North Valley Hospital project threatened

A pending Medicare ruling threatens North Valley Hospital's building plans, administrator Craig Aasved announced Monday.

At a press conference, Aasved termed the future "bleak" for the hospital if a Medicare ruling removes North Valley's certification as a Critical Access Hospital.

The move would reduce North Valley's annual Medicare/Medicaid payments by $1 million.

"Our message to the community is to contact our congressmen: Baucus, Burns and Rehberg," Aasved said.

So far, the hospital has invested $1.4 million in land and $1.8 million in legal costs, application fees and feasibility studies toward a new $26 million facility. But more than that new building is at stake for North Valley, which operates as a nonprofit, community hospital.

Aasved was supported at the Monday gathering by hospital and foundation board members as well as members of the capital campaign committee who are working to raise several million dollars for the new hospital.

During the presentation, Aasved stressed that the choice of the Montana 40 and U.S. 93 location did not create the critical access dilemma for North Valley.

"Any site would be an issue," he said.

Various interpretations of the Medicare rule put the certification in danger even if the hospital built a new facility at its current location just north of the McDonald's restaurant on U.S. 93.

According to Aasved, the medical staff can't continue operating in the more than three-decade-old facility and still maintain the financial advantage of a critical access designation.

"It does not meet the seismic [earthquake] code," he said.

Aasved said the federal HUD loan for the new facility remains in limbo. The agency wants written assurance that moving one mile won't endanger its certification as "a necessary provider."

The critical access status means Medicare and Medicaid pay a larger share of North Valley's actual cost of serving elderly and indigent patients. Larger hospitals use revenue from a higher volume of private insurance patients to subsidize Medicare and Medicaid patients.

Granted in November 2003, North Valley Hospital's certification provided the financial boost needed to make building a new facility feasible. It required a state waiver of federal location requirements for critical access facilities.

The new Medicaid rule terminates the state's authority to issue such waivers as of next January. In response to questions about waivered hospitals moving, Medicare officials said its regional offices would decide on a case-by-case basis.

Aasved said North Valley was notified that the Denver regional office would provide an answer on critical access by the first part of January but no assurances have arrived.

He said he provided the Denver office with letters of support from the state Department of Health and Human Services as well as from Kalispell Regional Medical Center.

Although North Valley provides many of the same services as Kalispell Regional, Aasved said the medical center has not opposed the new North Valley facility.

"There is no local opposition," he said.

Hospital officials hope to flood Montana's congressional delegation with citizen support. North Valley has sample letters available for people who want to help put pressure on the Centers for Medicare/Medicaid Services.

Aasved stressed that a delay could mean an increase in interest rates as well as construction costs. He said a local contractor estimated costs would rise 6 percent in the next year.

He said the hospital's board of directors had recommended that North Valley Hospital proceed with the bidding process on April 15 and the Centennial Celebration on May 12.

He said the board will reassess the situation on April 13.

By Monday afternoon, hospital officials had some hope that work by Sen. Max Baucus' office might bear fruit. During the press conference, Aasved was summoned to a telephone call from the senator's office. Later, at the request of a Baucus aide, the hospital waited a day before sending out a press release on the problem.

Aasved said the hospital is working with Medicare officials to get the needed assurances that its critical access status will continue in a new facility.

In response to an inquiry from the Inter Lake, Baucus' staff provided a copy of a letter dated Feb. 14, 2005, in which he urged Dr. Mark McClellan of the Centers for Medicare & Medicaid Services to preserve North Valley's status as a Critical Access Hospital.

According to the letter, Baucus wrote the legislation in 1997 which allowed rural hospitals to receive special payment consideration as providers of critical services.

Reporter Candace Chase may be reached at 758-4436 or by e-mail at cchase@dailyinterlake.com