On July 16, 2014

Hospital CEO’s memo suggests commercially insured will continue to shoulder more cuts

By Morgan True, VTDigger.org

Vermont’s second largest hospital says its rates are likely to grow by 8.4 percent next fiscal year, because payments from government programs that cover health care services aren’t keeping up with inflation.
In a letter to the 1,100 employees of Rutland Regional Medical Center, CEO Tom Huebner said the hospital board recently approved a fiscal year 2015 budget, which includes a 2.9 percent increase in spending.
“Even with our costs only going up 2.9 percent, our rate – our prices – will have to go up 8.4 percent,” Huebner wrote. “Medicare and Medicaid are only giving us about a 1 percent increase, so we have to make up for this by charging our commercial payers (Blue Cross, MVP, etc.) more.”
Seventy percent of RRMC’s revenue comes from Medicare and Medicaid, which accounts for the disparity between the 2.9 percent increase in costs and the 8.4 percent increase in rates. Medicare rates are set federally, but the state sets Medicaid reimbursements, which were increased 1.6 percent by the Legislature for the next fiscal year, which began Tuesday, July 1.
Huebner said he expects the hospital budget to be approved by the Green Mountain Care Board because it is well below the cumulative 3.8 percent increase the board has said it will allow. However, 0.8 percent of that increase can only be used for capital projects that dovetail with Vermont’s health reform efforts, and Huebner gave no indication whether the hospital has such projects slated for the coming year.
More detailed information on Rutland Regional’s budget and the budget for Vermont’s 14 other hospitals will be available this month, according to Mike Davis, who is in charge of hospital rate reviews for the board. The hospital fiscal year begins in October, but hospitals are required to submit their planned budget to the Green Mountain Care Board by July 1. The board won’t post the budgets and accompanying narratives until they’ve been screened for accuracy, Davis said.

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