OMC faces massive cut in Medicare reimbursements

CEO urges public to comment on proposal

PORT ANGELES — Olympic Medical Center is urging people to comment on a Centers for Medicare and Medicaid Services proposal that would significantly cut reimbursements for the hospital’s off-site clinics — costing the public hospital $47 million over the next decade.

OMC CEO Eric Lewis said Thursday he was unsure how the hospital could absorb the 60 percent cuts to reimbursements for visits to off-site clinics — such as the Primary Care Clinic on Eighth Street in Port Angeles and the Sequim clinics.

“We haven’t thought about that yet,” he said. “What we’re doing right now is focusing on stopping this from being implemented.”

Comments on the proposal are due by Sept. 24.

The changes don’t affect Jefferson Healthcare in Port Townsend or Forks Community Hospital, which are designated as critical access hospitals. The critical-access designation allows rural hospitals with 25 beds or fewer, and which fulfill other criteria, to receive 100 percent Medicare reimbursement.

“Jefferson Healthcare is unaffected by the proposed change because all of our provider-based clinics are located on campus,” said Hilary Whittington, chief financial officer & chief administrative officer for Jefferson Healthcare.

“However, we vigorously oppose the change because we believe it will undermine access to care for the most vulnerable patients on the North Olympic Peninsula.”

Lewis said the cuts OMC would see if the Centers for Medicare and Medicaid Services’ proposal moves forward would only worsen the area’s shortage of health care providers and could increase visits to the emergency room.

The rules would reduce OMC’s expense reimbursement from $118.35 per visit to $47.34 per visit — a 60 percent cut — at its off-site clinics. That would be a $3.4 million loss in funding for next year.

“In my 30 years in health care, I’ve never seen a cut this big,” Lewis said. “We want to inform the public about this proposal then, if they want, they can choose to tell [the Centers for Medicare and Medicaid Services] their comments on it.”

He said Medicare patients make up about 60 percent of the hospital’s patients.

At off-site clinics — which are clinics that are more than 250 yards away from the hospital’s main campus — the percentage of Medicare patients varies, he said.

“Some, it’s as high as 80 [percent] and 90 percent,” Lewis said.

Hospitals are reimbursed significantly more per visit than private practice physicians.

The Centers for Medicare and Medicaid Services said in its proposal that in many cases hospitals have purchased private-practice clinics and then offered the same services that had been offered before. For that reason, the agency has proposed reducing hospital reimbursements.

“We have heard that many off-campus departments converted from physicians’ offices to hospital outpatient departments, without a change in either the physical location or a change in the acuity of the patients seen,” the Centers from Medicare and Medicaid Services said in its proposal.

“To the extent that similar services can be safely provided in more than one setting, we do not believe it is prudent for the Medicare program to pay more for these services in one setting than another.”

Lewis said the hospital has more regulations than private care providers and unlike private practice, Olympic Medical Center is required to provide care to Medicare patients.

“We also take every patient regardless of ability to pay,” he said. “Freestanding physicians don’t have to do that.”

The government is assuming there are private practice physicians that would see OMC’s patients, but that isn’t the case, Lewis said.

There is a shortage of health care providers on the North Olympic Peninsula, in part because of the low reimbursement rate for private practice physicians, he said.

Under current rules any clinics OMC adds would see reimbursements at the lower rates. Congress in 2015 protected the existing clinics by grandfathering them in under these rules.

“This is really going against what that law did,” Lewis said.

Lewis said he believes the Centers for Medicare and Medicaid Services thoughtfully considers the comments it receives before making new rules.

To comment on the proposed regulations, visit or mail written comments to Seema Verma, Administrator, Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1695-P, P.O. Box 8013, Baltimore, MD 21244-1850.


Reporter Jesse Major can be reached at 360-452-2345, ext. 56250, or at [email protected].

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