“The hospital loses millions in uncollected bills each year. Paying your bills should be the rule and not the exception. We can’t allow discounts on amounts owed for services provided by our hard working staff.”
– Governor Eddie Baza Calvo
The Guam Memorial Hospital Authority is revoking the 8% discount on payments by insurance carriers to GMHA.
This is the latest policy change resulting from the work of the Hospital Management Advisory Team. The team submitted their recommendation to the Governor who approved it.
The discount was part of a 2006 Direct Payer Agreement between the hospital and insurance carriers. This agreement has not been updated since fiscal year 2006. The agreement includes timelines for payments by insurance companies to the hospital as well an 8% percent discount if the insurance company pays within a 30-day window. The discount was meant to be an incentive to get insurance companies to pay their bills quickly.
“HMAT, in its review of hospital policy, agreements and local statute, discovered that the 8% discount was being applied to claims paid outside of the agreed upon 30-day time frame,” stated Wil Castro, Advisory Team member and Director of the Bureau of Statistics and Plans.
“The financial impact as a result of this misapplication from fiscal year 2011 through fiscal year 2015 is approximately $3 million.”
By terminating the 8% discount to insurance companies, GMHA may realize approximately $245,000 per year.
The Advisory team established working subgroups made up of subject matter experts in order to provide a more thorough analysis and set of recommendations. Terminating the 8% discount and other fiscal policy changes have come from the HMAT’s budget working group.
HMAT and hospital management agree that the corrective action will not
only recover millions but also enhance the hospital’s cash situation.