Hospitals Eye 30M Medicare Change

February 13, 2004
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GRAND RAPIDS — A group of 13 West Michigan hospitals could collectively gain as much as $30 million a year in Medicare reimbursement by appealing for a reclassification tied to the Kalamazoo Area Wage Index.

The deadline for the appeal is Sunday.

The hospitals are expected to successfully obtain the reclassification, due in large part to the intervention of West Michigan U.S. Reps. Pete Hoekstra, Vern Ehlers and Dave Camp, according to James Kosowski, director of public relations at Spectrum Health. The trio of legislators requested that the Centers for Medicare and Medicaid Services (CMS) clarify the reclassification appeals criteria originally released in early January. On Wednesday, CMS did just that, and the changes are expected to result in a significant increase in Medicare payment rates for the West Michigan hospitals, Kosowski said.

“Our hospitals and the communities they serve were being hurt by an Area Wage Index calculation that did not accurately reflect the real wage and salary costs for providing care to West Michigan residents,” said Roger Spoelman, president and CEO of Mercy General Health Partners in Muskegon. “Without the strong and continued support of Rep. Hoekstra, Rep. Ehlers and Rep. Camp, West Michigan would have continued to suffer from inadequate Medicare payments.”

The Area Wage Index is an element used to calculate federal Medicare reimbursement rates. The AWI calculation in Grand Rapids and surrounding areas has been artificially low in recent years as a result of factors unrelated to today’s real wage and salary costs for providing health care to West Michigan residents, Kosowski said.

“If, as we expect, our appeals are successful, health care in Grand Rapids and surrounding communities will greatly benefit by having its Area Wage Index increased to a level comparable to other areas in the state,” said Richard Breon, president and CEO of Spectrum Health. “Thanks to Representatives Ehlers, Hoekstra and Camp, we expect to begin receiving Medicare payments that better reflect our true costs.”

The participating hospitals include Hackley Health System, Holland Community Hospital, Mercy General Health Partners, Metropolitan Hospital, Munson Healthcare, North Ottawa Community Hospital, Saint Mary’s Mercy Medical Center, Spectrum Health, Spectrum Health Reed City Campus, Zeeland Community Hospital, Ionia County Memorial Hospital and Gerber Memorial Health Service.           

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