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New hospital fees could be tough sell

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The Guam Memorial Hospital held a public hearing on their proposal to raise rates and implement new fees.  It's been over a decade since GMH adjusted its rates and because of this the hospital is not receiving the proper Medicare reimbursement.

GMH is now attempting to have their rates be reflective of current national standards, as CFO Benita Manglona said, "About 400 charge items that are below Medicare rate, and as we all understand the Medicare rate for any hospital that charges below Medicare rate is not a good thing."

According to Manglona if the hospital's fees for a procedure are $100 and the Ambulatory Payment Classification Rate is $500 GMH would only be able to be reimbursed for 92% of the $100 versus the Medicare allowed rate. "So the hospital is losing a lot of money by not charging that rate and we use the Medicare APC as a benchmark to arrive to use as GMH rates because Medicare has a very complicated formula that it derives from looking at all charges in hospitals across the States," she said.

While the hospital does have the authority to implement a 5% annual increase to its fees the rates proposed by the hospital exceed that. In fact, some of the proposed fees are increased by over 500%. For example, x-ray aorta, leg arteries currently costs $50 the new rate proposed is $2560.42. Increases such as this has private insurance companies like Calvo's Selectcare worried. Plan administrator Frank Campillo said, "All I am saying is that when you raise things, I'm not saying not to just be cautious because I see some things in here that are 300%, 500%, 5,000%, so there are things that can shock the system and then you end up having people less insured population and consequently increasing your receivables."

But that's not all also of concern is that GMH intends to raise the fees all at once. "Like the water system you cannot just increase from A to Z without damaging the entire system the problem with the hospital today is that you have a lot of non-payers that's were the biggest problem is," he added.

While Manglona admits that self pay clients do contribute to the financial distress at the hospital she contends that they only make up 25%. "When we studied this increase and we looked at the increase more than half of this is all Medicare, Medicaid and MIP, where we get paid a percentage and then the insurances are only one-fourth or a third of it and then the rest are self-pay and all the other providers," she explained.

Manglona adds  they are aggressively going after non-payers and making efforts to get them to pay their bills. But like Campillo representatives from local insurance companies are concerned that third-party insurance companies will be left to bear the brunt of the fee increase which will force them to pass it to the consumer creating "a dead spiral". Manglona says the information gathered at the public hearing will be compiled and presented to the Legislature for final approval.

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