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Mayo Clinic backs Brewer; Scottsdale Healthcare on the fence

Arizona Gov. Jan Brewer delivers her 2013 State of the State address. (Photo by Ryan Cook/RJ Cook Photography)

Arizona Gov. Jan Brewer delivers her 2013 State of the State address. (Photo by Ryan Cook/RJ Cook Photography)

One of two hospitals that held out support for Gov. Jan Brewer’s Medicaid expansion plan out of concerns the proposed hospital tax would cost more than they would get back is officially on board.

Mayo Clinic was one of 17 Arizona Hospital and Healthcare Association board members that voted on March 15 to support the governor’s Medicaid plan. A representative of Mayo Clinic also stood with Brewer at a March press conference where she unveiled the draft language of her plan.

A spokesman for the prestigious hospital would not comment on the Mayo Clinic’s reasons. But a key to Mayo’s endorsement may be a provision in Brewer’s plan that allows the Arizona Health Care Cost Containment System director to exempt certain hospitals from the tax, which will pay the state’s share of new Medicaid spending that will trigger billions in federal funds.

Mayo, which treats few Medicaid patients, had told lawmakers that it did not want to pay the assessment. Most Arizona hospitals support the tax on themselves, and would get more money back in Medicaid reimbursements than they would pay through the new assessment.

According to AHCCCS, Mayo received only $6.6 million in Medicaid reimbursements in the contract year 2011, which ran from October 2010 to September 2011.

A spokesman for Mayo Clinic would not say why the hospital endorsed Brewer’s Medicaid plan.

“We support the governor, but beyond that we’re not going to comment,” Mayo spokesman Jim McVeigh said.

Another hospital that has raised concerns over the impact of the assessment, Scottsdale Healthcare, has not endorsed Brewer’s plan and still has serious concerns over whether it would pay the tax.

Michelle Pabis, a lobbyist for Scottsdale Healthcare, said the hospital system is still holding discussions with the Governor’s Office and AHCCCS officials over the assessment. She said the system supports Brewer’s efforts to restore Medicaid coverage, but that the wording in the exemption provision leaves too much discretion to the AHCCCS director.  She said Scottsdale Healthcare wants more concrete language that will ensure that it doesn’t pay a tax for which it will see no benefits.

“I think that definitely is a step in the right direction,” Pabis said. “Obviously we’re pleased to see that flexibility with the creation of the model. But we have learned over the years that the devil is in the details with any provider assessment model. So we’re just not comfortable with having something concrete to react to at this point.”

The draft language of Brewer’s Medicaid expansion plan states that the director of AHCCCS can establish exemptions from the assessment based on criteria such as the size of a hospital, its location or the specialty services available to patients. Pabis said Scottsdale Healthcare would prefer to see language that more closely resembles the city of Phoenix’s Access to Care Ordinance, which exempted Mayo from the city’s hospital assessment through specific criteria that would apply to the hospital.

“We think the Phoenix model that includes exemptions for hospitals disproportionately impacted is the best example,” Pabis said. “Those hospitals were exempted, basically, in the ordinance.”

However, Scottsdale Healthcare does not appear to have the same claim to an exemption that Mayo does. While Mayo sees a small amount of Medicaid patients, about

21 percent of the Scottsdale Healthcare Osborn Medical Center’s volume was AHCCCS patients in contract year 2011, according to the agency. That amounted to nearly $41 million in payments from AHCCCS that year.

Monica Coury, a spokeswoman for AHCCCS, said the Osborn facility’s numbers are on par with Yuma Regional Medical Center and other hospitals that are supporting Brewer’s plan.

The Scottsdale Healthcare Shea Medical Center, in north Scottsdale, saw far fewer Medicaid patients than the Osborn facility. According to AHCCCS, about 11 percent of the Shea facility’s volume were Medicaid patients in contract year 2010, the last year for which such data was available. In 2011, it received $22.3 million in reimbursements from AHCCCS.

In total, Scottsdale Healthcare’s hospital system received about $67 million in reimbursement from AHCCCS in contract year 2011, according to the agency’s records.

Coury said Scottsdale Healthcare and Mayo Clinic are not in the same boat when it comes to Medicaid.

“Scottsdale may be a ‘wanna-be Mayo,’ but they have a solid book of Medicaid business and stand to gain greatly under the governor’s plan. If Scottsdale wanted to get out of the Medicaid business, they would have to shut down Osborn, or at least Osborn’s trauma center. Aside from a few transplant cases, Mayo does not have a Medicaid book of business to speak of and yet they are standing in support of the governor because they understand that her plan is critical to shoring up Arizona’s health care sector as a whole,” Coury said in an email to the Arizona Capitol Times.

Pabis said she respectfully disagrees with Coury’s opinion, and said Scottsdale Healthcare will continue to raise any concerns it has with AHCCCS.

“At the end of the day, this is a policy decision for the governor and Legislature to make and we look forward to continuing to be a part of that process,” Pabis said in an email.

Brewer spokesman Matthew Benson said no decisions have been made on whether new language will be added to the Medicaid plan on exemptions from the hospital tax. But he said Mayo doesn’t appear to have any problems with the exemption language, and noted that Scottsdale Healthcare serves a sizeable Medicaid population.

“It’s sort of an interesting argument since the institution that was specifically exempt under the Phoenix initiative is OK with where we’re headed,” Benson said.

Pabis said Scottsdale Healthcare simply wants to ensure that any assessment is fair and does not disproportionately affect her hospital system or its patients.

“We continue … to support the governor’s efforts to restore Medicaid and are working closely with the Governor’s Office to develop a provider assessment solution that is fully consistent with the governor’s mission and ours,” Pabis said. “Those missions, as they have been articulated, are to create an assessment tool that has fair, proportional and balanced assessments and disbursements.”

The question over what impact the assessment will have on Mayo and Scottsdale Healthcare is one of many contentious issues weighing on lawmakers who will vote on Brewer’s plan. Sen. Michele Reagan,

R-Scottsdale, whose district includes both hospital systems, has said that she likely wouldn’t vote for any plan they are uncomfortable with, especially considering that Scottsdale Healthcare is the largest employer in her district.

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