+
Ask
the Administrator
There are many times
during the course of a work day, or just when staff from QVMC
are out in the community, when we are approached by community
members with questions regarding our facility. We decided it
would be helpful to create a forum where we can answer the
public’s questions.
Questions received
will be answered by the appropriate QVMC staff member and placed
on this website.
 Question:
I heard that Quincy
Valley Medical Center receives government subsidies. Is this
correct?
Answer:
No, Quincy Valley Medical Center (QVMC)
does not receive government subsidies but this
question presents a great opportunity to explain the basic
financial principles of our Hospital.
Quincy Valley Medical Center Hospital is a
Critical Access Hospital; this is a federal program
that allows designated hospitals such as ours to be reimbursed
at cost (+1%) by Medicare for Medicare inpatients (Medicare Part
A). Every year our accountants prepare a “cost report” that we
submit to Medicare. The “cost report” is a summation of the
total Medicare allowable costs divided by the total number of
inpatient days. The cost report derives a “cost per patient
day”. Medicare then reimburses 101% of these allowable costs.
How does this work? The
reimbursement rates are adjusted up to a year and a half after
Quincy Valley Medical Center has incurred the costs because in
practice we cannot submit our cost report until May of the
following year.
Does this mean we can increase our
expenses at will and still be financially stable? No,
because there can be up to 18 months of delay in the
reimbursement adjustment, during which time we must maintain
positive cash flows. In addition, it is important to remember
that Medicare only covers 40% of our total patient population.
Unlike Medicare, the remaining 60% of our payors reimburse at a
predetermined fixed rates. It is for the benefit of all parties
that we keep our costs as low as possible.
Are all Medicare charges reimbursed at
“cost”? No. On the outpatient side (also known as
Medicare part B), Medicare reimburses our facility at a
predetermined rate. That rate usually averages between 20 and
30% of charges. For example, while the room charge will be
reimbursed at “cost”, the provider-associated fee (the
physician’s charge) will be reimbursed at a much lower rate. On
an average professional component charge of $1000, Medicare will
reimburse the facility only $200. The remaining portion is
written off; the facility cannot pass this charge on to the
patient.
-Mehdi Merred, QVMC CEO, 3-17-09
| 
