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November 15, 2013

McAlester hospital CEO: Obamacare is here

McALESTER — Obamacare is no longer a train coming down the track.

It’s here — and it’s almost on top of us.

McAlester Regional Health Center Chief Executive Officer David Keith used the train analogy when addressing how Obamacare — officially known as the Affordable Care Act — is projected to affect the McAlester hospital as well as other hospitals across the nation.

Keith outlined some of those effects when addressing McAlester city councilors during their Tuesday night meeting at City Hall.

Affordable Care Act cuts to the hospital over the next 10 years will total nearly $28 million, Keith said. He  projected the negative impact MRHC now faces as a result of Medicare payment reductions and other government action, including a 2 percent sequester, will amount to $27,740,000.

Added to the challenges already presented is the fact that the state of Oklahoma did not accept a Medicaid expansion program connected to the ACA.

“We project that about 2,000 people in Pittsburg County who could have had insurance will not have insurance” as a consequence of the state’s rejection of the ACA-connected Medicaid expansion, Keith said.

A state program, Insure Oklahoma, has been extended for only one more year. Unless there’s a waiver or some other action, it’s set to end on Jan. 1, 2015, Keith said.

Insure Oklahoma is administered by the Oklahoma Health Care Authority with two self-proclaimed goals:

• To assure that state-purchased health care meets acceptable care standards.

• And to ensure that Oklahoma citizens relying on state-purchased health care are served in a progressive and positive system.

When Insure Oklahoma ends at the beginning of 2015, Keith projected it will impact 30,000 individuals and 4,500 businesses state-wide.

In Pittsburg County, Keith projected that 52 businesses will lose Insurance Oklahoma coverage. Forty-seven employees will lose coverage and another 45 individuals, mostly employers, will lose coverage when the program expires, he said.

With all of the challenges hospitals are facing because of the Affordable Care Act, another government program is causing hospitals to take another hit, according to Keith.

RAC is an acronym for Recovery Audit Contractors — private contractors that audit hospital claims for Medicare payments.

According to the American Hospital Association, RAC audits “subject hospitals to additional administrative burdens and costly payment denials.”

One of the major problems is that RAC workers have incentives to contest hospital claims for Medicare payments, according to Keith.

“Every hospital in the country is facing this,” he said.

“This is non-physician auditors second-guessing physicians” up to three years after a physician has prescribed or conducted a treatment, Keith said.

By questioning Medicare payments to the hospital, RAC workers can deny the payment and the only way the hospital can contest the RAC decision is through an appeals process that can take up to three years to adjudicate, Keith said.

Two-thirds of hospital medical records reviewed by RAC are found to contain no errors, according to Keith.

Even so, RAC program actions have a substantial financial impact on the McAlester hospital.

“Well over a million dollars of our cash flow is tied up in RAC audits,” Keith said.

The Affordable Care Act coupled with the RAC audits and other mandated matters is fast bringing change to the medical industry, Keith said.

“We haven’t seen so many changes so quickly in the last 30 or 40 years,” he said.

Next: What Keith says the hospital will do in the face of financial challenges resulting from the mandated changes and RAC actions.

Contact James Beaty at

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