+ 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. For example, in January 2008 we increased our nurses’ wages (incurring additional cost). The upward adjustment in Medicare reimbursement will not happen until our cost report is completed in May 2009.

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.

What happened in 2008 and how will it affect 2009? In 2008, our reimbursements were determined based on the 2007 cost report. The growth in patient volumes generated a 30% increase in revenues from 2007, while our expenses only increased by approximately 12%. In 2008, the cost per patient day was significantly lower than in the previous years. This means that throughout 2008, we were reimbursed at a higher rate than our actual “cost per patient day”. The significant growth we experienced in 2008 will affect our cash flow in 2009: we will owe the overpayment back to Medicare. According to our accountants, the growth we experienced in 10 months is typical of the growth experienced by a hospital our size over a three year period. These adjustments do not impact the profit and loss figures that we have been reporting because we accounted for the anticipated difference throughout the year. In 2009, if our costs and revenues stay the same or grow proportionally together, we will not owe any Medicare payable.

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

Insurance: We accept most insurance plans including Medicare, Medicaid, many commercial insurances and many others. If you have questions about your insurance we can help.

Bilingual staff and interpreters are available for our Spanish-speaking patients.

Specialty referrals are available on-site.