Petersburg Pilot -

Whale Watching and LeConte Glacier Tours based out of Petersburg Alaska

PMC owes Medicare $700,000; half to be covered by prior Medicare overpayment


Interim CFO Doran Hammett told the Petersburg Medical Center board at a special meeting Monday that a draft cost report revealed some $928,000 was due to Medicare. Though PMC still has $380,000 on hand from a mid-year overpayment by Medicare to pay the bill, the amount due was unexpectedly high and prompted further investigation by Hammett and the consultant who prepares the reports, Martin Michiels of Health Care Consulting Services, LLC.

Hammett told the Pilot on Wednesday that after recalculations by Michiels, the hospital now expects to pay about $700,000 to Medicare to true-up for cost reimbursements over the fiscal year ending June 2014. More than half of what PMC now owes to Medicare, $380,000, is sitting in a fund after Medicare basically overpaid the hospital in December.

“So essentially what we’ve done is Medicare has loaned us some money for the year,” Hammett told the board.

Since PMC is a critical access hospital, the facility is reimbursed for 101 percent of their costs of providing care to Medicare patients. The reimbursement is initially estimated by Medicare based on the previous year’s reported costs. At mid-year Medicare reviews the per-diem rates they set and makes adjustments based on cost information from the most recent six months in the new fiscal year.

The results of the last mid-year review were puzzling, Hammett said, because Medicare simultaneously lowered their per-diem rate paid to the hospital, indicating they were overpaying, while also sending along the $380,000 check, indicating they were underpaying.

“They said ’we looked at the numbers, we think the rate is too high, we’re gonna lower your rate.’ But then they sent us a check. So those two things didn’t really reconcile in my mind,” Hammett said.

The main factor driving the initial amount due down from $928,000 to $700,000 came from adding a $230,000 PERS (Alaska Public Employees’ Retirement System) deduction to the cost report. In the past PMC has always claimed the PERS on behalf of payment on the cost report, but Michiels didn’t include it in the draft calculation because there was some indication that Noridian, a company contracted by Medicare to handle payments to PMC, decided PERS was no longer an allowable cost. Upon further investigation, Michiels determined that’s not the case, and he advised Hammett on Tuesday that PMC should continue to claim the PERS payment as they have in past years.

“That is significantly going to affect what the hospital owes. Instead of $928,000 it should be somewhere closer to around the $700,000 number,” Hammett said in a phone interview Wednesday.

For the previous fiscal year Medicare owed and paid PMC some $920,000. The fluctuations year-to-year are a result of the number of Medicare patients the hospital sees as well as Medicare’s formula for calculating the reimbursement.

Board member Tim Koeneman asked Hammett to advise the board on how to prepare their budget due in April given such fluctuations.

Going forward Hammett said he’s working with Informatics Manager Jill Dormer to get a quarterly report from Medicare that will be reconciled against PMC’s internal statistics, “to make sure we’re tracking things correctly as it relates to Medicare.”


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