Mat-Su Regional Medical Center

Financially hard-pressed Alaska hospitals and other health providers got some much needed federal government cash last week but it’s not nearly enough to cover losses, the hospitals say. Because of COVID-19 restrictions on non-emergency care hospitals have been running 50 percent to 70 percent below normal service levels, which is taking a huge bite from revenues. Other providers, including physicians, are in the same position.

About $69 million was received last week directly from the federal government by 200-plus rural hospitals, clinics and other health providers. The funds were designed for rural providers, and include Mat-Su Regional Medical Center in Palmer.

This is in addition to $84 million received recently in federal grants that were distributed to all Medicare-enrolled providers, again including Mat-Su Regional.

Hospital CEOs welcomed the money but say it’s not enough. Hospitals and nursing homes in the state are running losses estimated from $71 million to $79 million monthly and are expected to lose $282 million from March through June.

Meanwhile, the state of Alaska is sitting on $331 million designated for health care facilities that

is part of the $1.25 billion grant received under the federal CARES act. Unlike other parts of the $1.25 billion grant that are snarled in a legal problem over appropriation of funds, the state Department of Health and Social Services, or DH&SS, has ample authority from the Legislature to distribute these funds. DH&SS officials say they are still assessing needs of hospitals, but how and when the funds will be disbursed is not clear.

There is particular concern for Fairbanks Memorial Hospital, however, which fell through the cracks in getting money in the last two CARES act federal distributions including this week. The problem for the Fairbanks hospital, which is losing over $13 million a month, is that it didn’t fit the complex federal criteria for the federal grants. It is a community-owned hospital but is too big to be classed as a “critical access” facility, a designation intended for hospitals in small communities like Cordova or Kodiak. It is also designated a “rural referral” hospital serving Interior and northern Alaska (an area the size of Texas, state H&SS Commissioner Adam Crum points out). However, the two designations combine in a way to tangle the hospital’s qualification for federal CARES act funds, we’re told.

State officials and the state’s two U.S. senators were in lengthy phone calls with federal officials this week trying to get more flexibility for the next batch of federal funds targeted for health care providers. Fairbanks Memorial did get $3.4 million in federal funds under another program, we’re told.

Anchorage’s two large hospitals, Providence and Alaska Regional, didn’t get federal money either this week because they are in a “metro” area ineligible for funds designated for rural facilities. Those hospitals, however, are part of financially-stronger Lower 48 hospital groups. Fair- banks Memorial is a community-owned nonprofit and is much more exposed. This doesn’t mean Providence and Alaska Regional aren’t feeling the sting. Losses for larger hospitals are estimated at $40 million to $50 million per month.

Meanwhile, in another health care development Alaska’s U.S. Sens. Lisa Murkowski and Dan Sullivan, both Republicans, introduced legislation to extend the Rural Community Hospital Demonstration Program for an additional 5 years, ensuring essential hospitals in small communities are paid at rates by the government that can ease budget instability during challenging times.

Sen. Michael Bennet (D-CO), joined Murkowski and Sullivan as a cosponsor. In the U.S. House Congressman Don Young, Republicans, joined congresswoman Abby Finkenauer (D-Iowa) in sponsoring a House version of the bill.

The Rural Community Hospital Demonstration Program began in 2004 as a five-year demonstration project, and was extended in 2009 and again in 2016. The program, which reimburses hospitals in small, rural communities at higher than Medicare normal rates, but for hospitals too large to be designated as Critical Access Hospitals, or smaller hospitals in rural areas that provide critical services.

Without action from Congress, the program will expire for all participating hospitals between 2020 and 2021. A number of hospitals, including Central Peninsula Hospital in Soldotna and Bartlett Regional Hospital in Juneau, are set to fall out of the program early as this summer, during a particularly challenging time for hospitals. The bill must pass to prevent that.

Being in the program allows these hospitals, which are in rural areas but have 50 beds or less for critical care to be reimbursed at cost for in-patient services instead of being paid the flat rate paid by Medicare, which is typically below actual costs for health providers.

Smaller Critical Access Hospitals are paid on full cost reimbursement for out-patient as well as in-patient services. They can have no more than 25 critical care beds.

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