REGIONAL — A recent Medicare billing issue that has disrupted payments to some rural critical access hospitals in Minnesota has raised alarms across the state, with some providers warning they could run out of cash within weeks.
Hospitals in Cook and Ely have not been affected by the problem. Teresa Debevec, CEO of Cook Hospital, said her facility has not experienced any Medicare billing issues related to the recent changes.
Ely-Bloomenson Community Hospital CEO Patti Banks said while her hospital has not been impacted, she is aware of others that have seen significant financial strain.
“First of all, I can let you know that our hospital is not impacted by it,” Banks said. “I do know that there are other hospitals that have been impacted by this, some of them significantly when it comes to their cash flows.”
Banks said the situation reflects a system that has grown more complicated and, in some ways, more fragile.
Critical access hospitals are small rural facilities designated by Medicare to ensure access to care in remote areas. They are reimbursed based on their costs rather than fixed payment rates, but that also means operating under a unique and often complex set of rules.
“I think it also shows how complicated our financial world is within the hospital. And it shows how fragile things are right now when it comes to finances,” Banks said.
One challenge involves the way Medicare processes claims and enrollment information, where technical issues can interrupt payments even when care is appropriate.
“When Medicare changed how hospitals and providers are registered, glitches developed in how information is exchanged between the computer systems involved. Those glitches have led to payment disruptions and, in some cases, complete stoppages,” Banks said.
Even routine updates, like adding a new provider, can create uncertainty about whether services will be reimbursed, adding pressure to already tight operations.
Another pressure comes from the requirement that critical access hospitals provide emergency services around the clock, even when patient volumes are low.
“Whether we do one CT a day or 400 we still have to have that same CT scanner. And if you’re the person whose life depends on that CT scanner, like that’s a pretty vital thing,” said Jodi Martin, marketing and communications team leader.
“We have to be here. We have to provide the service, because you don’t want to be the one person that we can’t be here for,” Banks said.
Those requirements mean hospitals must maintain staff, equipment, and readiness regardless of how many patients come through the door on a given day.
Hospitals have expanded outpatient services and telehealth in an effort to stabilize revenue and improve access. But those efforts can be complicated by changing reimbursement rules.
“It creates more headaches and concerns for everybody involved. It’s not a good way to do business,” Banks said.
As more patients enroll in Medicare Advantage plans, rural hospitals are increasingly dealing with private insurers that do not follow the same cost-based reimbursement system as traditional Medicare, often resulting in lower payments and additional administrative burdens.
“There are so many layers to the Medicare rules. You touch one of them, and there can be far-reaching unintended consequences, and sometimes those rules compete,” Banks said.
She described the current state of hospital finance using a metaphor shared by a colleague.
“A colleague of mine describes the state of health care finances right now as a Jenga tower. Every time you move a piece or eliminate a part of it, the tower is going to topple soon, especially in rural communities. We cannot afford to experience any more cuts or elimination when it comes to finances,” Banks said.
That sense of instability is not new, but it is becoming more pronounced as changes continue at the federal level.
“It’s going to be bumpy. We’re in for a bumpy ride for a while until we figure this out, because the change is going to come fast and it’s not going to be easy,” Banks said.
While Ely and Cook have not been directly affected by the current billing issue, the broader challenges of running a critical access hospital while maximizing Medicare funding remain.
For rural hospitals, Banks said, the challenge is not just responding to one disruption but navigating a system where multiple moving parts can shift at once, often with little warning.
And while those hospitals have managed to avoid this particular crisis, leaders say the broader financial landscape means the work of keeping local hospitals stable is ongoing.