PETERBOROUGH — As one of New Hampshire’s 13 Critical Access Hospitals, Monadnock Community Hospital qualifies for a higher level of Medicare payments because it serves a rural population. There are about 1,300 such hospitals nationwide, caring for 60 million people living in almost 90 percent of the nation’s land area. And now some of the funding for these hospitals could be threatened.

The proposed federal fiscal year 2014 budget calls for cutting Medicare reimbursement levels to Critical Access Hospitals by $1.43 billion over the next 10 years. In addition, the budget would eliminate the use of the critical access designation for any facility that’s within 10 miles of another hospital, which would save $690 million in Medicare funding.

In a letter sent last month to high-level members of the House Ways and Means Committee, U.S. Rep. Annie Kuster, the Democrat who represents the Monadnock region in Congress, joined 24 other representatives in urging the committee to reexamine the proposal.

“In 2010, the average cost per rural hospital beneficiary was 3.7 percent lower than be urban beneficiary, saving our health care system $2.2 million,” Kuster wrote. “Without CAHs, hundreds of thousands of Americans may lose or have limited access to essential care.”

Peter Gosline, the chief executive officer at Monadnock Community Hospital, said hospital officials are concerned, and noted that the Critical Access Hospital issue is just one area in which MCH could be impacted financially by state and federal budgets.

“I don’t believe they’d be making draconian cuts right away,” he said Monday in reference to the federal budget. “They may chip away. They are looking for a palatable way to reduce reimbursements.”

Gosline said imposing a 10 mile limit would only impact one New Hampshire hospital — Alice Peck Day Hospital in Lebanon, which is very close to Dartmouth-Hitchcock. But it could be a starting point that might eventually have a serious impact on MCH.

“What would be next?” he asked. “Cheshire Medical Center is only about 20 miles away.”

In an email to the Ledger-Transcript, Kuster explained why she is concerned.

“We can’t predict with certainty how these cuts would impact every individual hospital in the Granite State,” Kuster wrote. “What we do know is that many of these rural hospitals struggle to balance their budgets and meet the needs of their communities. The Critical Access Hospital designation is one of the reasons they can survive and serve the health care needs of patients, many of whom are elderly, low-income, or uninsured. It’s not just hospitals that depend on this funding, but also the communities and people they serve.”

Kuster said distance between hospitals should not be the only factor that determines a community’s access to health care.

“Rather than using a ‘one size fits all’ approach based on an arbitrary distance, we should maintain the flexibility needed to base this designation on realities on the ground in our communities,” she wrote.

Other issues

Gosline said cuts related to adjustments to the state of New Hampshire’s reimbursements to hospitals through the Disproportionate Share Hospital program will actually have a greater impact than any changes to the Critical Access Hospital program.

Since the early 1990s, the state has collected a Medicaid Enhancement Tax from hospitals, based on a hospital’s earnings, which was then used to get matching federal grant money. The tax was immediately returned to the hospitals in DSH payments, to help compensate for the cost of treating uninsured patients.

But in recent years, the state has cut back on the amount of DSH payments, without reducing the tax. Gosline thanked Gov. Maggie Hassan, the hospital’s guest at a breakfast and tour during her visit to Peterborough on Wednesday, for her help in developing the state’s fiscal year budget for 2014, which includes an additional $40 million for DSH payments. But even with that increase, the hospital is still budgeting for a $1 million shortfall.

“We pay about $4 million in taxes. We only get $3 million in DSH. That amount in one year will be a hit to our budget,” Gosline said.

Art Nichols, chief executive officer at Cheshire Medical Center in Keene, said changes to the DSH program have had even greater impact on big hospitals.

“Two years ago, the Legislature said the larger hospitals could afford to pay the tax,” Nichols said on Tuesday. “For us, it’s 5.5 percent of revenue, about $5.5 million. We have not gotten anything back. It’s by far the most significant economic blow in the last few years.”

Nichols said Cheshire Medical is not considered a Critical Access Hospital, but instead gets Medicare reimbursement on a Prospective Payment System basis. “We’re paid on a diagnosis-related system. Essentially, it’s a fee schedule,” he said.

Nichols said all hospitals are under some type of threat. “A lot of hospitals are looking at potential reductions as obscure regulations are discussed,” Nichols said. “We recognize the signs. Given the costs of health care, I’m surprised Congress hasn’t moved faster, but trying to fix health care is like painting with a very broad brush. When you do that, you mess up.”

Keeping a staff

Both Gosline and Nichols said attracting and keeping a staff of doctors is another challenge for many New Hampshire hospitals.

Nichols said Cheshire and MCH have developed a good working relationship, with Cheshire oncology and gastroenterology specialists providing service to patients in Peterborough. But some of that service has been scaled back, as Cheshire has lost staffers for various reasons.

“It’s really difficult to get specialist physicians out here in the hinterlands,” Nichols said.

“If Cheshire gets hit, it impacts us too,” Gosline said.

Looking ahead

At the breakfast with Hassan and members of the Executive Council, Gosline noted that MCH had a $2.8 million loss in 2012. “We were truly not-for-profit,” he said.

For 2013, that deficit is expected to be just $300,000, partly due to a wage freeze and some layoffs, he said. “We’ve learned to become nimble,” he said. “A small hospital is always working on the edge. It looks like we’ll move into the black for this next year.”

He said the hospital has ranked in the top 100 among the nation’s 1,300 Critical Access Hospitals in surveys of patient satisfaction for each of the last two years. “That’s how we’ll survive and prosper,” he said.