Health-care providers here, struggling to cope with relentless cost increases, receive far lower Medicare reimbursements for the same procedures and services than their counterparts in other areas of the U.S., says Tom Fritz, CEO of Inland Northwest Health Services here.


Spokane-area health-care executives have urged congressional leaders to make reimbursement rates more equitable, but havent made any headway, Fritz says.


You cant get reimbursements up because the federal government has capped the amount of money it will spend on Medicare, he says. The national policy is that any change has to be cost neutral. If someplace goes up, someplace else goes down. Its hard to take away somebody elses money.


Fritz made the comments in an interview after addressing the issue in a speech to the City Forum here recently.


While reimbursement rates in the East are higher than in Spokane and Seattle, our average length of stay is shorter, and our outcomes are just as good in terms of what we do, Fritz said. The average cost per case is lower in the Northwest than in other parts of the United States, yet theres been a penalty in terms of reimbursement for both hospitals and doctors.


While the Spokane areas representatives have urged their colleagues in Congress to enact equitable reimbursements, its very difficult because they have to deal with the New York delegation, or the Boston delegation, or the Florida delegation, or the Texas delegation, to try to figure out how do we get enough votes to move some of that money from some of those other localities, which has proven thus far to be kind of an impossibility, he said.


In the interview, Fritz said that for every $1 of service that health-care providers here give to Medicare recipients, theyre reimbursed just 60 cents. He said the problem is much worse with the Medicaid program, for which providers are reimbursed only 27 cents on the dollar.


U.S. Sen. Patty Murray, D-Wash., has introduced legislation to address the Medicare-reimbursement problem, and U.S. Rep. George Nethercutt, a Spokane Republican, has been interested in the issue, but no effort to even out reimbursements has gotten very far, Fritz says.


He says the problem dates back to the mid-1980s, when the government established Medicare reimbursement rates after years of paying bills at the amounts at which they came in.


When reimbursement rates were first established, hospitals here and in Seattle were doing a good job of controlling costs, so rates were set lower than in other parts of the countryand theyre still lower, Fritz contends.


A study last year, by the Medicare Payment Advisory Commission, an independent federal body that advises Congress on Medicare issues, seems to bear out Fritzs contention. In that study, of state-level variations in Medicare spending, Washington state came in below the national average in all of the comparisons that were done.


Payments to provide care for recipients in Washington were at just 86 percent of the national average. For comparison purposes, they were adjusted for the health of recipients and for whether recipients received care in state or out of stateand fell even further, to 83 percent of the national average.


Payments for care for Idaho Medicare recipients were at just 78 percent of the national average, but when adjusted rose to 97 percent of that level.


The study said payments in both Massachusetts and New York were at 116 percent of the national average, and were at 137 percent of that level in the District of Columbia. When adjusted, payments for Massachusetts recipients fell to the national average; for New York recipients they fell to just 93 percent of the U.S. norm; and for District of Columbia residents they dipped to 97 percent.


For Texas residents, they were at 119 percent of the U.S. average, and at 112 percent when adjusted. In the adjusted figures, Louisiana topped all states with payments at 124 percent of the national average, while Hawaii was at the bottom, at 66 percent.


Fritz told his City Forum audience that the health-care industry faces other problems besides inequitable reimbursements. For example, its picking up the $3.5 billion cost of implementing the new Health Insurance Portability and Accountability Acts privacy ruleseven though the act was sparked by life insurers desires for more patient information.


Its just one good example of where an exorbitant cost is displaced on our system and then moved over to employers and others who pay that premium, he said.


Meanwhile, charity care and bad debt are on the rise, and hospitals are operating on razor-thin margins, including a statewide margin of just 2 percent at Washingtons hospitals, Fritz said.


Rural hospitals are operating in the red, he said. What were starting to see are closures of facilities nationally, and we hope that we can avoid those closures in our community.


The industry also has had to cope with added costs from the threat of terrorism, Fritz said. He concluded that hospitals eventually might not be able to play their traditional role of providing local safety nets for poor patients.


Some gains noted


Yet, through efforts at Inland Northwest Health Services, formed by Empire Health Services and Providence Services Eastern Washington in 1994 to collaborate on care when possible, some savings have been achieved, Fritz said.


He said INHS now has an annual operating budget of more than $60 million, and its 102-bed St. Lukes Rehabilitation Institute is covering its costs after running annual deficits of as much as $8.5 million earlier.


The combining of Empire and Providence Services air-ambulance services into INHSs Northwest MedStar service also has eliminated deficits, which had totaled $4.5 million a year when the two air-ambulance services operated independently, Fritz said. Northwest MedStar now covers its costs, flies more than 3,000 flights a year, is the fifth-largest air-ambulance system in the U.S., Fritz said. In the last few months, Northwest MedStar has teamed up with St. Lukes to fly patients to Spokane in its fixed-wing aircraft from Iowa, Florida, Oklahoma, Texas, and other states for specialty rehabilitative care, which is very, very important for our community from an economic-development point of view, he said.


Meanwhile, hospitals from outside the Inland Northwest are asking to link into the INHS information-technology system that serves Spokanes hospitals and a total of more than 30 hospitals in the Inland Northwest, Fritz said.


Were currently working with hospitals in the Seattle market that wish to join our network, and also hospitals in Montana, he said. We are continually being asked by hospitals to join the network as a way to reduce their costs. This is very important, because hospitals in general invest about 4 percent of their gross revenue back into information-system technology.


Our hospitals in Spokane are investing less than 2 percent. This is a multimillion-dollar savings for all of us.