As a result of Balanced Budget Act and Medicare reimbursementchanges, Lincoln County patients needing home health care will belosing a service provider option in September, said Phillip Grady,King’s Daughters Medical Center chief executive officer.

Effective Sept. 7, KDMC will end its affiliation with LawrenceCounty Hospital that allowed KDMC Home Health to provide servicesto Lincoln County patients. Under the agreement, KDMC provideslocal services and the Lawrence County Hospital handles billing andcollecting with Medicare and insurance companies.

“This is a very gut-wrenching decision for us,” said Grady, whoinformed KDMC Home Health’s 27 employees of the closure at ameeting Tuesday afternoon.

The decision impacts about 70 current KDMC home health patients,in addition to agency employees. Since January 1998, Grady said thenumber of patients served by KDMC had reduced by 50 percent due tochanges BBA-mandated changes in Medicare reimbursement methods.

Over the next 30 days, Grady said the staff will work withpatients and their physicians toward a transfer to another homehealth service provider or to complete their current course oftreatment. Grady said Lincoln County was fortunate in that it hasother home health service providers, including South MississippiHome Health and Gilbert’s, formerly Van Winkle Home Health.

Also, Grady said KDMC will assist home employees in looking atopen positions at the hospital or at other service providers thatwill likely need more staff because of increased patient totals.Grady said he was “guardedly optimistic” that KDMC home healthemployees could find work elsewhere in the medical profession.

“They are an excellent team of health care professionals whohave provided high quality care and have assisted management inachieving cost savings as reimbursement has declined over the pastseveral years,” Grady said about the home health staff.

Financially, Grady said KDMC home health was a little less thana break-even operation. However, under the current situation andwith another Medicare reimbursement change coming Oct. 1, Gradysaid the move to close the agency was the best business decisionfor the hospital.

“In today’s reimbursement environment, hospitals must be able tomanage their own business affairs,” Grady said. “Depending onanother hospital for billing and collection, particularly when thatfacility may be experiencing financial stress, potentially puts ourother patient care services at risk.”

Deborah Roberts, Lawrence County Hospital administrator, saidshe was not surprised with KDMC’s decision. She said she believedit was the best decision for KDMC in its situation.

“We still have a good working relationship and there are no hardfeelings,” Roberts said.

Roberts said Medicare reimbursement schedules had been entirelyrevamped on both the revenue and expense sides. She said manyhospitals are facing uncertainties with the changes coming Oct.1.

“There are no guarantees on how everybody’s going to come out onthis thing,” Roberts said. “It’s changed the whole outlook on homehealth.”

Originally, KDMC, Walthall County General Hospital, SimpsonGeneral Hospital and Southwest Mississippi Regional Medical Centeroffered home health care services under Lawrence County Hospital’sCertificate of Need (CON), Grady said. Simpson and Southwestdropped out in 1998 with the first reimbursement changes, Gradysaid.

“We didn’t want to get out two years ago because we stillthought it was beneficial,” Grady said about KDMC’s situation.

However, Grady said the upcoming changes will eliminate theprimary financial benefit to Lawrence County Hospital, which wasthe ability to shift administrative and overhead expenses to thehome health agency. Termination of the affiliation is not expectedto have a negative financial impact on the Lawrence CountyHospital.

With no more CONs being issued, Grady said KDMC is out of thehome health care business for the foreseeable future. AlthoughGrady believes the service would be beneficial, Roberts said thereare no plans for Lawrence County to operate home health in LincolnCounty.

“We’re doing all we can do now,” Roberts said.

Grady recently testified before Sen. Thad Cochran’sAppropriations subcommittee on the effects of the BBA on ruralhospitals. Grady expressed concerns about a five-year $9.9 millionimpact of the BBA on KDMC and an estimated $7 million impact onLawrence County Hospital over the same period.

KDMC has seen the greatest BBA-related impact in three areas ofhospital operations: the rural health clinic, home health and thesub-acute nursing facility.

KDMC Home Health’s closure is the second service reduction sincethe BBA was implemented, Grady said.

In January, KDMC transferred ownership of its rural healthclinic to Franklin County Memorial Hospital following a BBA-relatedpayment change that resulted in a $289,000 annual shortfall inclinic operation. Franklin County Hospital was in a better positionto be reimbursed for the full cost of providing services.

“With the rural clinic, it was a sad story with a happy ending,”Grady said. “While we weren’t able to continue operating theclinic, we were able to ensure the clinic remained viable. We choseto give up being the provider of this service rather than see iteliminated for our patients.”

Grady did not foresee any changes in the sub acute nursingunit.

“We intend to keep it,” Grady said. “It’s a service that’s veryvaluable and nobody else around offers it.”

Although BBA impact has been severe, Grady said KDMC remains insound financial condition and hospital officials will continue totry to expand services where possible.

Grady encouraged citizens to contact Congressional leaders andurge them to restore some of the $300 billion cut from Medicare asa result of the BBA.

“A strong medical community is key to the continued economicdevelopment of Lincoln County and other rural areas such asMeadville and Monticello,” Grady said. “Congress needs to level theplaying field between the favored reimbursement provided to urbanhospitals, such as in Jackson and New Orleans, and the inequitablereimbursement provided to rural hospitals such as KDMC.”