For some hospitals, prosperity has drawbacks

Some hospitals experience a financially bumpy road even when they turn a profit, according to a report from Area Wide News.

Fulton County Hospital, a 25-bed critical access hospital (CAH) in Salem, Ark., either turned a profit or took small losses for six months, according to the article. However, due in part to its run of good luck, the hospital now owes Medicare $353,000 because of overpayments.

In 2013, the hospital's admissions increased 10 percent from 2012, unusual for a CAH, and costs either decreased or remained steady, according to Bill Couch, the Medicare expert for Hughes, Welch and Milligan CPAs.

"When we have the good fortune to have an increase in [patient] volume and our costs are staying the same or decreasing, what we are doing is being overpaid by Medicare," Couch told Area Wide News. Medicare pays higher reimbursements for lower patient volumes, but reimbursed the hospital in 2013 based on 2012 volumes.

Things look better for the hospital where Medicaid is concerned, according to the article. "When the hospital filed claims with Medicaid, it paid a much smaller reimbursement rate--meaning it now owes the hospital $204,000 to settle up," it states. "If it chooses, the hospital board can pay the $204,000 to Medicare, reducing what it owes to $149,000."  

To avoid owing Medicare for overpayments in the future, Couch recommended to the hospital board that the hospital analyze its expected income for the remainder of the fiscal year, which concludes at the end of June. Based on that, he said, the hospital should come up with an amount for Medicare to withhold from future reimbursements. It will be something of a balancing act, he said, according to the article. "[W]hen we do that [ask for less reimbursement], our cash flow dries up. It's going to put some pressure on us, so we don't want to be too severe with that."

An Office of Inspector General audit last year found that due to a combination of poor record-keeping and turnover among the contractors responsible for enforcement, Medicare is unable to collect more than $500 million in overpayments, FierceHealthcare previously reported.

To learn more:
- read the article