Minge, Kief:

Medicare

payments

lag in

rural areas

Disparity could be $2.7 million at NU Medical Center

By RON LARSEN

Journal Staff Writer

NEW ULM -- New Ulm Medical Center Administrator Brian Kief says he couldn't agree more with former Congressman David Minge's conclusion that disparities in Medicare payments are costing rural Minnesota's economy up to $300 million a year.

While he couldn't get into specifics as far as NUMC is concerned, Kief said, "I feel it's accurate to say Medicare payments in this area are $2.7 million less than urban."

Minge is putting the final touches on a draft analysis of Medicare payment disparities for the Blandin Foundation of Grand Rapids. Blandin which gives nearly $20 million a year in grants to help strengthen rural Minnesota communities contracted the study because health care "is such a critical component of rural economies," said the Foundation's Bernadine Joselyn. "We wanted to facilitate a more objective and comprehensive look."

While he's tried to take an analytical approach to the problem, Minge said the disparities "are not easy to quantify because there's no assurance that each individual situation would stay the same."

While much of the disparities tend to be of regional nature where the Midwest, for example, gets lower payments than some other regions, Minge said that resulted from existing disparities being "grandfathered in by Congress" when changes in the Medicare program were made.

The restructuring also generated a lot of paperwork "which has become burdensome for small, rural hospitals," Minge explained. "Medicare was not well treated by health care providers and the country, and the system was abused. Increased paperwork has been the result of this."

Minge notes these disparities have been narrowed or reduced in the past year "so we're moving in the right direction. Still, the spread is narrowed only modestly and disparity remains."

Minge and Kief agree on what has surfaced as a "double-whammy" for rural hospitals in Minnesota.

"In rural areas, with an aging population, the percentage of Medicare patients to general patient population will run higher than in many urban hospitals or in rural communities with a more varied patient population," Minge said. "Whereas, some hospitals in urban areas may experience a 40 percent ratio of Medicare patients to general patient population, the New Ulm Medical Center might be at 50 percent, and the Springfield facility might run as high as 70 percent, for example."

Not only are these hospitals working with a smaller overall patient base, Minge said, but they have a smaller general patient base with which to spread increased costs.

"While it's difficult to establish an exact percentage," Kief said, "I would say that we run pretty close to 50 percent most of the time. And the added hammer for us is that private health care insurers will base their payments on Medicare so we lose out there, too."

There's a hammer for local employers, too, said Minge.

"Because of all this, employers may face higher costs in utilizing smaller hospitals," he explained.

Neither Minge nor Kief see much relief in sight from Congress.

"I'm very pessimistic about real relief from Congress," Kief said. "And urban flight which might change the patient base mix is a wild card that isn't predictable. Our future is through greater efficiency. We have to retain the human touch in patient care, but we can use technology to achieve efficiency in billing and data processing areas and the like."