Regulators approve eight of 14 proposed hospital budgets

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Regulators approve eight of 14 proposed hospital budgets

Tue, 09/09/2014 - 5:05am -- tim

by Morgan True State regulators gave preliminary approval to eight of Vermont’s 14 hospital budgets Thursday. The Green Mountain Care Board voted unanimously on all eight budgets without making adjustments to spending plans submitted by hospital managers in July. The approved budgets won’t be final until a formal order is issued to the hospital. Before the order goes out, the board can revisit the budgets it has voted on and make adjustments.

All budgets must be finalized by September 15 for the start of the hospital budget year October 1. The board is scheduled to meet September 11, but can convene additional meetings as necessary to complete its work.

In the hospital budgeting process, the board approves patient revenue and the rates a hospital can charge for services in the coming year.

Four of the hospitals whose budgets’ did not receive a vote Thursday have requested to make accounting changes that impact their patient revenue, or the year-over-year change in their patient revenue. In addition to the four hospitals seeking accounting adjustments, the board chose not to vote on the budget request of Springfield Hospital and Copley Hospital in Morrisville, due to concerns about the budgets they submitted.

The four requesting accounting changes are:

Gifford Hospital shifted its primary care practice into a community health center within a new parent organization, Gifford Health Care. That that drew $6.6 million out of its hospital budget, leading the board to report the revenue request at minus 9.9 percent, instead of the actual 0.5 percent increase.

• Fletcher Allen Health Care is asking to shift $12.1 million in revenue from its reference lab out of patient revenue, because it says samples sent to the lab from other providers shouldn’t be considered in the hospital’s patient revenue.

It also has $1.8 million in “off-cycle physician acquisitions” from FY 14 that it would like counted in FY 15.

The two changes combined equal a $10.3 million decrease in it’s patient revenue request, and takes the percentage change in Fletcher Allen’s patient revenue from 2.7 percent to 3.7 percent — well above the 3 percent guidelines from the board. Its total patient revenue request is roughly $1.1 billion.

Central Vermont Medical Center in Berlin is seeking $762,673 increase in its FY 14 budget for “off-cycle physician acquisitions” that it does not want counted in its FY 15 budget. That would reduce its increase from 3.6 percent to 3.2 percent.

Southwestern Vermont Medical Center in Bennington is seeking a $4.8 million decrease in its FY 14 patient revenue based on “discontinued revenue sources,” taking their FY 15 patient revenue request from a 0.4 percent decrease to a 3.2 percent increase.

The board chose to hold off voting on those hospitals budgets’ to get a better understanding of the accounting changes.

If the requested adjustments are approved and all other budgets are approved without the board’s making adjustments, then hospital revenue from patient services would increase $68.5 million, taking Vermont hospital spending to roughly $2.8 billion in fiscal year 2015. Estimates for Vermont’s total spending on health care are in excess of $5 billion.

With the requested adjustments, the percentage change in hospitals’ patient revenue averages a 3.2 percent increase, higher than the 2.7 increase approved last year, and calling the board’s earlier claims of historically low budget requests into question.

Nationally, hospital spending grew 4.9 percent in 2012 and 3.5 in 2011, according to figures from the federal Centers for Medicaid and Medicare Services.

Vermont’s actual hospital spending in FY 14 won’t be known until next year.

The board won’t receive an accounting of what was actually spent in FY 14 until January. It will then take several months to determine whether hospitals stayed within their spending limits.

In FY 2013, the first year the board was responsible for hospital budgets, the hospital system budget was exceeded by roughly $12 million, said Mike Davis, who, as a state regulator, has led the hospital budgeting process for 28-years.

The budgets that won preliminary approval Thursday were:

Brattleboro Memorial Hospital: $71.3 million budget; $1.5 million, or 2.1 percent, increase in patient revenue; 2.7 percent increase in charge rates.

Grace Cottage Hospital in Townshend: $17.9 million budget; $1.4 million, or 8.6 percent, increase in patient revenue; 5 percent increase in charge rates.

Mt. Ascutney Hospital in Windsor: $48.5 million budget; $1.6 million, or 3.4 percent, increase in patient revenue; 3.2 percent increase in charge rates.

North County Hospital in Newport: $73.5 million budget; $1.7 million, or 2.4 percent, decrease in patient revenue; 8.3 percent increase in charge rates.

• Northeastern Vermont Regional Hospital in St. Johnsbury: $65.3 million budget; $636,900, or 1 percent, increase in patient revenue; 5 percent increase in charge rates.

Northwestern Medical Center in St. Albans: $90.7 million budget; $3 million, or 3.5 percent, increase in patient revenue; 6.4 percent increase in charge rates.

Porter Medical Center in Middlebury: $72.6 million budget; $2.8 million, or 4.1 percent, increase in patient revenue; 5 percent increase in charge rates.

Rutland Regional Medical Center: $224 million budget; $6.3 million, or 2.9 percent, increase in patient revenue; 8.4 percent increase in charge rates.

Government programs — Medicare and Medicaid — set their own rates for what hospitals will be paid. Therefore, the rate increases approved by the board only impact insurance companies and the uninsured.

The uninsured are typically given discounts, based on a hospital’s charity care policy. As a result, much of the rate increase is shifted to insurers, which translates into higher premiums for consumers.