Partners' miscalculation will cost Massachusetts hospitals $110M


What appeared to be a small mistake by Partners HealthCare calculating wages at one of its hospitals has mushroomed into a nine-figure loss in Medicare payments for Massachusetts hospitals.

Hospitals in the Bay State will lose as much as $110 million in the 2017 fiscal year due to a mistake in calculating wages at the tiny Nantucket Cottage Hospital, according to the Boston Business Journal, The 19-bed facility sets the floor for Medicare reimbursement in Massachusetts because it is one of the very few rural hospitals in the state, and payments need to be equalized among rural and urban facilities.

A consulting firm hired by Partners overestimated how many hours Nantucket Cottage employees worked, bringing their overall average wages--and the corresponding Medicare reimbursement--down. That led to an immediate $84 million loss, plus another $26 million to other reimbursement cuts.

Somewhat ironically, Partners had come under fire for compensation practices involving its lowest-paid employees, in essence offering minimum wage to its unionized housekeeping employees.

The loss could have been worse: Partners originally estimated in May that it could have been high as $160 million.

Although Partners has informed the Centers for Medicare & Medicaid Services of the error, the agency has not relented on restoring the lost funding, according to the Boston Business Journal. CMS has maintained that because Partners did not submit the corrections until April, it was some two months past the statutory deadline.

“We have consistently stated in annual inpatient reimbursement rules rule-making that hospitals that do not meet the procedural deadlines set forth in the IPPS rule will not be afforded a later opportunity to submit wage index data corrections,” CMS said in the ruling.

The mistake was not limited to Massachusetts. Rhode Island hospitals were also part of the calculation. They stand to lose $7 million, WPRI has reported.

- read the Boston Business Journal article
- check out the WPRI article