PORT ANGELES — The possibility that Olympic Medical Center will lose federal funding over numerous and repeated violations found by the state Department of Health appears to have been delayed, at least for the time being.
OMC was notified in a June 30 letter from Centers for Medicare and Medicaid Services that its reimbursements would end today because it was out of compliance with its regulations due to deficiencies the Department of Health (DOH) identified in a June 12 visit.
A letter from the DOH to Liz Uraga, OMC’s director of quality support services, also dated June 30, required the hospital to submit a corrective action for each of the violations.
DOH surveyors who visited the hospital last week to review its plan of correction “noticed significant improvements,” OMC Director of Marketing and Communications Bobby Stone said in a Wednesday email.
“Although no official notice has been received from CMS, OMC does not anticipate any interruption in payments,” Stone said. “We feel confident that remaining issues will be addressed during DOH’s next visit. In the meantime, OMC remains open and ready to serve our patients and our community.”
Many of the deficiencies found by the DOH were related to documentation practices as well as the use of physical and chemical restraints, verbal orders for administering medicine, and assessment and reassessment of patients.
During their June visit, for example, surveyors found the hospital hadn’t ensured staff followed physician orders to assess the vital signs of two post C-section patients. OMC previously had been cited for that deficiency during visits on Feb. 7 and April 25.
Also during their June visit, DOH surveyors determined OMC didn’t follow its own policy requiring face-to-face assessments of adult patients within an hour of their restraint or seclusion. That violation also had been reported on previous visits.
Having its CMS certification revoked would not force OMC to shut its doors. However, it would have devastating consequences because the hospital could no longer receive the Medicare and Medicaid funding which makes up the majority of its payer mix — the percentage of revenue that comes from self-pay patients, private insurance and government insurance programs.
According to a draft financial report presented to OMC’s board of commissioners on Aug. 6, the year-to-date Medicare (61 percent) and Medicaid (13 percent) payments accounted for almost three-quarters of its discharges.
Even though Medicare and Medicaid pay substantially less than what it costs OMC to deliver care, it’s an essential component of the hospital’s revenue.
OMC’s problem with meeting CMS eligibility requirements began in February, when the DOH visited it for the first time since 2018.
Agency surveyors found serious deficiencies that required OMC to submit a plan of correction to DOH and CMS. Their revisit in April, however, turned up new and unresolved violations that resulted in CMS issuing OMC a June 5 termination notice.
The hospital avoided losing its certification by submitting another plan of correction. The DOH followed up on June 12 with a revisit, which again found new and repeat violations that prompted the notice of termination dated for today.
The seven-year delay between DOH survey visits is not unusual.
According to a June 2025 report from the Joint Legislative Audit and Review Committee, which audits state agencies, as of December 2024, 72 percent of DOH hospital inspections were late.
Under state law, DOH is supposed to inspect hospitals at least every 18 months, or every 36 months if it’s inspected by a third party, which OMC is.
The JLARC report went on to state that DOH, which evaluates hospitals for CMS compliance, didn’t have an answer for what it would take to complete inspections on time.
OMC has lost more than $900,000 in the first six months this year, and looking ahead, it will have to absorb the hit of no longer participating in the federal 340B Drug Pricing Program.
It submitted a termination request to the Health Resources and Service Administration on July 24, stating it no longer met the program’s requirements.
The 340B program enables hospitals like OMC to purchase deeply discounted outpatient medications for uninsured or underinsured patients. The 30 percent to 40 percent savings help hospitals stretch federal dollars to serve more people.
OMC enrolled in the 340B program in 2015; in 2021, it purchased a building on the corner of Front and Race streets where it administered the program for $1.1 million, according to the Clallam County assessor’s office. It now sits empty.
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Reporter Paula Hunt can be reached by email at paula.hunt@peninsuladailynews.com.
