For more information contact:
Charles Dingman
cdingman@preti.com

Mayo Regional Hospital awarded $318,722 in supplemental aid

A rural community hospital serving a district including Dover-Foxcroft has successfully persuaded a federal Medicare appeal board that it qualifies for supplemental payments for services because of the loss of community doctors and paying patients.

 The supplemental aid is worth $318,722 to Mayo Regional Hospital, according to the Provider Reimbursement Review Board (PRRB) in Baltimore.  The Board hears administrative appeals from hospitals and others who provide health care within the Medicare system.

The March 27 decision could safeguard a healthier future for Mayo Regional Hospital, in addition to helping other small Maine community hospitals hurt by a depressed economy, high unemployment and a shortage of local hospital physicians in rural areas, according to Augusta attorney Charles F. Dingman of Preti, Flaherty, Beliveau, Pachios & Haley, LLC.

Dingman represented Mayo against Medicare’s fiscal intermediary for hospitals in Maine. The intermediary is the contractor used by Medicare to decide how much hospitals are paid for services covered by the program.
The intermediary advanced several arguments against granting Mayo’s request for additional payments allowed under a program to help hospitals that are the only source of acute health care in their communities (“Sole Community Hospitals”).  After the intermediary denied relief, the Hospital appealed to the Board.
The hospital successfully argued that when faced with dwindling revenues in the early 1990s because of declining patients, it did everything it could to reduce operating expenses and to find new doctors to replace several that had left the community. In spite of those efforts, the hospital still suffered financially – so much so that it sought a “decreased volume adjustment” available for Sole Community Hospitals dependent on Medicare reimbursements.

“The board (PRRB) concluded that the hospital had shown that it was entitled to a payment of $318,722 to help reduce the effects of a sudden downturn in its volume of patient services that had been caused by a number of physicians leaving the community unexpectedly,” Dingman said.  The case is similar to an earlier decision Dingman won on behalf of a different client hospital last year, Rumford Community Hospital. It is noteworthy that there were no decided cases on this issue prior to the Rumford case, which the Board cited in ruling favorably on Mayo’s appeal.  The Mayo decision is significant in two ways.  First, it reaffirms that a practical approach, rather than a fixation on technicalities, is needed in carrying out a program designed to help small rural hospitals that are the only source of help for their communities, when they can’t scale back what they do instantaneously. A hospital has to maintain core services to fulfill its mission.”

A second issue raised in the appeal was a challenge by the intermediary of the PRRB’s authority to consider a different claim, relating to certain bad debts for which Medicare provides reimbursement.  The intermediary relied on a traditional argument that such claims can’t be considered unless they were flagged for consideration in the hospital’s original “cost report” for a given year.  The PRRB ruled, however, that its jurisdiction was much broader (citing a recent federal court decision).  “This case is significant,” Dingman said, “because it took that court ruling, which up to now had only theoretical significance, and applied it to allow Board action on a concrete issue that will increase payments to this Hospital.” The board decided that it did.