Federal budget plan may trim Medicare payments to 15 rural Oregon hospitals

PENDLETON — A federal budget-cutting proposal threatens to reduce Medicare payments to 15 rural Oregon hospitals, and hospital and state officials said the impact could be devastating.

The East Oregonian reports that the proposal involves "critical access hospitals" that get higher Medicaid payments under a program started in 1997 amid a wave of hospital closures in rural America.

Oregon has 25 of the critical access or rural hospitals.

But 15 are within 15 to 35 miles of another hospital, which is why their payments are threatened.

Until 2006, the 15 were exempted from a limit on hospitals not considered sufficiently remote for the higher payments.

Now, a recommendation from the inspector general's office of the U.S. Department of Health and Human Services could end that exception. It would affect about 850 hospitals nationally.

In Oregon, "some of these hospitals would be put at severe financial risk," Scott Ekblad, director of the state Office of Rural Health, said.

At St. Anthony Hospital in Pendleton, CEO Harrold Geller estimated the potential loss at $3.5 million to $4.5 million a year. He said the hospital gets about 40 percent of its income from Medicare.

"It has profound implications," Geller said. "A lot of unintended consequences need to be thought through before axing something like this."

Among the other hospitals affected would be the Coquille Valley Hospital in Coquille and the Southern Coos Hospital & Health Center in Bandon. The hospitals are 18 miles from each other.

How much support the recommendation would gain is unclear. The Obama administration has proposed cutting the "critical access" status only for hospitals less than 10 miles from another hospital.

But the recommendation has alarmed rural hospital officials across the nation.

"We've never seen such a harsh attack. We are scared it could come to fruition," said Maggie Elehwany, vice president of government affairs at the National Rural Health Association.

"In the '80s and '90s, over 400 rural hospitals closed across the country," she said. "This isn't about bonuses and some kind of special incentive — this is about keeping doors open."

Ekblad said Oregon lost eight hospitals during those two decades.

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