CALAIS, Maine — A local hospital has reached an agreement to repay a federal agency on an installment plan, which officials say should help avoid aggravating the hospital’s financial situation.
In a prepared statement released Thursday by U.S. Rep. Bruce Poliquin, hospital officials thanked the congressman for helping to set up a 36-month payment plan and for encouraging the federal Centers for Medicare and Medicaid Services not to demand the repayment in one immediate lump sum.
Calais Regional Hospital, which already has been experiencing financial difficulties, was overpaid a total of $3.5 million in 2013 and 2014 by the federal agency. When the mistake was discovered, federal officials “requested an immediate payback of $3.5 million, which would cripple the hospital’s ability to stay open,” according to a statement released Thursday by Poliquin.
The financial hurdle is the latest in a series of challenges the hospital has faced over the past few years.
In June, Michael Lally suddenly resigned after serving as CEO of the hospital for six years, saying in a written statement that his resignation was by mutual agreement with the board and that he wanted to pursue other personal and professional opportunities.
Under Lally’s leadership, the hospital last year reduced hours for 90 employees and laid off a handful of workers as part of an effort to rein in a two-month operating deficit of more than $500,000. In 2012, the hospital eliminated 13 positions in an attempt to offset a $1 million loss during the first five months of the year.
Dee Dee Travis, spokeswoman for the hospital, said Thursday that Poliquin and U.S. Sens. Susan Collins and Angus King each wrote letters to the federal agency to voice support for the hospital’s desire to set up a multiyear payment plan.
Travis said the suggestion that failure to set up such a plan likely would have resulted in the hospital’s sudden closure would be an “exaggeration,” but she said having to pay the $3.5 million would have complicated the hospital’s finances.
“It would have made our day-to-day operations difficult, that’s for sure,” Travis said.
Travis said the hospital’s Medicaid and Medicare reimbursements in 2013 and 2014 — which at a total of $3.5 million would have averaged $1.75 million in each of those two years — were “larger” than what the hospital had faced in prior years, but she did not provide specific dollar amounts.
Jeff Austin of the Maine Hospital Association said Thursday it is common for smaller hospitals to be overpaid or underpaid for Medicaid and Medicare reimbursements. Smaller hospitals get regular estimated payments throughout the year, based on what they received in prior years, and often end up getting not enough or too much and then having to settle the difference with the federal agency later on, he said.
“It’s a two-way street,” Austin said.
Larger hospitals used to receive regular estimated payments but now operate on a “pay-as-you-go” system, Austin said. He said he was not familiar with Calais Regional Hospital’s specific situation and did not know enough about recent reimbursement plans in general to comment on whether the amount the Calais hospital has to repay is unusual.
Austin said he did not think the Centers for Medicare and Medicaid Services is looking to put critical access hospitals such as the one in Calais in financial jeopardy.
“I think they want to help hospitals carry on,” Austin said.
In a letter sent last month to the Centers for Medicare and Medicaid Services, Poliquin said Calais Regional Hospital employs 250 people and each year receives 8,500 emergency room visits and delivers more than 100 babies.
“As you know, the process by which Medicare and Medicaid payments to health care organizations are calculated each year is extremely complex, and confusion and overpayment often results,” Poliquin said in the letter to agency officials. “Calais Regional Hospital and the tens of thousands of rural Mainers whose health depends on its services should not be threatened because this overpayment was finally realized by CMS auditors, who demanded immediate repayment.”
In the same statement released Thursday by Poliquin, interim hospital CEO Bert Whitaker and Everett Libby, chairman of the hospital’s board, described the situation as a “cash-flow issue” and said that without the payment plan agreement, there could have been a “loss” in the health care provided by the hospital.
“Calais Regional Hospital is important to our region and ensuring CRH continues to be able to provide care is vital to not only our community members’ health, but also the health of our local economy,” Whitaker said in the statement.
