North General Hospital Case Highlights Complexity Of Medicare Formula

Main Category: Medicare / Medicaid / SCHIP
Also Included In: Public Health
Article Date: 16 Jul 2007 - 14:00 PDT

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North General Hospital -- a Harlem, N.Y., community hospital that had reported a profit for the first time in fiscal year 2005 -- last week revised those financial results and announced a $6.2 million loss for the period, a case that highlights the complexity of the Medicare and Medicaid reimbursement rate formulas, the Wall Street Journal reports. North General also estimated a $7.1 million loss for FY 2006 (Dougherty, Wall Street Journal, 7/12).

The Journal in June 2006 published an article on North General that examined how the hospital, which had reported a $20 million loss for FY 2003, reported a $2.6 million profit for FY 2005 because of a number of measures focused on the treatment of conditions that affect Harlem residents in high rates (Kaiser Daily Health Policy Report, 6/22/06).

North General focused on more profitable services, such as the treatment of cardiovascular problems, hypertension, obesity and infant mortality. However, North General "now says the services it offered to patients brought in less revenue than it initially estimated" because of retroactive changes in the Medicare and Medicaid reimbursement rate formulas, the Journal reports.

North General Chief Operating Officer John Maher said that the hospital "simply overestimated revenue." North General had to return $500,000 to Medicare and $3.2 million to Medicaid for FY 2005. In addition, North General overestimated revenue from private health insurers and patients. Liz Sweeney, a health care analyst at Standard & Poor's, said, "It happens. There's a lot of estimation that goes into accounting in general, and in health care, there's perhaps more estimation" (Wall Street Journal, 7/12).

"Reprinted with permission from http://www.kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation . © 2005 Advisory Board Company and Kaiser Family Foundation. All rights reserved.

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