Governor signs GMHA rates hike into law

Patients expect 5% yearly increase

NOVEMBER 25, 2015 – Guam Memorial Hospital Administration (GMHA) can now implement their rate increase as Governor Eddie Baza Calvo formally signs the hospital’s proposed rate adjustments as Public Law 33-98.

Topping the list of rates increase is the “PTA-Tibioperoneal Artery/Branches” and “Intravascular Stent Percutaneous Init” both with a rate increase of 2,572.03%, or from a rate of $360.32 to $9,627.86. These are both Radiology procedures.

On October 13, GMHA submitted a proposed rate increase for some 402 procedures for the following department: Respiratory Therapy, Special Services, Hemodialysis, Laboratory, Rehabilitative Services, Nuclear Medicine, Radiology, Nursery, and Emergency Room. GMHA claims they need the increase to improve the financial standing of the hospital. GMHA’s CFO Benita Manglona said the hospital’s charges are outdated and aside from the 5% increase they did last April, the hospital rates are at year 2009 level. The law allows the hospital to implement an increase not greater than 5%. A legislative action would be needed for increases more than 5%, thus they referred their proposed increases to the Legislature. Senator Dennis Rodriguez, Jr. sponsored the bill.

On the public hearing, Take Care’s President Jeffrey Larsen said the increase would result to an average of 26-28% increase in health insurance premiums. He said the staggering increase by as much as 2,500% “should raise red flags,” and asked the lawmakers “to demand to know why such astronomical increases are occurring at a rate substantially greater than healthcare trends.” He also said some services listed in rate increase are not being provided by GMHA, rather they are services by a third party.

Manglona refuted Larsens’ claim that the rate increase they are proposing is above healthcare trends. She said they are just following the current Medicare APC rates.

Vice Speaker B.J. Cruz on the other hand has a different idea. He questioned the hospital’s collection rate, which from Manglona’s data is 50%. Manglona said they are trying to beef up on their collection and that they are working on Request for Proposals (RFP) for a call center “so there can be people dedicated to just calling for patients to pay their bills.” Cruz wants the hospital to boost its collection first and if that is fixed and the hospital would still need more funds, then that would be the time talk about increases.

But aside from the low rates the hospital is charging, Manglona said that another reason for low gross collection is that the Federal government is not reimbursing enough for the cost of hospitalization of migrants from FSM under the Compact-Impact Treaty. Manglona took the chance to mention that the lawmakers should help them with that.

When GMHA’s proposal was debated on by the lawmakers in the floor, Senator Rodriguez read the findings of the Office of the Inspector General US Department of Interior’s evaluation on GMHA on December 2014.

“GMHA provides a variety of medical service to the people of Guam but is not well funded and does not maximize opportunity to generate revenues. GMHA has not adjusted its fees since early 1990s. And current fees are not sufficient to cover operating cost. The Medicare and Medicaid reimbursement rates have not kept pace with the cost of providing medical services. Without the necessary funding, GMHA cannot pay vendors leaving the hospital with longstanding and increasing accounts payable. GMHA also has difficulty collecting payments from patients. GMHA’s funding challenges make it difficult to develop and maintain the infrastructure necessary to provide medical services.

“A new private hospital opening in 2014 may exacerbate GMHA’s current difficulties in maintaining staff and retaining patients who can afford to pay for services.

“GMHA’s funding and cash flow is not enough to provide the necessary medical services for Guam citizens. The hospital cannot get the funds it needs to manage its cash flow because:

1. Its fees have not kept pace with rising cost.
2. The Federal government does not fully reimburse it for cost of providing Medical and Medicaid services.
3. Vendor costs are rising due to GMHA’s outstanding invoices.
4. The hospital is not efficient in its collection of accounts receivable.”

Rodriguez said that the adjusted rates are already the lowest rates, and that these are the “facts of life – what it takes to run a business.” He said the rates are still low compared to the new hospital, referring to Guam Regional Medical City.

Rodriguez proposed for the body to “approve the rate increase for the services that being performed at the hospital while disapproving the proposed rates for services that are not being performed.”

Cruz, wanted to know those services, not being performed. He wants those to be clearly identified. On that same day, GMHA representative trimmed down the list by crossing out the items that are not performed by the hospital. Entries under Nuclear Medicine were all crossed out, except for one (intrathecal lumbar puncture). Out of 402 procedures, 304 was left after the trimming down. Cruz just wanted to be very sure as he said, “I’ve been burned before. I want them marked. Trick me once shame on you, trick me twice, shame on me.”

Senator Frank Blas, Jr. pointed out that the Inspector General’s report states “$239,000 of the estimated of the 123-M owed by uninsured patients was collected,” saying “Are we trying to catch up by raising the fees?”

Meanwhile, Senator Michael F.Q. San Nicolas reiterated the concerns of Jeff Larsen that the insurance premiums will increase as a result of the rate hike. San Nicolas said the insurance premium hike can “buy you a new car.”

“We are taking the financial problems of the hospital and were passing it through to the customers who pay these bills. It does not feel right at all. $137 to do the biopsy. It’s going to go up and cost $1,052 just to check if it is cancerous.

“Imagine somebody who is self-pay and they go in to get checked, and the doctor says ‘we found a mass, and we need to biopsy it.’ And then they ask, ‘how is that going to cost me?’ And they say ‘it’s going to cost you a thousand dollars. ‘I am very afraid that we’re going to have our people say, ‘you know what, I’m OK.’

“I have full appreciation of the financial troubles of the hospital. But I don’t believe that this proposed bill, this solution is the way for us to go about tackling that. We have to find better ways.

“Vendor cost of GMH is too high. When you dig deeper into this report, what it basically says is because GMHA does not pay its vendors on time, they’re getting cut-off from the cheaper vendors and they’re having to resort to the more expensive vendors.”

He quoted the Inspector General’s report, “GMHA’s primary vendors often refuse to extend credits forcing the hospital to seek other suppliers. Secondary suppliers tend to charge nearly double for supplies, so the hospital finds that it is paying higher rates for some supplies and services. For example, intravenous tubing from a primary vendor costs GMHA’s $98.65 per case of 24. But because that vendor is cutting them off because they are not paying them on time, they have to go to the secondary vendor and they’re charged $212.40 for the same case of 24 intravenous infusion tubings.”

Clearly stating his objection, “I don’t think that this is the time for us to be moving this legislation forward.”

He would prefer that they’re all “going to work together as a body, look very carefully at the entire operations of the hospital until it can be said that collection is done to our best efforts, the vendors are paid on time, and we’re getting the best pricing that we can possibly get. And from there figure out how much more does the hospital need in terms of subsidy.

“The hospital should continue to remain affordable for those people who aren’t able to get health insurance or to continue to remain at a price point where insurance companies aren’t going to raise premiums that would take hits to their households.”

Rodriguez said the adjusted rates will be effective immediately upon its enactment.

OPA (Office of Public Accountability)’s Audit Report on GMHA for years 2013 and 2014 states the hospital is going to increase by 5% every year. The same audit says “GMHA has not made required payments of withholding taxes for certain quarters of tax years 2010 and 2011.”

GMHA operates under the authority of a nine-member Board of Trustees, all of whom are appointed by the Governor of Guam with the advice and consent of the Guam Legislature,” the audit says./The Junction News Team