July 21, 2022

Kilmer, Olympic Medical Center, Celebrate New Federal Action to Prevent Cuts to Rural Health Care Providers

Kilmer Has Advocated for Years to Reverse Payment Cuts That Would Hurt Rural Health Care Providers like Olympic Medical Center in Port Angeles

New Rule by Center for Medicare & Medicaid Services Expected to Save Olympic Medical Center Tens of Millions

Washington, DC – Today, U.S. Representative Derek Kilmer (WA-06) announced that the Center for Medicare and Medicaid Services (CMS) has proposed a new rule that will help essential safety-net hospitals, including Olympic Medical Center (OMC), continue to provide affordable care in rural communities.

The proposed CMS rule, announced on July 15, would reverse a policy known as “site neutrality” for Rural Sole Community Hospitals, which has been in effect since 2019 and significantly cuts Medicare reimbursement rates for hospitals, like OMC, that provide services via a network of off-campus clinics that are intended to make health care more accessible to patients.

“This is a huge deal for protecting health care in rural communities and for protecting jobs,” said Rep. Kilmer. “Hospitals should be encouraged to bring their services closer to the people they care for, not be penalized for it. Unfortunately, the previous Administration put forward a policy that would’ve hurt access to health care in rural areas and killed jobs. That’s why I’ve been fighting tooth and nail over the last few years to block the previous policy and restore reimbursements to Olympic Medical Center. This proposed rule represents a big win for Sole Community Hospitals, like Olympic Medical Center, and for the patients and communities they serve.”

“We are relieved and thrilled that CMS has proposed this rule to exempt rural Sole Community Hospitals such as Olympic Medical Center,” said Darryl Wolfe, chief executive officer of Olympic Medical Center. “This is a victory for us to have our former rates reinstated, which will bring our Medicare reimbursement up to roughly 80% of cost.to provide the care.”

Wolfe added: “Once the rule is finalized, we will need to go back and re-orient our strategic plan and our facility master plan which both assumed a loss of $47 million over the next 10 years. Thanks to this rule update, we again see an improved opportunity to provide much needed access to clinic and same-day surgery services in Sequim in particular.”

In November 2018, CMS announced a rule that would lower reimbursements for off-site hospital clinics. As a result, hospitals that opened clinics to make health care more accessible to patients in rural areas faced a significant loss of funding. This policy resulted in steep cuts – from $118.35 to just $47.35 per patient – to the reimbursement rate for Medicare patients treated at OMC’s off-site clinics, including in Port Angeles and Sequim. As a direct result, OMC was unable to expand much needed primary care and ambulatory surgery services in Sequim. Over the long run, OMC estimated these cuts would have resulted in roughly $47 million in lost revenue over the next ten years. The hospital also reported that these dollars would otherwise be used to upgrade medical equipment or hire additional doctors and nurses.

In response, Rep. Kilmer introduced bipartisan legislation in 2019 to block the rule, held multiple meeting with CMS leadership, and hosted a virtual meeting between OMC and CMS leadership. In June, he sent a letter to CMS Administrator Chiquita Brooks-LaSure to encourage the Biden Administration to ensure equitable access to care under Medicare and exempt Sole Community Hospitals from the site neutral policy.

“It’s time to celebrate! This is a big win for Clallam County and specifically Sequim. The 2019 arbitrary rule previously meant doctors practicing in Sequim, providing the exact same services, with the same cost structure, were being paid 60% less. Now this opens the door for OMC to provide critical medical services in the fastest growing area of the county,” said Colleen McAleer, Executive Director of Clallam County EDC. “Thank you to our community businesses and local governments for writing hundreds of letters to CMS and to, of course, to Rep. Kilmer. Persistence paid off. This would not have happened without him.”

“This is great news and finally the right answer. Too often, ‘one-size-fits-all’ and ‘peanut-butter-spread’ policies hurt rural businesses and economies in ways that were unforeseen and unintended. It requires much more work to get it right across the board – both at the start, and to correct inequities,” said Marc Abshire, Executive Director of the Port Angeles Chamber of Commerce. “We’re very thankful to Rep. Kilmer for his extra efforts to help reverse the CMS site neutrality policy and ensure sustainable access to medical care here on the North Olympic Peninsula.”

“Rep. Kilmer has been a tremendous advocate for rural health care in Clallam County particularly in regard to his full support to fight the site neutral cuts first implemented in 2019,” said Jennifer Burkhardt, general counsel and chief human resources officer, Olympic Medical Center. “We have appreciated working in partnership with Rep. Kilmer, and for the additional support offered by Senators Patty Murray and Maria Cantwell’s offices when needed.”

CMS is accepting comments on the proposed rules through September 13.