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Reimbursement Fight Looms For Hospital

POSTED August 3, 2011 2:48 a.m.

In an attempt to fight off cuts that could severely hamper the hospital’s operation, Oak Valley Hospital Chief Executive Officer John Friel urged a letter writing campaign to elected officials to block a proposed bill.
On June 30, the California Department of Health Care Services submitted a State Plan Amendment (SPA) that seeks authorization to reduce Medi-Cal reimbursement rates for certain facilities by 10 percent of 2008-2009 rates.
The proposal is currently under review by the Centers for Medicare and Medicaid Services (CMS), the federal agency that administers Medicare, Medicaid, and the Children’s Health Insurance Program.
Skilled nursing facilities and sub-acute care units that are distinct parts of Oak Valley Hospital would be greatly affected by the reduction, noted officials. Oak Valley Care Center, operated by the hospital, currently has 115 skilled nursing beds.
“We respectfully request that your office contact key administrators at CMS and urge them to disapprove SP 11-110,” Friel wrote in released letters to California Senators Feinstein and Boxer. “Cuts of this magnitude will have a devastating impact on Medi-Cal beneficiaries’ access to medically necessary skilled-nursing services. Our facility is among those that would be significantly and adversely affected by the proposed reduction in reimbursement.”
Friel also sent similar letters to the CMS director and CMS regional administrator for California.
“If this goes through, we could see a 25 percent reduction of our Medi-Cal-Medicare reimbursements,” Friel said. “This is a 10 percent cut to our ’08 rates and not the current 2011. It would also be retroactive to June 1 of this year.”
Friel warned in his letter that the proposed reductions would put Oak Valley Care Center in jeopardy of closing and the community would lose its only skilled nursing facility affiliated with an acute care hospital.
If the closure were to occur, 150 jobs with the hospital would be lost and those patients residing at the facility would have to be relocated further away from the area.
Don Wiley of Catholic Healthcare West (CHW), the organization that Oak Valley Hospital has an affiliation contract with, stated that all CHW facilities have also been suffering from the potential loss due to the CMS cuts.
Tom Petersen, executive director of the Association of California Healthcare Districts, acknowledged that Oak Valley Hospital had a very efficient operating budget compared to more “looser budgeted” hospitals. A 10 percent cut of Medi-Cal funding would have a drastic effect overall to Oak Valley Hospital’s operation.
At the July 27 Oak Valley Hospital Governing Board meeting, several board members agreed that they would write letters on the hospital’s behalf.
“It’s important to the hospital and the community that we all get involved,” said Board Director Wendell Chun.

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