HomeMy WebLinkAboutRes2011-057 Sponsored by: Oates
CITY OF SEWARD, ALASKA
RESOLUTION 2011 -057
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD,
ALASKA, APPROPRIATING $750,000 TO PROVIDENCE SEWARD
MEDICAL AND CARE CENTER FOR THE PURPOSE OF COVERING
COSTS ASSOCIATED WITH IMPLEMENTATION OF AN ELECTRONIC
HEALTH RECORDS PROGRAM AND DISPUTED REDUCTIONS IN
MEDICAID COST REIMBURSEMENTS
WHEREAS, the City of Seward ( "City ") owns the local hospital and long -term care facilities
which are operated on the City's behalf by Providence Health & Services, as Providence Seward
Medical and Care Center ( "PSMC "); and
WHEREAS, the Centers for Medicare and Medicaid Services announced an American
Recovery and Reinvestment Act incentive program in July 2010 that provides incentive payments to
critical access hospitals electing to implement certified electronic health record ( "EHR ") technology
aimed at enhancing the ability of health providers to improve health care quality, efficiency, and
patient safety; and
WHEREAS, the cost of the electronic health record systems implemented by PSMC in 2011
was in excess of $300,000 and a portion of this may be eligible for future incentive payment
reimbursement depending on whether PSMC is confirmed to have met the "meaningful use"
requirements as established by the Centers for Medicare and Medicaid; and
WHEREAS, PSMC is experiencing operational shortfalls in both the long -term care facility
and the hospital, with the bulk of the shortfall attributed to lower than needed census at Seward
Mountain Haven, combined with a reduced cost -based reimbursement rate from the State of Alaska
Department of Health & Social Services ( "DHSS ") which amounts to nearly $450,000 year -to -date
in 2011; and
WHEREAS, PSMC has appealed the State - determined reimbursement rates on the basis that
they are inconsistent with prior computation methodologies utilized by DHSS and that this change in
methodology does not appear to be consistent with federal reimbursement requirements and does not
appear to be the result of any change in State law or regulation; and
WHEREAS, if the appeal of reimbursement rates is unsuccessful at the administrative level,
it is highly likely that PSMC will join with other healthcare facilities in the state to take legal action
to oppose what appears to be an arbitrary change in reimbursement methodology, in the hopes of
recovering higher Medicaid reimbursements for our legitimate costs incurred in operating Seward
Mountain Haven; and
imp WHEREAS, the census at Seward Mountain Haven has fluctuated up to 36 elders since its
opening in October 2009, with a current census of 32 compared with pro forma projections for 2010
CITY OF SEWARD, ALASKA
RESOLUTION 2011 -057
of 34.8, which is also having an adverse impact on the financial status of the facility, since
reimbursements are made on a patient day basis; and
WHEREAS, to date the cash shortfall is approximately $750,000 and the contract between
the City and Providence requires that the City cover a cash shortfall in a timely manner; and
WHEREAS, the estimated undesignated fund balance in the General Fund is approximately
$3.5 million prior to this appropriation, and the City's Fund Balance Policy band requires
undesignated fund balance between $2.8 million and $5.7 million, representing between three and
six months operating costs; and
WHEREAS, this appropriation will reduce the undesignated fund balance in the General
Fund to approximately $2.75 million which is slightly below the minimum required threshold
according to the City's Fund Balance Policy; and
WHEREAS, this action will not reduce the $500,000 designated fund balance currently set
aside for the purpose of covering operational shortfalls at PSMC, since it is very likely that until such
time as the reduction in reimbursement rates is rectified, the healthcare system will continue to
experience annual financial losses of this magnitude.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF SEWARD, ALASKA that:
Section 1. The amount of $750,000 is hereby appropriated from undesignated fund balance
account no. 101 - 0000 -3050 to Providence Seward Medical and Care Center via account no. 101 -
1191 -5610 to be used for operational shortfalls and electronic health records costs.
Section 2. This resolution shall take effect immediately upon adoption.
PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 11` day of
July, 2011.
THE CITY OF WARD, ALASKA
D illard E. Du Mayor
W
CITY OF SEWARD, ALASKA
RESOLUTION 2011 -057
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AYES: Valdatta, Bardarson, Smith, Keil, Shafer, Casagranda, Dunham
NOES: None
ABSENT: None
ABSTAIN: None
ATTEST:
'ohanna Kinney, CMC
ity Clerk
(City SpAi)ouggo,.
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Council Agenda Statement
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Meeting Date: July 11, 2011 u G
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Through: Phillip Oates, City Manager
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From: Kristin Erchinger, Finance Director finki
Agenda Item: Appropriation to cover health facility losses
BACKGROUND & JUSTIFICATION:
The City of Seward owns the local hospital and long -term care facility which are operated by
Providence Health & Services, under management agreement with the City. The City is financially
responsible for the operations of the health facilities.
In 2010, the Centers for Medicare and Medicaid Services announced an American Recovery and
Reinvestment Act incentive program to encourage critical access hospitals to implement certified
electronic health record ( "EHR ") technology aimed at enhancing the ability of health providers to
improve health care quality, efficiency, and patient safety. Providence Seward participated in
that program by implementing a new EHR system which would be compatible with all
Providence facilities in Alaska, at a cost of approximately $300,000. It is expected that much of
this investment in software and hardware may be eligible for reimbursement depending on
whether PSMC is confirmed to have met the "meaningful use" requirements as established by the
Centers for Medicare and Medicaid.
In addition to shortfalls arising from the implementation of a new EHR system, PSMC is
experiencing operational shortfalls in both the long -term care facility and the hospital, with the
bulk of the shortfall attributed to lower than needed census at Seward Mountain Haven,
combined with a reduced cost -based reimbursement rate from the State of Alaska Department of
Health & Social Services ( "DHSS "). These together account for shortfalls of approximately
$450,000 year -to -date in 2011.
PSMC has appealed the State - determined reimbursement rates on the basis that they are
inconsistent with prior computation methodologies utilized by DHSS and that this change in
methodology does not appear to be consistent with federal reimbursement requirements and does
not appear to be the result of any change in State law or regulation. If the appeal is not
successful, PSMC is prepared to enter into a lawsuit with other healthcare facilities to oppose the
change in reimbursement methodology. It is possible that this approach may result in higher
cost -based reimbursements, since those reimbursements are made based on the actual costs
incurred at the facilities.
Shortfalls are also the result of a lower census at Seward Mountain Haven. Census has been as
high as 36 since opening of the facility in October, 2009, but the facility has held off on efforts to
fill the facility in order to address a number of challenges that have arisen from Seward's
implementation of the Green House Model. For example, encouraging elders to become more
mobile has elevated the risks of falls, so care is being taken to address these types of challenges
prior to ramping up the census. The pro forma projections estimated that in 2010 the census
would be 34.8 and the current census stands at 32, although that routinely varies.
CITY OF SEWARD, ALASKA
RESOLUTION 2011 -
The cash shortfall is approximately $750,000 year -to -date and the contract between the City and
Providence requires that the City cover a cash shortfall in a timely manner, so this appropriation is
being made to satisfy those contractual requirements.
The estimated undesignated fund balance in the General Fund is approximately $3.5 million prior to
this appropriation, and the City's Fund Balance Policy band requires undesignated fund balance
between $2.8 million and $5.7 million, representing between three and six months' operating costs.
This appropriation will reduce the undesignated fund balance in the General Fund to approximately
$2.75 million which is slightly below the minimum required threshold according to the City's Fund
Balance Policy. This action will not reduce the $500,000 designated fund balance currently set aside
for the purpose of covering operational shortfalls at PSMC, since it is very likely that until such time
as the reduction in reimbursement rates is rectified, the healthcare system will continue to experience
annual financial losses of this magnitude
CONSISTENCY CHECKLIST:
Where applicable, this resolution /ordinance is consistent with the Seward City Code, Charter,
Comprehensive Plans, Land Use Plans, Strategic Plan and City Council Rules of Procedures.
Other:
FISCAL NOTE:
This appropriation reduces the City's undesignated fund balance by $750,000 to be slightly below
the City's Fund Balance Policy of betwe n three to six months' of operating reserves in undesignated
fund balance. Finance Department:
RECOMMENDATION: b0"1
City Council approve Resolution 2011- , authorizing the appropriation of $750,000 to cover hospital
operating shortfalls and electronic health records implementation.
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