KanCare Payment Delays Threaten Rural Hospital

Aug 28, 2014

With 60 employees and a $3 million annual budget, Hanover Hospital is more vulnerable to cash flow issues, says Dr. Roger Warren. It's one of two hospitals in Washington County.
With 60 employees and a $3 million annual budget, Hanover Hospital is more vulnerable to cash flow issues, says Dr. Roger Warren. It's one of two hospitals in Washington County.
Credit Andy Marso / KHI News Service

The rural hospital that Dr. Roger Warren leads in Hanover, Kan., is owed about $140,000 by the three insurance companies the state contracted with to administer Medicaid. And as he walks the halls, Warren is able to point out exactly what that money means to his full-service medical clinic.

Hanover Hospital's updated sprinkler system mandated by new fire regulations was about $80,000. In the lab, there's the Envoy 500 blood testing machine he bought in 2012 for $30,000. In the small cafeteria that serves residents of the hospital's skilled nursing wing, there's an industrial dishwasher that cost about $20,000.

Dr. Roger Warren, who runs Hanover Hospital in Washington County, says the three managed care organizations that administer Medicaid claims owe his hospital about $140,000 — more than half of the facility's monthly budget.
Dr. Roger Warren, who runs Hanover Hospital in Washington County, says the three managed care organizations that administer Medicaid claims owe his hospital about $140,000 — more than half of the facility's monthly budget.
Credit Andy Marso / KHI News Service

"Not a big deal," Warren, 83, says of the dishwasher dollar amount. "Used to be a big deal."

The unpaid KanCare claims are reaching "big deal" status in Warren's ledger book. The amount outstanding represents more than half of the north-central Kansas facility's monthly budget, and Warren says creditors still expect to be paid no later than the fifth of next month, no matter how much he's owed.

"Going broke is not a fiction with us," Warren says.

Implementation issues

At a recent legislative oversight hearing, officials from the Kansas Department of Health and Environment (KDHE) said none of the three KanCare companies — Amerigroup, Sunflower State Health Plan and United HealthCare — had met contractual goals for timely claims payment in 2013. KanCare, which launched in January 2013, moved virtually all the state’s 380,000 Medicaid enrollees into health plans run by the three companies.

Representatives of the Kansas Hospital Association say they have worked to address the payment delays and, though claims processing has improved, that work continues.

Hospital association members on the KanCare Implementation Technical Advisory Group were set to meet Thursday with representatives of KDHE and the managed care organizations (MCOs). Tish Hollingsworth, the hospital association's senior director of finance and reimbursement, says it will be the group's third collaborative meeting this year, after eight last year, and will have a "robust agenda."

“We’re just still hammering away at the implementation issues," Hollingsworth says. "It just seems like there’s always something, when you have a transition this big, that will crop up.”

The problems at Hanover Hospital appear to stem from the 25-bed skilled nursing wing in the facility.

Melissa Minge, Hanover's billing clerk, says the claims-processing employees at the managed care organizations insisted the hospital first bill Medicare on claims that she says the federal health care program for seniors couldn’t pay.

Minge says the MCO employees tell her "they'll look into it," but little gets resolved quickly.

“Very seldom do you hear back," she says. "You have to call them again. And again and again and again.”

 Sheryl Adam, the hospital's financial officer, says most of the unpaid claims come from one MCO, United HealthCare, but that doesn't necessarily mean the others are easier to work with.

"We are having trouble with Amerigroup and Sunflower also, but I think most of our patients are United HealthCare and that’s why they stick out," Adam says.

Tim Spilker, president of United HealthCare Community Plan of Kansas, says the company is aware of the billing problems with Hanover Hospital and is working to correct them.

“We know what the root cause is," he says. "We’re working with them to ensure the claims that were incorrectly recouped are addressed. From their perspective they’d probably say 'No, we haven’t received the money yet.' But we expect that will happen in the next one to two weeks.”

Spilker called the Hanover problems an "isolated incident with a certain (claims) processor."

"We really take accountability if we’ve screwed something up, and this is a place where we’ve really inaccurately or inappropriately applied Medicare," he says.

Spilker says his company has been processing better than 97 percent of all claims within state-mandated deadlines. The state's standard of 100 percent is a high bar to clear, he says, but one the company supports.

Problems for 'mom-and-pop' hospital

Hollingsworth says the hospital association heard of similar billing problems last year for other hospitals that also include skilled nursing facilities.

"Early in 2013 that was something United HealthCare and all of the MCOs struggled with: payments to nursing homes, skilled nursing facilities, intermediate swing beds, the non-hospital services hospitals are providing,” she says.

Hollingsworth says United HealthCare has cleared up most of those issues for new claims as well or better than the other two companies.

That's little consolation to Warren, who runs what can best be described as a "mom-and-pop" hospital, with a lab, X-rays, emergency room and surgical capabilities.

He and his wife are the sole physicians, but his son — a surgeon who lives in Hiawatha — now flies in to perform most surgeries because Warren can no longer stand long enough. The 47,000-square foot facility has 60 employees and operates on a budget of about $3 million annually.

Medicare accounts for most of that budget. But Adam says Medicaid reimbursements, now KanCare, make up about 10 percent, and that 10 percent was more reliable before January 2013, when the state turned the management of the program over to the three for-profit companies.

"We never had any trouble when it was state-run," Adam says. "Never had any problems. It’s like jumping through hoops and pulling teeth to get them to pay now."

Warren says other critical access hospitals might be better able to absorb the late payments because they can go to their county governments and ask for help. But Washington County is one of the few rural counties that has two such hospitals, and Warren says the portion of the tax base that Hanover shares with the county hospital is small and maxed out.

When cash flow is strained he has made payroll by dipping into the funds of the hospital's charitable foundation, which is underwritten largely by him and his wife. But he says those funds are meant to be used for capital improvements and with creditors closing in, his options are limited.

“We’ve got to where nobody feels too charitable toward us,” Warren says. “They don’t want to wait for 30 days to get their money, they want it right now, and they’re worried about if they don’t get it from us right now, we won’t be here next month.”

Closer to home

The prospect of a future without Hanover Hospital was dispiriting to a table of senior women eating lunch Tuesday in the nursing facility's small dining room.

The county hospital is 15 miles away and there's another facility 18 miles east across the county line in Marysville. But Hanover Hospital allows local seniors in need of care to stay closer to home and draws from some of those communities as well.

“I came from Marysville,” Donita Cohorst says. “Hanover is so much better. Marysville has a new hospital, but I'd rather be here because of the care.”

Another woman at Cohorst's lunch table says she came to Hanover from Nebraska.

Hanover's two-story brick hospital sits on a town square that features a wooden bandshell bedecked in American flag bunting and a white building that doubles as the city hall and fire department.

Standing at the hospital entrance, Warren pointed to another brick building on the square, where a car dealership used to sit. Hanover, like many rural communities, has contracted since he started as the hospital's administrator in 1960. It has grown a bit since 2000, but the population is still estimated at just short of 700 people.

Warren says he could have retired years ago or made more money picking up shifts at short-staffed ERs in other communities.

But in Hanover, his patients and staff all know him. In Hanover, he has built something despite the financial challenges.

“I like practicing here,” Warren says. “I love it.”

Andy Marso is a reporter with KHI News Service, an editorially independent program of the Kansas Health Institute.