Financial Struggles for Onamia Hospital Amid Payment Issues
Andy Knutson, the CEO of Mille Lacs Health System, revealed that the Centers for Medicare and Medicaid Services (CMS) has withheld around $3 million in reimbursement that the hospital desperately needs.
ONAMIA, Minn. — Rural hospitals in Minnesota are already under significant financial stress, but the situation has become even more dire for Onamia’s only hospital, which might close its doors in a few weeks due to this unexpected hurdle.
Knutson explained that technical glitches in the CMS’s new payment processing program have resulted in this substantial amount being tied up. This money is crucial for covering the hospital’s expenses.
He emphasized that while the program aims to combat fraud, it is inadvertently blocking legitimate claims from hospitals like theirs, not just locally but nationwide.
“We’ve never faced a scenario where there’s been an ongoing problem without any clear answers,” Knutson expressed. “For months now, we’ve just been at a standstill.”
Onamia is a small town situated roughly 110 miles northwest of the Twin Cities, with the nearest critical access hospital located about 40 miles away. The Mille Lacs Health System employs over 400 people, including Beverly Insley, who was born at the hospital and now operates a billing agency.
“Every day is filled with stress. We’re constantly engaging with payers and tackling various issues, but this situation—I think it’s affecting our healthcare system in a way we’ve never seen before,” Insley stated.
Knutson mentioned that they first learned about the payment processing changes last summer. While he hoped it would help eliminate fraudulent claims, he’s concerned that it may instead lead to providers being deregistered and payments being halted.
“These are costs we’ve been billing for years without any problems. Now Medicare claims they’re incorrect, and we’re struggling to understand why this is all occurring,” Knutson added. “When I finally contacted someone at CMS, they acknowledged they know about the issue and are trying to resolve it, but they couldn’t provide a timeline.”
Critical access hospitals, like the one in Onamia, depend on certain billing methods to minimize financial risks and enhance healthcare access in rural regions. In Minnesota, around 100 hospitals are facing some degree of impact from these payment issues.
For now, Knutson assured that patient care remains unaffected. He and his leadership team are taking a 10% pay cut and looking into various solutions, including applying for grants and taking loans.
“We can’t let our employees down, nor our community or patients,” Knutson stated. “We’re committed to finding a resolution.”
Knutson also mentioned that the hospital is considering closing its five clinics in nearby smaller towns like Ayle.
Although CMS didn’t directly answer queries from KARE 11, they did provide a statement to Minnesota Public Radio, saying, “We are dedicated to both safeguarding taxpayer funds and ensuring hospitals receive their due payments.”
They acknowledged that certain hospitals are facing delays and are collaborating with contractors to resolve these issues promptly.
If the situation is resolved quickly, Knutson indicated that the hospital could see its reimbursement arrive within two weeks.
