IRCHD and IRMC Reach Indigent Care Agreement
Surely, you have read that last Thursday, May 21, 2015 the IRCHD and IRMC approved the “Second Amended and Restated Agreement for Indigent Care Services.”
But we’re surprised that after 16 months of up-and-down negotiations, the tragic death of IRCHD Treasurer Trevor Smith, the lack of congeniality, a no-show to a negotiating meeting by IRMC and the need to engage attorneys on both sides (IRCHD has spent $ 400,000 after budgeting $ 200,000), there has been no in-depth reporting on the details of the new agreement.
Basically, the approval by the IRCHD and the IRMC was a “double-header.” At about 4:30 p.m. the IRCHD approved the Agreement, five Trustees to two, and at about 5:00 p.m. the IRMC Board of Directors unanimously approved the Agreement. It was a quick dash to go from one meeting to the other.
To begin with, the term of new Indigent Care Agreement now coincides with the term of the Master Lease between IRCHD and IRMC; the term of which extends to December, 2034.
The term of the prior agreement was that “at each two-year interval following the calendar year 2006…District and Hospital shall bargain and negotiate in good faith with one another to obtain and equitable and mutually satisfactorily continuance of this agreement.”
Perhaps, if not the most significant aspect of the new Agreement is the “reimbursement methodology” from IRCHD to IRMC for indigent medical care.
Under the prior Agreement, reimbursement was determined by the Medicare inpatient and outpatient cost reports (MCR).
Now, rather than using these reports, the reimbursement methodology is based on a Non-Federal rate, which is all others (e.g private payers). This rate was believed to be the best and most precise representation of the indigent patient in both population and reason for services provided to the Medical Center.
The net effect is that the Non-Federal rates are lower than the Federal rates.
The Non-Federal rate for 2014 will be used for three three years, backdated to October, 2014 and adjusted 3% annually for inflation.
In 2012 the Non-Federal per diem rate for hospital medical/surgical services was $ 1,719 and $ 792 for psychiatric services. What the IRMC and IRCHD have agreed to for FY 2015, 2016 and 2017 (three years) is $ 1,844 (less 5% = $ 1751) for medical/surgical services and $ 699 (less 5% = $ 664) for psychiatric services.
Additionally, the IRMC and IRCHD have agreed on $ 1,000,000 in funding for the Partners Program for FY 2015. According to IRMC president/CEO Jeff Susi, IRMC wanted $ 200 – 300,000 more for the Partners Program but by accepting the $1,000,000 it “acquiesced to the IRCHD’s request.”
In a April 2, 2015 email from Mr. Susi, he wrote that “IRMC is agreeing to a major reduction in funding.
Another modification under the new Agreement is if the “MEDICAL CENTER intends to add a new program or service…that DISTRICT determines there is no necessity for…it may elect not to provide funding…”
While the new Agreement runs parallel to the Master Lease, under the new Agreement “Between May 1 and June 30 beginning in Calendar Year 2017 and continuing every three (3) years thereafter (i.e. 2020, 2023, et seq.)…DISTRICT and MEDICAL CENTER…shall meet and shall bargain and negotiate in good faith…to obtain an equitable and mutually satisfactory confirmation of the continuance of this Agreement…”
Is that an ambiguity?
Another modification, now in thinking is more significant than the reimbursement formula, is that: “Notwithstanding anything else in this agreement, MEDICAL CENTER and DISTRICT acknowledge and agree that DISTRICT’S Annual Appropriations shall be in thesole discretion (emphasis added) of the DISTRICT.”
In voting against approval of the renegotiated Indigent Care Agreement, Dr. Thomas Spackman, IRCHD Chairman, indicated he took issue with inherent ambiguities and that it did not take into account oversight of the management of IRMC.
Prior to the vote and the Regular Monthly Meeting, at the IRCHD Chairman’s Meeting, one Trustee spoke out indicating that with the challenges of healthcare and without the indigent care funding by the District and philanthropy of the Indian River Medical Center Foundation, “we won’t have a hospital in five years.”