PORT ANGELES — Proposed federal cuts to home health reimbursements are excessive for a rural community the size of Clallam County, Olympic Medical Center’s chief executive told the six commissioners this week.

Eric Lewis, CEO of the Port Angeles-based hospital, on Wednesday gave the board his monthly update on the controversial legislation that is making its way through Congress and how health care reform would affect OMC.

“They’ve decided that our home health agencies are being overpaid, and they’re going to cut us by 2.75 percent every year for four straight years,” Lewis said.

“I think that’s something we should fight.”

Olympic Medical Home Health Medicare-certified agency provides home care throughout Clallam and West Jefferson counties. It earned Home Care Elite status in 2006, 2007 and 2008.

In four years, the proposed cuts would amount to $7.6 billion nationwide, or 11 percent.

“I think those cuts are excessive, and would really hurt our home health agency,” Lewis said.

“Maybe some home health agencies are overpaid, but for rural home health agencies that cover a county the size of Clallam County, I don’t believe that that’s an appropriate cutback.”

While the national controversy over health care reform spills into the congressional recess, Lewis is keeping current on proposals in the U.S. House of Representatives and U.S. Senate.

Effects of reform

Reform proposals offer a mixed bag for rural hospitals like OMC, Lewis said.

“One of the good things is, there will be fewer uninsured residents in Clallam County,” Lewis said.

The county of 70,000 has more than 9,000 uninsured people.

OMC, a nonprofit public hospital, has about $7 million in uncompensated care on the books.

“That should go down, and that will be a big positive for the health care system,” Lewis said.

President Barack Obama is committed to passing legislation this year, he said.

“It seems to be a top priority,” Lewis said.

The U.S. House and Senate each have health care reform bills more than 1,000 pages long that are presently being studied by committees.

“There’s been just an amazing amount of lobbying and almost a soap opera of political process going on in D.C.,” Lewis said. “It’s been fully engaging.”

Since the 52 conservative Democrats in the House — which Lewis referred to as Blue Dogs — are from rural areas, Lewis said that rural hospitals like OMC have a voice in the debate.

That group has insisted that the House remove a public option that would take on Medicare rates.

“They said they could not support Medicare rates for the public option,” Lewis said. “It would have to be negotiated with the facilities that they deal with.”

Most Republicans oppose a public option because they say it would drive insurers out of business.

Less cost, less coverage

The removal of the public option would bring the cost of health care reform down from $1.1 trillion to $900 billion over 10 years, Lewis said, by covering 94 percent of the population instead of 97 percent.

Three House committees — Ways and Means, Energy and Commerce and Education and Labor — are working on the bill, which is called the “American Affordable Health Choices Act of 2009.”

The bill includes about $150 billion in cuts to hospitals during the next 10 years, Lewis said.

In the Senate, the bipartisan Finance Committee is working on a compromise version of a health care reform bill through the August recess.

“They also brought their cost to about $900 billion,” Lewis said.

The $150 billion in cuts to hospitals relate to a “productivity adjustment,” meaning a reduction in annual inflation for Medicare.

At Olympic Medical Center, this reduction would cost $24 million over the next 10 years.

“It’s a pretty big effect on us, but at least we’ll know it’s coming,” Lewis said.

In theory, the reduction in uninsured costs should offset the $24 million reduction.

The House has specific proposals for tax increases to pay for access to health care.

The Senate Health Committee has a bill but doesn’t say how to pay for it.

“The Senate really hasn’t weighed in on how they’re going to pay for it exactly,” Lewis said.

According to the House proposal, people making more than $350,000 a year would pay a 1 percent surcharge the first year and a 2 percent surcharge in subsequent years.

People making more than $1 million annually would pay a 5.4 percent surcharge.

Cost to OMC

“Those taxes have certainly been hotly debated, but there has to be some way to pay for that $900 billion of access,” Lewis said.

“They’re paying for some of it through cuts to providers, and they’re going to have to pay for the rest somehow.”

Lewis said proposed health care reform does a good job of addressing the problem of the 50 million uninsured but falls short of reducing costs and improving outcomes.

“Just cutting reimbursement in the current system isn’t a long-term solution,” Lewis said.

“They have to structurally change the system to be less focused on fee for service and more focused on outcomes. And they really don’t address the cost issue.”

Leskinovitch: No true reform

Jim Leskinovitch, president of the OMC board, said the current proposals lack true reform.

“I think what we’re addressing more than anything is the uninsured,” Leskinovitch said.

“We’re not going to a single-payer system, which really would be a reform of what we’re doing right now.

“People say, ‘Government, get out of health care.’ They’re already here. More than half.”

About 71 percent of OMC’s business currently comes from the government, Lewis said.

“They’re not going to get rid of it, because most people in this country depend upon it. Period,” Leskinovitch said.

Lewis highlighted what he sees as four main problems with the current proposals — a lack of tort reform, lack of long-term cost controls, lack of a public health focus and the fact that it doesn’t address geographical cost differences.

“We’ll compromise until we get something,” Lewis said, predicting that a bill passes this fall.

“It may not be as comprehensive as needed, but I think President Obama will get some kind of bill out of the House and the Senate.”

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Reporter Rob Ollikainen can be reached at 360-417-3537 or at rob.ollikainen@peninsuladailynews.com.