WASHINGTON, DC – In an effort to improve patient care and help Rhode Island hospital workers and hospitals, U.S. Senator Jack Reed (D-RI) today announced that the recently released Centers for Medicare & Medicaid Services (CMS) Hospital Inpatient Prospective Payment System (IPPS) proposed rule could increase Medicare wage index payments to four hospitals in Rhode Island by an estimated $6.6 million in fiscal year 2013.  The hospitals include: Newport Hospital, Kent Hospital, South County Hospital, and Westerly Hospital.

“I am pleased that CMS has finally responded to my efforts to address the Medicare reimbursement disparity among hospitals in Rhode Island and offered a proposal to ensure hospital staff are fairly paid for providing care to patients,” said Reed who has been urging CMS to increase these reimbursement rates.  “This is an important first step that has been years in the making.   We all need to keep working to get this proposal finalized so that our hospitals and their dedicated staff can better meet the needs of patients.”

The proposed regulation would establish a new adjustment factor for the Rhode Island wage index. The new factor would be determined by taking the difference between the average wage index in Rhode Island before and after some of the hospitals have reclassified.  It would increase the wage index to the four hospitals by that differential.

"This proposed change will level the playing field for Newport Hospital and other community hospitals in Rhode Island.  It will help Newport Hospital remain viable, enabling us to continue to meet the health care needs of all the residents of Newport County for years to come.  On their behalf we sincerely thank Senator Reed for his foresight and his efforts," said August Cordeiro, president and CEO of Newport Hospital.

"This is excellent news that will only serve to strengthen Kent Hospital and the other health care institutions that have been working for years to address this problem," said Sandra L. Coletta, president and CEO of Kent Hospital in Warwick. "Senator Reed should be commended for his efforts and we are truly appreciative of his hard work on this important issue."

"The Board and management of South County Hospital are grateful to Senator Reed for addressing an inequity in reimbursement for Medicare patients that will help us sustain high quality healthcare services in our community," said Lou Giancola, president and CEO of South County Hospital.

“The recent announcement by U.S. Senator Jack Reed of a proposed rule change to the wage index marks an important first step in addressing the long standing inequity in Rhode Island Medicare coverage,” said Westerly Hospital President/CEO and Chairman of the Hospital Association of Rhode Island Charles S. Kinney.  “We cannot thank Senator Reed enough for the attention he has paid to this issue as we have worked with him for more than a year in conjunction with the Hospital Association of Rhode Island.”

"Hospitals in Rhode Island face many challenges - rising uninsured and uncompensated care, low reimbursement, and continued payment reductions - but their commitment to Rhode Island is unwavering," said Edward J. Quinlan, president of Hospital Association of Rhode Island.  "This payment adjustment will provide significant assistance.  We thank Senator Reed for his work on our behalf."

CMS determines the Medicare wage index for hospitals based on the cost of labor in a given Metropolitan Statistical Area (MSA).  Hospitals located in states with rural areas receive an artificial increase in wage index payments.  There are two states, Rhode Island and New Jersey, classified by CMS as all-urban that do not benefit from this adjustment.  In an attempt to address the uniqueness of these two states, CMS implemented the imputed rural floor in 2005.  However, this policy only benefits New Jersey.  While some hospitals in Rhode Island have been eligible to reclassify into a neighboring wage index and receive higher reimbursement rates, those hospitals unable to reclassify have consistently been reimbursed based on lower wage index.  Due to Rhode Island's size, this has resulted in a severe payment disparity among hospitals located in close proximity to each other.

The new proposal would increase the Medicare reimbursements made to each of these four disadvantaged hospitals in Rhode Island by the following estimated amounts:

Newport Hospital would receive an additional $1.4 million in Medicare reimbursement in FY13.

Kent Hospital would receive an additional $3.4 million in Medicare reimbursement in FY13.

South County Hospital would receive an additional $1.3 million in Medicare reimbursement in FY13.

Prior to the proposed change, Westerly Hospital anticipated $800,000 less in Medicare reimbursement in 2013.  The change proposed by CMS would instead add approximately $500,000 in reimbursement, a $1.3 million improvement to the Hospital’s 2013 budget projection.

CMS will collect comments on this proposal through June 25.  CMS must issue a final rule before this proposal takes effect.