medicare patients they can accept, keeping people from the care they need.
Cothran said it can be frustrating for a doctor having to limit patients, knowing that people need care.
“You can’t work 24/7,” he said. “And you have to take into consideration being able to care for people you’ve already accepted.”