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Hospital rate exemption order causes confusion

by Nora Edinger

REGIONAL EDITOR

Nineteen of the state's most rural hospitals are on their way to setting their own patient-services rates -- maybe.

"There does seem to be some confusion," said John Law, spokesperson for the West Virginia Hospital Association, which favors independent rate setting for all hospitals.

Law believes the crux of the problem is a lack of information supplied to the affected hospitals.

"Hospitals will need to file a letter of some sort," Law said of beginning the application process for deregulation, which would allow the hospitals to set their own rates for services provided to privately insured patients.

The state Health Care Authority currently regulates such rates. West Virginia and Maryland are the only states to do so.

Rural deregulation became an issue in mid-September when Gov. Cecil Underwood asked the authority to compile a list of hospitals that fit criteria that included: Federal classification as a rural provider, a high percentage of government-funded patients, a low number of short-term patients, and an above-average number of charity cases.

"The governor has the option to exempt financially vulnerable hospitals from rate review under state code," Underwood spokesperson Dan Page said of the effort. "He was acting upon a statute, one that created the Health Care Authority."

Underwood claims deregulation would allow these rural hospitals to increase rates for privately insured patients in order to cover a shortfall in payments from charity cases and government-insured patients. Hospital administrators claim the 1997 federal Balanced Budget Act has reduced Medicare and Medicaid payments to amounts lower than hospital costs.

Parker Haddix, authority director, responded to Underwood's September effort with a letter listing 19 hospitals -- including Stonewall Jackson Memorial Hospital in Weston and St. Joseph's Hospital in Buckhannon.

In early October, Underwood sent a second letter to Haddix requesting he notify the hospitals they were exempt from the authority's rate review.

Haddix sent the letter Oct. 3, but Law and an official from at least one of the hospitals said it was not clear hospitals needed to respond to achieve deregulation.

"We haven't filed anything ... This is the first I've heard of it as far as needing to file something," said David Shaffer, administrator of Stonewall Jackson.

Officials from St. Joseph's were unavailable for comment.

Haddix said this week none of the hospitals have applied for the exemption. He added the legality of the situation has yet to be tested.

"They would still have to go through the legal process," Haddix said, explaining each application would be reviewed individually by the authority's three-member board and an exemption order issued before deregulation could occur.

That process would take a matter of weeks, he anticipated.

Shaffer said he is not in any hurry to submit an application for Stonewall Jackson, although he wouldn't rule out such a pursuit.

"We were just granted a small increase," Shaffer said.

The authority in September gave Stonewall Jackson permission to raise its rates 5 percent for in-patient services and 3.5 percent for out-patient services.

Other hospitals involved in the discussion include Braxton County Memorial Hospital in Gassaway, Boone Memorial Hospital in Madison, Grant Memorial Hospital in Petersburg, Greenbrier Valley Medical Center in Lewisburg, Hampshire Memorial Hospital in Romney, Montgomery General Hospital, Plateau Medical Center in Oak Hill, Pleasant Valley Hospital in Point Pleasant, Pocahontas Memorial Hospital in Marlinton, Potomac Valley Hospital in Keyser, Preston Memorial Hospital in Kingwood, St. Luke's Hospital in Bluefield, Summers County Appalachian Regional Hospital in Hinton, Summersville Memorial Hospital, Welch Community Hospital and Williamson Memorial Hospital.

The authority already exempted critical-access hospitals from rate setting two years ago, Haddix has said of another federal classification of hospitals. There are eight such hospitals in the state, with Broaddus Hospital in Philippi and Grafton Hospital among them.

Regional editor Nora Edinger can be reached at 626-1403 or by e-mail at nedinger@exponent-telegram.com.

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