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Erlanger Sequatchie Valley operates this facility in Dunlap, Tenn., A Supreme Court ruling may affect how rural hospitals deliver service. This picture was taken on June 6, 2019.
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Staff photo by Tim Barber / Erlanger Sequatchie Valley operates this facility in Dunlap, Tenn. A Supreme Court ruling may affect how rural hospitals deliver service. This picture was taken on June 6, 2019.

Hospitals that serve higher numbers of low-income patients could recoup a significant amount of money after a ruling by the U.S. Supreme Court this week.

In a 7-1 decision, the court determined that the U.S. Department of Health and Human Services faltered by not allowing public comment when the department changed the way it calculates payments designed to offset the costs of treating uninsured and underinsured patients.

"Under this new statute, the court said you do have to go through the public comment process. Hospitals should be able to make comments, and those should be considered before [the U.S. Centers for Medicare and Medicaid Services] makes a rule going forward," said Mike Shaver, director of reimbursement for Erlanger. Shaver said the decision marks the first time the court ruled in favor of hospitals since the 1980s.

Not only are low-income patients less able to afford their hospital visits, they're more likely to delay preventive care and arrive at the hospital sicker, requiring more expensive treatment.

Steve Johnson, vice president of government and payer relations for Erlanger Health System, said "disproportionate share payments are vitally important" for hospitals such as Erlanger that qualify.

"The designation is intended to help make hospitals who care for a high percentage of low income patients sustainable, because they care for so many patients who are uninsured or underinsured," Johnson said.

Locally, Parkridge Health System also receives disproportionate share payments and stands to gain from the decision.

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The onetime Grandview Medical Center in Jasper, Tennessee, no longer is an in-patient facility but maintains a 24-hour emergency room and out-patient services as Parkridge West Hospital.

The changes to how those payments are calculated resulted in $3 billion to $4 billion in estimated losses to qualifying hospitals between fiscal years 2005 and 2013, the court said, adding that public comment may have prevented those losses.

Yolanda James, spokeswoman for the Tennessee Hospital Association, said in an email that the impact of the court's decision on Tennessee's hospitals is "unknown at this early stage," but "there is potential for a positive benefit to our state's hospitals."

Although Johnson is pleased with the decision, he said it's unclear how the Centers for Medicare and Medicaid Services would interpret the ruling, since the payment formula is long and complicated. Another question is even though Erlanger was affected by the payment changes, the hospital wasn't part of the original case.

Still, he thinks the system is well positioned to receive some money given that Erlanger was in the appeals process.

"We are excited about the ruling, but we temper our excitement by acknowledging that it may take [the Centers for Medicare and Medicaid Services] more than a year to resolve appeals, and any payment would be offset by legal fees," he said.

It's also unclear what will happen to other hospitals that face the same problem with disproportionate share payments and had no involvement in the legal process.

Contact Elizabeth Fite at efite@timesfreepress.com or 423-757-6673.

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Staff Photo by John Rawlston / Seen on Tuesday, Jan. 5, 2016, in Chattanooga, Tenn., this entrance sign for Erlanger Medical Center is located on the east side of the facility on Third Street near the intersection with Central Avenue.
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