Northeast Rehabilitation Hospital Network

Transcription

1 Northeast Rehabilitation Hospital Network Testimony of John F. Prochilo Chief Executive Officer February 5, 2013

2 Who We Are and What We Do Northeast Rehab was founded in Our Salem facility was the first freestanding rehab hospital in the State We provide inpatient and outpatient rehabilitation services to primarily elderly and disabled patients who are primarily insured by MEDICARE not Medicaid We have inpatient rehab hospitals located in Salem, Nashua and at Pease. We have received regulatory approval to place a 15 bed inpatient rehab unit in Elliot Hospital in Manchester. We treat patients who are recovering from a stroke, brain injury, amputation, neurological disease, multiple trauma, prolonged illness resulting in loss of ability to function We have outpatient rehab clinics in both Mass and NH We employ almost 1,000 people Page 1

3 MEDICARE vs. Medicaid MEDICARE is a Federal health insurance program that pays for hospital and medical care for elderly and certain disabled Americans The majority of our patients are elderly and are insured by MEDICARE Over 70% of patients in our hospitals are insured by MEDICARE. Medicaid is a joint Federal and State program that helps low income individuals or families pay for the costs associated with medical and custodial care, provided they qualify About 4% of our patients are insured by Medicaid similar to other rehab hospitals. Page 2

4 Differences Between Rehab Hospitals and Community Hospitals We are categorized as a special hospital not a general acute care hospital Rehab Hospitals do not have services that are most commonly utilized by Medicaid patients in community hospitals: We do not have primary care adult or pediatric physician services We do not have obstetrical or gynecological services We do not have an emergency room or surgical services Patients don t come from home. After illness or injury, patients are referred from community hospitals to the rehab hospital Rehab hospital services are predominately meant for elderly and disabled MEDICARE patients We do treat Medicaid patients (both adults and children) but they are comparatively small in number. Page 3

5 MEDICARE 60% Rule for Rehab Hospitals Stroke Spinal cord injury Congenital deformity Amputation Major multiple trauma Fracture of femur (hip fracture) Brain injury Neurological disorders Burns Rheumatoid Arthritis and Osteoarthritis if specific criteria are met Total Joint Replacements if specific additional criteria are met Systemic vasculitis with joint inflammation In order for NRH to be classified by MEDICARE as a rehabilitation hospital, at least 60% of our patients must have one of the conditions listed above. Community Hospitals are not subjected to this MEDICARE rule. Page 4

6 States in which Rehab Hospitals are NOT subjected to the MET or any similar assessment Alabama Alaska Arkansas Arizona Nebraska Nevada New Jersey New Mexico 32 states in which Rehabs are not Subjected to MET or assessment. California Colorado Connecticut North Carolina North Dakota Oklahoma 9 States in which Rehabs are specifically exempted from MET or assessment. Delaware Florida Hawaii Oregon Pennsylvania South Carolina 11 states in which Rehabs are subjected to MET or assessment* Indiana South Dakota 7 states unclear to us at this time. Iowa Louisiana Maryland Tennessee Texas Vermont * Assessments to Rehabs identified by us thus far are substantially less than NH. MASSACHUSETTS Virginia Mississippi Wyoming Page 5

7 History of Northeast Rehab and the MET I have been the CEO of Northeast Rehab since In we were given specific assurances that our participation would benefit the state and there would be no downside to our participation (see Commissioners Byrd and Arnold letter). DSH and MET had been linked since at least NRH has participated solely for the benefit of the State to acquire additional federal funds. In all cases, the DRA has wired the DSH payment funds to NRH s bank in the morning and then NRH wired the identical amount back to the DRA to pay the MET tax. The wire in- wire out transactions were always scheduled on the same day. In all cases where the tax exceeded the DSH payment, NRH requested and was granted a reduction of the tax to match the DSH amount. In 10 out of the 14 years until the 2011 MET, NRH s tax exceeded the DSH payment and the tax was subsequently reduced. Page 6

8 Late in the Fall of 2010 the Rules Changed The MET is now a real tax. This is the first hearing in which we ve had the opportunity to discuss the MET as a new tax in addition to other taxes that we pay. Northeast Rehab would have never agreed to participate in the Medicaid Enhancement fund and related hospital taxes if we knew that we would be assessed almost $3 mil in taxes when the majority of rehab hospitals in the country are not subject to the tax for good reason. Page 7

9 Northeast Rehab as a Taxpayer We are privately owned by local individuals and we pay Federal, State and local taxes We pay: Federal Taxes State Taxes Business Profits Tax on our NET income the same revenue stream taxed by the MET. Property Taxes In addition, based on what we know, the 2013 MET could be upward of $2.8 million. Page 8

10 Taxpayer Dispute Because MET is now a real tax it can only be imposed consistent with the constitution. We have challenged the application of the MET to us for the 2011, 2012 and 2013 assessments. The 2011 MET Challenge is pending in Rockingham Superior Court. The other years are still in the administrative process at the DRA. Page 9

11 Taxpayer Dispute (continued) Among the grounds for our challenge to the application of the MET are: The State s taxation only of the hospitals and not of other providers of the same services. We already pay Business Profits Tax on the same revenue stream being taxed under the MET. Also of note, the court found that the facts of our case are different than those of the acute care hospitals involved in a similar dispute Another example that we are different than community not for profit hospitals. Page 10

12 Review and Conclusions Rehab Hospitals are special hospitals and are very different than acute care community hospitals. We do not have primary care and emergency services that are most accessed by Medicaid patients. The majority of patients we treat are insured by MEDICARE not Medicaid. We are limited by regulation in the specific types of patients we can treat. 32 States Rehab Hospitals are not subject to the MET or similar assessments. We were given specific assurances about how this program would work in order for the State to obtain more Federal funding for Medicaid patients. THE RULES CHANGED and now we have a real tax that should not be applied to Rehab hospitals. Rehab hospitals will always experience a significant shortfall between DSH and MET. NRH is challenging the application of the MET on constitutional grounds. Solutions advanced by the acute care hospitals like expansion of Medicaid now found in the ACA may provide adequate solutions for general hospitals but will NEVER provide a similar solution for rehab hospitals. Exempting special hospitals for Rehab from the MET is the right thing to do for the Rehab Hospitals in New Hampshire. Page 11