North General Hospital Case Highlights Complexity Of Medicare Formula

Armen Hareyan's picture

Complexity Of Medicare Formula

North General Hospital-- a Harlem, N.Y., community hospital that had reported a profit forthe first time in fiscal year 2005 -- last week revised those financialresults and announced a $6.2 million loss for the period, a case thathighlights the complexity of the Medicare and Medicaid reimbursementrate formulas, the Wall Street Journal reports. North General also estimated a $7.1 million loss for FY 2006 (Dougherty, Wall Street Journal, 7/12).

The Journalin June 2006 published an article on North General that examined howthe hospital, which had reported a $20 million loss for FY 2003,reported a $2.6 million profit for FY 2005 because of a number ofmeasures focused on the treatment of conditions that affect Harlemresidents in high rates (Kaiser Daily Health Policy Report, 6/22/06).


NorthGeneral focused on more profitable services, such as the treatment ofcardiovascular problems, hypertension, obesity and infant mortality.However, North General "now says the services it offered to patientsbrought in less revenue than it initially estimated" because ofretroactive changes in the Medicare and Medicaid reimbursement rateformulas, the Journal reports.

North GeneralChief Operating Officer John Maher said that the hospital "simplyoverestimated revenue." North General had to return $500,000 toMedicare and $3.2 million to Medicaid for FY 2005. In addition, NorthGeneral overestimated revenue from private health insurers andpatients. Liz Sweeney, a health care analyst at Standard & Poor's,said, "It happens. There's a lot of estimation that goes intoaccounting in general, and in health care, there's perhaps moreestimation" (Wall Street Journal, 7/12).


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