[Congressional Record (Bound Edition), Volume 153 (2007), Part 5]
[Senate]
[Pages 6842-6847]
[From the U.S. Government Publishing Office, www.gpo.gov]




               NORTHEAST PENNSYLVANIA MEDICARE WAGE INDEX

  Mr. SPECTER. Mr. President, for a considerable period of time, there 
have been a number of counties in Pennsylvania that have been suffering 
from low Medicare reimbursements, which has caused them great 
disadvantage in comparison to surrounding areas. I refer specifically 
to Luzerne, Lackawanna, Wyoming, Lycoming, and Columbia in northeastern 
Pennsylvania, and there are open disadvantaged counties elsewhere in 
Pennsylvania. Those counties are surrounded by MSAs, metropolitan 
statistical areas, with higher Medicare reimbursements in Newark, and 
New York, to the east; in Allentown to the southeast; and in Harrisburg 
to the southwest. As a result, a flight of very necessary medical 
personnel has occurred as northeast Pennsylvania hospitals are not able 
to provide employees with adequate competitive wages.
  Further complicating this issue are the exceptions to the Medicare 
wage index regulations. Since 1987, exceptions have been created to the 
wage index program for rural facilities, new facilities, and others. In 
fact, in 1999, Congress passed legislative reclassifications for 
specific hospitals to allow selected facilities to move to a new MSA 
and receive greater Medicare reimbursement. While these 
reclassifications have improved funding for those hospitals, hospitals 
that did not receive improved funding are being further disadvantaged.
  It has also come to my attention that inpatient rehabilitation 
facilities are not provided an opportunity to obtain equitable Medicare 
reimbursement. Inpatient rehabilitation facilities receive adjustments 
in their Medicare reimbursement due to geographic disadvantages within 
the Medicare inpatient prospective payment system. This is based on 
information gathered from other acute care facilities in the MSA, not 
from their own wage information. Thus, inpatient rehabilitation 
facilities cannot apply for reclassification to another MSA that 
reflects their actual labor costs. As such, the facilities are 
prevented from being eligible for increased funding to assist with 
wages like acute care facilities, while being forced to compete for 
employees with those facilities that have had access to increased 
funding.
  I have worked to find a solution to the Medicare wage index disparity 
in reimbursement for a number of years. During the conference for the 
fiscal year 2002 Labor, Health and Human Services, and Education 
Appropriations bill, the conferees agreed that there should be relief 
for these areas in Pennsylvania that were surrounded by areas with 
higher MSA ratings. However, at the last minute, there was an objection 
to including language in the conference report.
  To correct this problem I, along with Representatives Sherwood and 
English, brought the matter forward in the fiscal year 2002 
supplemental appropriations bill. The language was included in the 
House version of the bill, and I filed an amendment to Senate bill. 
During conference negotiations my amendment was defeated and the 
provisions were not included.
  As part of the fiscal year 2004 Labor, Health and Human Services, and 
Education appropriations bill, $7 million was provided for hospitals in 
northeast Pennsylvania that continued to be disadvantaged by the 
Medicare area wage index reclassification. The funding was provided as 
temporary assistance for those facilities.
  During the consideration of the Medicare Prescription Drug, 
Improvement, and Modernization Act of 2003, I met with Finance 
Committee chairman, Charles Grassley, and ranking member Max Baucus 
about the bill provisions, including the need for a solution to the 
Medicare area wage index reclassification problem in Pennsylvania. 
Thereafter, section 508 was included in the bill, which provides $300 
million per year for 3 years to increase funding for hospitals 
nationally to be reclassified to locations with higher Medicare 
reimbursement rates. The temporary program, which began in April 2004 
and was scheduled to expire March 31, 2007, has and will provide 
Pennsylvania hospitals $69 million over that time, or $23 million per 
year.
  On September 29, 2006, I introduced the Hospital Payment Improvement 
and Equity Act to extend the section 508 Medicare wage index program 
for 3 more years until March 31, 2010. This legislation would have also 
expanded the eligibility of the program to include inpatient 
rehabilitation facilities and facilities that qualified for the program 
but did not receive assistance due to inadequate funding.
  As part of the Tax Relief and Health Care Act, which was signed into 
law on December 20, 2006, an extension of the section 508 Medicare wage 
index program was included. This will provide 14 Pennsylvania hospitals 
an additional $18.4 million for 6 more months until September 30, 2007.
  On February 21, 2007, I visited Moses Taylor Hospital in Scranton, 
PA, and met with representatives of northeast Pennsylvania hospitals 
affected by this issue. I went over with them the situation that had 
occurred and asked that they submit memoranda or letters outlining 
their hospitals' extreme plight, which I could then share with my 
colleagues in the Senate and have printed in the Congressional Record 
for everyone to see.
  A letter prepared by Harold Anderson, president & CEO of Moses Taylor 
Hospital, Scranton, PA, pointed out the following:

       Health care facilities in our area are especially 
     disadvantaged in that we must compete for specialized, 
     skilled health care labor in a geographic market that 
     includes easy access to Philadelphia, Allentown, and 
     Stroudsburg, three geographic areas in which the Wage Index 
     reimbursement for acute care hospitals is higher than that 
     found in NEPA [Northeast Pennsylvania].

  He goes on to write:

       Considering the relative scarcity and high demand for a 
     highly skilled work force, such as nurses, pharmacists, 
     imaging technologists, etc., the out-migration to the 
     adjacent MSAs is further exacerbated in that NEPA hospitals 
     are forced to pay higher salary and wage rates, which are not 
     fully compensated by the Medicare reimbursements. As just one 
     example, the starting salary for Registered Nurses has 
     increased by more than 18% over the past three years.

  Regis Cabonor, president & CEO of Bloomsburg Hospital, Bloomsburg, 
PA, wrote on February 26 as follows:


[[Page 6843]]

       The significant volume of services provided to Medicare 
     beneficiaries renders the Hospital largely dependant upon 
     Medicare reimbursement to cover the cost of direct patient 
     care . . .

  He also states:

       Without the additional reimbursement provided by this [508 
     wage index] reclassification, our hospital would not be able 
     to attract and retain qualified clinical staff, forcing staff 
     and our patients to travel to the next closest facility for 
     work and care.

  Similar concerns were expressed in a memorandum from Jim May, 
president & CEO of Mercy Health Partners, Scranton, PA, pointing out 
that:

       The 508 reclass funding has enhanced our ability to compete 
     with our adjacent CBSA's [Core-Based Statistical Area] for 
     registered nurses, technicians, and other medical 
     professionals. Over a three year span we have reduced our 
     registered nurse vacancy rate from 12.2% to 4.5%. 
     Significantly, we have cut our spending for contract agency 
     nurses in half. We believe that reducing those expenses has 
     contributed toward improved care management and quality for 
     our patients.

  Mary Theresa Vautrinot, President & CEO of Marian Community Hospital, 
Carbondale, PA, noted that Marian Community Hospital is the largest 
employer in the Carbondale area. The hospital serves a large Medicare 
population who would have difficulty accessing health care if not for 
the hospital, which struggles to find physicians to staff the facility. 
She notes that, without the 508 wage index funding, the hospital may 
not be financially viable.
  Similar concerns were noted by the Community Medical Center 
Healthcare System of Scranton, PA. John Nillson, interim president and 
CEO, stated in his letter that:

       The dramatic differential in Medicare payments between our 
     MSA and the surrounding MSA's will continue to have a 
     negative impact . . .

  Further:

       . . . the nursing shortage has intensified and when 
     combined with other skilled labor shortages, has resulted in 
     a highly competitive environment for these skilled 
     caregivers. As a result, it remains difficult to recruit and 
     retain healthcare professionals.

  John Wiercinski, chief administrative officer, Geisinger South 
Wilkes-Barre, Wilkes-Barre, PA, and Lissa Bryan-Smith, chief 
administrative office, Geisinger Wyoming Valley, Wilkes-Barre, PA, 
noted that:

       Due in large part to the Section 508 legislation, nurse 
     vacancy rates have decreased significantly at both hospitals.

  James Edwards, president & CEO, of the Greater Hazelton Health 
Alliance, which is made up by Hazelton General Hospital and Hazelton--
St. Joseph Medical Center, Hazelton, PA, submitted a memorandum that 
similarly states:

     The monies received through the Section 508 reclassification 
     played a major part in the successful turnaround of our 
     health care system, assuring our community that quality 
     health care services will be available to meet their health 
     needs.

  The Wyoming Valley Health Care System, in a letter from president and 
CEO, Dr. William Host, points out the problems in retaining registered 
nurses:

       Prior to [the Section 508 wage index program], the 
     discrepancy between our reimbursement by Medicare and that of 
     surrounding MSA's was having disastrous effects. Nurses, 
     technologists of all sorts, nurse anesthetists and 
     pharmacists were abandoning northeastern Pennsylvania in 
     droves. Vacancies in these areas were running 14% to 20% and 
     this created a serious threat to quality of care and access.

  Raoul Walsh, president & CEO, Tyler Memorial Hospital in Tunkhannock, 
PA, sent a memorandum that shared this concern:

       If the Section 508 was removed or reduced, the hospital 
     would be forced to eliminate or reduce clinical services . . 
     .

  James Brady, president of Allied Services, of Clarks Summit, PA, an 
inpatient rehabilitation facility which did not qualify under the 
section 508 wage index program, shared that as a result of not 
receiving funding they have been forced to employ international nurses 
to fill 13 of the 30 open nursing positions.
  Neal Bisno, secretary treasurer, Service Employees International 
Union, district 1199P, which has a number of northeast Pennsylvania 
hospital employees as members, addressed the issue from the workforce 
perspective, stating:

  A permanent solution is needed [to the Medicare wage index program 
problems] in order to maintain a stable, well-trained health care work 
force in area hospitals and guarantee continued access to quality 
health care services in Wilkes Barre/Scranton region.

  Denise Cesare, president & CEO, Blue Cross of Northeastern 
Pennsylvania, in a memorandum dated February 26, 2007, notes:

       Due to their current Medicare Wage Index classification, 
     hospitals in the northeast and north central regions receive 
     disproportionately lower reimbursements when compared to 
     similar hospitals that compete with them for services and 
     staff. This reimbursement imbalance drains trained clinical 
     staff, primarily nurses, from the local delivery systems. Our 
     system continues to suffer and decline as medical 
     professionals move to hospitals in neighboring locales 
     because higher Medicare Wage Indexes allow these regions to 
     pay higher salaries.

  On February 24, 2007, the Scranton Times-Tribune published an 
editorial regarding this issue in northeast Pennsylvania. The editorial 
posited that northeast Pennsylvania hospitals are in critical need of 
reform to the Medicare wage index system to end this cycle and cogently 
captures the issue:

       Wage rates at regional hospitals are lower than those for 
     large metropolitan areas, resulting in lower Medicare 
     reimbursements, resulting in the inability of many hospitals 
     to significantly increase wages, resulting in lower 
     reimbursements . . . and on it goes.

  Congressional action is needed to reform the Mediare wage index 
system and provide a fair reimbursement for hospitals. MedPAC, the 
Medicare Payment Advisory Commission, is scheduled to release a report 
in late June, 2007 that will offer recommendations on reforming the 
wage index system. I encourage Finance Chairman Baucus and Ranking 
Member Grassley to examine these recommendations and move forward with 
improvements to this system in an expedited fashion. Northeast 
Pennsylvania hospitals are in great financial distress. They deserve 
fair treatment.
  Mr. President, I ask unanimous consent that these memoranda, letters, 
and editorial be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                        Moses Taylor Hospital,

                                  Scranton, PA, February 22, 2007.
     Senator Arlen Specter,
     310 Spruce Street, Suite 201,
     Scranton, PA.
       Dear Senator Specter: The Section 508 funding which Moses 
     Taylor Hospital currently receives amounts to $3.3M in 
     Medicare revenues each year. Given the fact that this funding 
     is scheduled to expire on September 30th, 2007, the loss of 
     the appropriated funds would be devastating not only to Moses 
     Taylor Hospital, but to all of the similarly situated, acute 
     care facilities in Northeastern Pennsylvania. Health care 
     facilities in our area are especially disadvantaged in that 
     we must compete for specialized, skilled health care labor in 
     a geographic market that includes easy access to 
     Philadelphia, Allentown, and Stroudsburg, three geographic 
     areas in which the Wage Index reimbursement for acute care 
     hospitals is higher than that found in NEPA.
       The original Medicare Wage Index mechanism assumed that 
     highly skilled health care workers would somehow remain in 
     the geographic area most closely located to the acute care 
     facility in which they would work. However, intensive media 
     advertising campaigns, targeted personnel recruitment 
     initiatives, and an excellent interstate highway and turnpike 
     system make it much easier for personnel to travel to the 
     adjacent MSAs in which acute care hospitals receive higher 
     Medicare Wage Index payments and can, therefore, afford to 
     pay higher salaries and wages. [Considering the relative 
     scarcity and high demand for a highly skilled work force, 
     such as nurses, pharmacists, imaging technologists, etc., the 
     out-migration to the adjacent MSAs is further exacerbated in 
     that NEPA hospitals are forced to pay higher salary and wage 
     rates, which are not fully compensated by the Medicare 
     reimbursements. As just one example, the starting salary for 
     Registered Nurses has increased by more than 18% over the 
     past three years.]
       The lower Medicare reimbursements ultimately impact 
     hospital capital expenditures since the facilities are unable 
     to generate appropriate capital reserves to acquire advanced 
     medical technology and upgrade physical plants. This 
     inability to invest in buildings and equipment has the 
     additional, unfortunate consequence of causing area residents 
     to seek care in adjacent MSAs, often at great expense and 
     logistical difficulties to patients and their families.
       We certainly hope that the Federal Government will devise a 
     means to address the inadequate wage component of Medicare 
     reimbursements in the long term; however, we

[[Page 6844]]

     urge the extension of the Section 508 adjustments beyond the 
     end of September 2007. Thank you for your continued effort 
     and support regarding this important issue.
           Sincerely,
                                               Harold E. Anderson,
     President & CEO.
                                  ____



                                          Bloomsburg Hospital,

                                Bloomsburg, PA, February 26, 2007.
       The Bloomsburg Hospital (the ``Hospital'') is a 52-bed 
     acute care and 20-bed psychiatric care hospital located in 
     Columbia County, Pennsylvania. The Hospital provides 
     healthcare services primarily to patients in Columbia and 
     Montour counties and surrounding communities. The Hospital 
     registers approximately 85,000 patients annually for medical 
     care.
       The geographic region served by the Hospital has had an 
     average population over 65 years of age of approximately 16% 
     since 1996, as reported by the Pennsylvania State Department 
     of Health. This population is slightly higher than the 
     statewide average of 15.2%. The over 65 population is treated 
     by the Hospital primarily as Medicare beneficiaries.
       Currently, Medicare beneficiaries account for 25% of total 
     Hospital volumes and 31% of total payments for services. The 
     Medicare population is the single largest payor population of 
     the Hospital.
       The significant volume of services provided to Medicare 
     beneficiaries renders the Hospital largely dependent upon 
     Medicare reimbursement to cover the cost of direct patient 
     care as well as to defray the ever increasing costs of 
     utilities, professional liability, information technology, 
     facility upgrades and other technology expenditures. All of 
     these expenditures are necessary to continue to provide 
     adequate patient care in a rapidly advancing industry.
       During fiscal year ended June 30, 2006, the Bloomsburg 
     Hospital received approximately $663,000 in additional 
     payments from the Medicare program as a result of the 
     temporary reclassification of Wilkes-Barre/Scranton Area 
     hospitals MSA. Should the reclassification not be extended or 
     made permanent, the Hospital would lose this reimbursement.
       It is important to note that the largest competitor to our 
     hospital is located only 12 miles from our facility. That 
     hospital is located in Montour County and is therefore 
     included in the Harrisburg MSA (whose reimbursement rates 
     from the Medicare program are consistent with the current 
     rates paid to our hospital since the reclassification). The 
     temporary reclassification of our hospital allowed us to 
     compensate our clinical employees commensurate with our 
     competitor.
       Without the additional reimbursement provided by this 
     reclassification, our hospital would not be able to attract 
     and retain qualified clinical staff, forcing staff and our 
     patients to travel to the next closest facility for work and 
     care. While this is easily commutable for clinical workers 
     seeking higher wages for comparable work, the same commute is 
     not as manageable for elderly or sickly patients.
       Without adequate qualified staff to provide medical care at 
     our community hospital, we will be forcing patients to travel 
     further for their care.
           Sincerely,
                                                 Regis P. Cabonor,
     President and CEO.
                                  ____



                                        Mercy Health Partners,

                                                February 26, 2007.
     Hon. Arlen Specter,
     U.S. Senate, Hart Senate Office Building, Washington, DC.
       Dear Senator Specter: Thank you for recognizing the severe 
     economic situation that healthcare providers face in 
     Northeastern Pennsylvania and for your tireless efforts in 
     securing the original 508 reclassification and our most 
     current six month extension. I also wanted to offer high 
     praise to your staff, including John Myers and Andy Wallace, 
     for their willingness to work on behalf of the region's 
     hospitals and the thousands of patients they serve.
       During last week's meeting, you requested specific 
     information about the impact of our reclass. Mercy Hospital 
     in Scranton would lose approximately $6.2 million in the next 
     fiscal year without the ability to maintain our reclass to 
     the Allentown-Bethlehem-Easton, PA-NJ Core-Based Statistical 
     Area (CBSA). In short, the reclass funding has moved us from 
     losing money to breaking even. Prior to the original 508 
     reclass, we experienced negative operating margins every year 
     from fiscal year 2000 through 2003. Since 2004, our average 
     operating margin is 0.42%. The loss 508 funding would result 
     in an overall CY2006 operating loss of -5.14 percent.
       The 508 reclass funding has enhanced our ability to compete 
     with our adjacent CBSA's for registered nurses, technicians, 
     and other medical professionals. Over a three year span we 
     have reduced our registered nurse vacancy rate from 12.2% to 
     4.5%. Significantly, we have cut our spending for contract 
     agency nurses in half. We believe that reducing those 
     expenses has contributed toward improved care management and 
     quality for our patients.
       We are very proud that since the 508 reclass we have 
     consistently placed in the top 10 percent of hospitals 
     nationwide for the twenty-one quality measures set by the 
     United States Department of Health and Human Services. We 
     performed at the 96th percentile on the nationally recognized 
     HHS quality measures in 2006.
       In addition, we are one of 27 hospitals nationally 
     recognized by Solucient as a top 100 hospitals for 
     cardiovascular care in the past three consecutive years. 
     Furthermore, Mercy is one of 3 Pennsylvania hospitals 
     certified in both cardiovascular and pulmonary rehabilitation 
     by the American Association of Cardiovascular and Pulmonary 
     Rehabilitation.
       We believe that you agree that our mission demands 
     delivering world-class care to our community. Elimination of 
     the 508 funding would force us to consider staff and service 
     reductions to cope with the substantial loss of revenue.
       On behalf of our patients, our community, our employees and 
     our physicians, Mercy implores the honorable members of the 
     United States Congress to move towards fair and permanent 
     reforms of the Medicare wage index and extend the 508 
     reclassification until these reforms take effect. Please 
     contact me at (570) 348-7012 if I can provide further 
     information or be of service.
           Sincerely,
                                                     James E. May,
     President and Chief Executive Officer.
                                  ____

                                                February 26, 2007.
     Senator Arlen Specter,
     Hart Senate Office Building,
     Washington, DC.
       Dear Senator Specter: Thank you and your staff, including 
     John Myers and Andy Wallace, for your continued support of 
     the Section 508 Wage Index reclassification for the hospitals 
     in Northeastern Pennsylvania. This issue is paramount to the 
     survival of Marian Community Hospital and the Maxis Health 
     System.
       Marian Community Hospital is a 104-bed acute care hospital 
     located in Carbondale, Lackawanna County, Pennsylvania. The 
     Hospital is the largest component of the Maxis Health System. 
     With its 470 employees, Marian Community is the largest 
     employer in the Greater Carbondale Area, contributing 
     $15,000,000 annually to the local economy. Our hospital 
     serves a predominantly Medicare and Medical Assistance 
     population who would have considerable difficulty accessing 
     healthcare if this hospital were not here. Because of 
     Carbondale's proximity to Scranton (we are located 20 miles 
     north of Scranton) and its three large hospitals, we 
     continually encountered significant difficulty recruiting key 
     health care professionals such as nurses and technologists. 
     Because of our relatively small size, and location, we also 
     struggle to attract physicians to practice here.
       The Section 508 reclass has added approximately $1 million 
     to Marian Community Hospital's annual Medicare reimbursement. 
     These funds have allowed us to compete with the other larger 
     hospitals to attract critical staff because we are able to 
     offer more competitive salaries than would be possible absent 
     the 508 reclassification. In addition, we have been able to 
     recruit much needed physicians to the area. While $1 million 
     does not appear to be a significant amount of money to many 
     hospitals, it represents 3% of our annual net revenue from 
     all sources and 8% of our total annual Medicare payments.
       In 2006, Marian Community Hospital initiated an aggressive 
     restructuring plan to return the organization to 
     profitability. Although this is a difficult task, we are 
     making progress. If we lose the funds provided through the 
     Section 508 reclassification, it would be necessary for the 
     hospital to take drastic steps to remain financially viable, 
     such as cutting services or significantly reducing our staff. 
     The results of losing the 508 classification would have a 
     detrimental impact on the patients we serve and the community 
     in which we operate.
       Your efforts to extend the Section 508 reclassification and 
     to find an equitable solution to the wage index issue are 
     greatly appreciated.
           Sincerely,

                                       Mary Theresa Vautrinot,

                            President and Chief Executive Officer,
     Maxis Health System.
                                  ____

                                          Community Medical Center


                                            Healthcare System,

                                  Scranton, PA, February 23, 2007.
     Hon. Arlen Specter,
     U.S. Senate,
     Washington, DC.
       Dear Senator Specter: I am writing to you today relative to 
     the Wage Index. I strongly support your initiative to 
     maintain the Medicare Wage Index reclassification of the 
     hospitals located in Lackawanna County to the Newburgh, NY-PA 
     MSA for the purposes of calculating reimbursement. As Interim 
     President and CEO of Community Medical Center Healthcare 
     System, this critical issue still remains at the forefront of 
     Healthcare in Northeastern Pennsylvania, and I encourage you 
     to continue your efforts of working to find a permanent 
     solution.
       The dramatic differential in Medicare payments between our 
     MSA and the surrounding

[[Page 6845]]

     MSA's will continue to have a negative impact on our 
     healthcare infrastructure if this temporary fix is not 
     extended. The financial impact for CMC is projected to be 
     $5.6 million for Fiscal Year 2008. As you are aware, the 
     nursing shortage has intensified and when combined with other 
     skilled labor shortages, has resulted in a highly competitive 
     environment for these skilled caregivers. As a result, it 
     remains difficult to recruit and retain healthcare 
     professionals.
       Since healthcare represents a major capital asset, the 
     failure to maintain the temporary fix would have a 
     significantly adverse effect on every member of our 
     community. Recognizing this potential crisis and continuing 
     the wage index would go a long way toward assuring that 
     northeastern Pennsylvania will have healthcare resources 
     available.
       Thank you for your consideration. I ask for your continuing 
     support and attention to this matter.
           Sincerely,
                                                     John Nilsson,
     Interim President and CEO.
                                  ____



                                  memo

     Date: February 27, 2007.
     To: Senator Arlen Specter.
     From: John Wiercinski and Lissa Bryan-Smith.
     Re Medicare Wage Index/Section 508.

       Sen. Specter--Thank you very much for your recent visit to 
     Northeastern Pennsylvania and your continued interest in and 
     support of the Medicare Wage Index/Section 508 legislation.
       The continuation of this important legislation--and a 
     permanent fix to the Medicare Wage Index for Northeastern 
     Pennsylvania hospitals--is imperative not only to Geisinger 
     South Wilkes-Barre Hospital and Geisinger Wyoming Valley 
     Medical Center, but also to the people we serve.
       The positive financial impact to both Geisinger hospitals 
     in the Wilkes-Barre area is approximately $8 million. Above 
     all, these dollars allow Geisinger to continue to invest in 
     our workforce so we can effectively recruit and retain the 
     best and the brightest healthcare professionals and keep them 
     here in our community caring for patients. Due in large part 
     to the Section 508 legislation, nurse vacancy rates have 
     decreased significantly at both hospitals.
       The Section 508 funding also helps to ensure that our 
     employees at Geisinger South Wilkes-Barre and Geisinger 
     Wyoming Valley are able to utilize the latest technological 
     advances; for example, 64 Slice CT Scanning, Stereotactic 
     Linear Accelerators and Computer Assisted Surgical Equipment.
       As major employers, hospitals have a significant impact on 
     the local economy. Studies have shown that every dollar of 
     expenditures by hospitals results in approximately two 
     dollars of additional spending to local businesses. This 
     positive economic impact is important for everyone in our 
     area.
       Thank you, again, Senator Specter, for your support.
                                  ____

         Greater Hazleton Health Alliance, Hazleton General 
           Hospital, Hazleton-Saint Joseph Medical Center.
       In March 2004, the Greater Hazleton Health Alliance (GHHA) 
     and its affiliated hospitals (Hazleton General Hospital and 
     Hazleton-Saint Joseph Medical Center) were notified of their 
     three-year temporary reclassification into the Lancaster MSA. 
     This reclassification could not have come at a better time, 
     bringing in approximately $3 million per year between April 
     2004 and March 2007, and having a major impact on health care 
     in Hazleton, Pennsylvania, and the surrounding communities. 
     Without this reclassification, GHHA hospitals were headed to 
     possible bankruptcy or sale.
       The monies received through the Section 508 
     reclassification played a major part in the successful 
     turnaround of our health care system, assuring our community 
     that quality health care services will be available to meet 
     their health needs.
       As background, in 1996, Hazleton's two hospitals, Hazleton 
     General Hospital (HGH) and Hazleton-Saint Joseph Medical 
     Center (HSJ), reached a management agreement that formed the 
     Greater Hazleton Health Alliance, an effort to expand the 
     offerings of area health care as well as to carefully steward 
     community healthcare resources.
       Some initial savings were created through the formation of 
     the Alliance and local decision-making became far more 
     coordinated. However, with downward pressure on reimbursement 
     and intensified competitive pressure locally, as well as from 
     neighboring regions, GHHA began facing significant strain in 
     2003. As such:
       Financial performance of both hospitals had deteriorated 
     significantly eroding cash reserves. On a combined basis, 
     operating losses were approximately $3.3 million in 2002; 
     $6.2 million in 2003; and $2.3 million in 2004.
       Important capital investments in facilities, equipment and 
     information technology had not been made in nearly a decade.
       Physician relationships were badly suffering. A loss of 
     confidence and trust in leadership, as well as a growing 
     perception that the quality of hospital care was 
     deteriorating, were causing the local medical community to 
     begin withdrawing public support and patient referrals.
       Negative public perceptions of GHHA were increasing in 
     Hazleton and the surrounding region.
       Staff were accepting positions in surrounding communities, 
     in other MSAs with higher wage indices. HGH is only two miles 
     away from an MSA with significantly higher wage indices.
       Employee morale was at an all-time low and union 
     negotiations had become contentious.
       In fall 2003, the Board of GHHA made a tough decision to 
     seek the help of outside experts to assist with stabilization 
     and turnaround and to advise the organization on long-term 
     strategic positioning. A three-year Financial Recovery and 
     Turnaround Plan was developed. Had it not been for the 
     additional monies received as a result of the MSA 
     reclassification, GHHA may not have been able to successfully 
     effect a financial turnaround.
       Below are just some of the GHHA's accomplishments since 
     2004.
       Implementation of a new business model that resulted in a 
     financial turnaround allowing us to be profitable for the 
     last two years.
       Adjustments of pay scales to market rates making GHHA 
     hospitals competitive in recruitment and retention of highly 
     qualified staff with surrounding communities in other MSAs.
       Made strategic capital investments in equipment and 
     physical plant approximating $18,000,000 including: expansion 
     of HGH's physical plant to include an annex building to house 
     non-clinical services allowing for expansion of the 
     hospital's first floor; renovation of most of the first floor 
     including expansion of the surgical suite/recovery unit and 
     doubling the size of the emergency department; development of 
     a brand new short procedure unit and a new step-down unit; 
     renovation to the endoscopy unit and patient floors.
       Investment in new state-of-the-art equipment and 
     technology. A $3-$4 million project is currently underway to 
     replace our entire information system, preparing us for the 
     electronic medical record.
       Consolidation of inpatient beds and Emergency Services at 
     HGH to reduce duplicative operating and capital costs.
       Surrender of the HSJ acute care license.
       Commitment to deliver outstanding customer service and 
     expansion of our quality improvement program. Patient safety 
     and clinical care initiatives were implemented, a high-
     quality professional radiology group was retained, and a 
     relationship was formed with Lehigh Valley Medical Center, a 
     tertiary center in Allentown, Pennsylvania, to staff our 
     Emergency Department with quality, emergency credentialed 
     physicians.
       Increased volumes by enhancing quality and expanding 
     community outreach, initiating a staffing productivity 
     program, and holding the line on expenses.
       The hard work and collaboration of the GHHA management team 
     brought about a renewed energy and positive momentum that 
     continue today. The financial picture of the organization has 
     changed dramatically, thanks in large part to the temporary 
     reclassification to the Lancaster MSA. However, should GHHA 
     have to revert back to the Wilkes-Barre/Scranton MSA as is 
     now set for October 2007, the resulting financial loss of $3 
     million per year would, without question, hamper our ability 
     to recruit and retain quality health professionals and 
     continue in our quality improvement and turnaround processes. 
     The real losers would be the communities we serve.
                                                 James D. Edwards,
     President/CEO.
                                  ____

                                                    Wyoming Valley


                                           Health Care System,

                                                February 28, 2007.
     Hon. Arlen Specter,
     U.S. Senate,
     Washington, DC.
       Dear Senator Specter: Your unrelenting attention to the 
     Medicare Wage index issue confronting northeastern 
     Pennsylvania is deeply appreciated by the Wyoming Valley 
     Healthcare System, its 3200 associates and the 
     disproportionately blue collar Medicare population we serve. 
     Due in great measure to your efforts, Section 508 of the 
     Medicare D legislation temporarily re-classified our MSA to 
     the Lehigh Valley. Prior to that event, the discrepancy 
     between our reimbursement by Medicare and that of surrounding 
     MSA's was having disastrous effects. Nurses, technologists of 
     all sorts, nurse anesthetists and pharmacists were abandoning 
     northeastern Pennsylvania in droves. Vacancies in these areas 
     were running 14% to 20% and this created a serious threat to 
     quality of care and access. The negative impact on the 
     regional economy was another serious matter.
       After the temporary repair, changes were dramatic. All the 
     institutions spent the money as intended--90% to improve 
     employee wages and benefits and 10% for capital equipment 
     they need to do their work with quality and efficiency. 
     Vacancies are now down to 1-2%. Morale is greatly improved 
     while quality of care and access are preserved.

[[Page 6846]]

       We are now faced with a deadline of September 30, 2007 to 
     achieve either another extension or a permanent repair. 
     Failure to do so will mean a loss of $8.5 million to WVHCS, a 
     serious decrease in our ability sustain access, a threat to 
     quality of care, a serious departure from our 135 year 
     history of bringing the best in personnel and technology to 
     bear on the health of citizens in our region, and all the 
     associated adverse effects on our economy.
       Thank you, Senator, for all your past and current efforts. 
     If there is anything we can do to enhance your prospects of 
     success in this matter, please do not hesitate to communicate 
     that to us.
           Sincerely and respectfully,
                                                  William R. Host,
     President and CEO.
                                  ____



                                      Tyler Memorial Hospital,

                               Tunkhannock, PA, February 28, 2007.
     To: Senator Arlen Specter.
     Re Section 508.
       Dear Senator: Thank you for providing Tyler Memorial 
     Hospital the opportunity to comment on losing Section 508 
     reimbursement.
       Tyler is a rural hospital that necessitates every Medicare 
     reimbursement to fulfill its community mission. The Hospital 
     consists largely of a Medicare and Medicaid population 
     supporting the infrastructure. The hospital would lose 
     approximately $400,000 on a hospital budget of nearly 
     $26,000,000. If the Medicare Section 508 was removed or 
     reduced, the hospital would be forced to eliminate or reduce 
     clinical services, forego salary increases for a period, or 
     some combination thereof to create a solution.
       Please note that Tyler is 28 miles from Scranton and 
     Wilkes-Barre with less than ideal driving arrangements. 
     Elderly patients don't like to travel great distances for 
     routine care and they may have to if this comes to pass.
           Sincerely,
                                                   Raoul M. Walsh,
     President/CEO.
                                  ____



                                              Allied Services,

                             Clarks Summit, PA, February 26, 2007.
     Senator Arlen Specter,
     Hart Building,
     Washington, DC.
       Dear Senator Specter: per your request, the following is 
     the effect on Allied Services who did not get its wage index 
     adjusted. I thought we would be a good resource for what 
     could have happened to all the acute care hospitals if they 
     did not get the wage index adjustment. Perhaps our data will 
     be useful in demonstrating how important the adjustment is to 
     our health care region.
       These numbers are the totals for the approximate 3\1/2\ 
     year period.
       Additional Wage Index Revenue Not Received--$16 million.
       Over and beyond expenses normally needed for recruitment 
     and filling vacancies: Contract Labor--$3.5 million; 
     Recruitment--$1 million; Advertising-- $1.5 million; Sign-on 
     Bonus--$1 million; Overtime--$1.5 million.
       Total additional expenses--$8.5 million.
       Total effect of not getting wage index adjustment on Allied 
     was $24.5 million.
       The wage index affects all employees but this is our 
     nursing staff data. Allied Services had 23 position openings 
     3\1/2\ years ago. Today we have 17 openings but would have 30 
     if we did not recruit 13 nurses from the Republic of the 
     Philippines.
       I hope this data helps to support the need for the wage 
     index adjustment.
           Sincerely,
                                                   James L. Brady,
     President.
                                  ____

         Service Employees International Union, Pennsylvania's 
           Health Care Union,
                                                    March 2, 2007.
     Senator Arlen Specter,
     U.S. Senate,
     Washington, DC.
       Dear Senator Specter: Thank you for your willingness to 
     work on behalf of the region's hospitals, hospital employees 
     and the thousands of area patients. We appreciate your 
     efforts in securing the original 508 reclassification and our 
     most current six-month extension.
       In our region and across the country, at a time when more 
     patients are struggling to access the health care they need, 
     nurses--the central providers of that care--are leaving the 
     bedside in large numbers as a result of poor working 
     conditions and low wages. However, a recent study published 
     by the Institute for Women's Policy Research, ``Solving the 
     Nursing Shortage through Higher Wages'' found that increasing 
     pay for nurses is a direct way to draw both currently 
     qualified and aspiring nurses to hospital employment. 
     Hospitals that offer higher wages are able to attract more 
     nurses, leading to more adequate staffing and improved 
     patient care.
       As you know, our area hospitals operate with restricted 
     budgets, low operating margin and financial instability. Our 
     hospitals in the Wilkes-Barre/Scranton area are heavily 
     dependent on Medicare. Yet, we have found that the temporary 
     reclassification, access to more appropriate Medicare 
     reimbursements, has had direct impact on region's health care 
     workforce. Area nurses and hospital workers have shared in 
     the benefits of increased Medicare funding. For example, in 
     their most recent contract settled in late 2005, SEIU 1199P 
     RNs at Geisinger South Wilkes-Barre (formerly Mercy Hospital 
     Wilkes-Barre) increased wages an average of 13% in the first 
     year of the contract and 31% by 2010. SElU 1199P RNs at 
     Geisinger Wyoming Valley Medical Center in Wilkes-Barre 
     negotiated comparable wage rates in their negotiations in 
     January 2006. We directly attribute these advances to two 
     factors: the improve Medicare reimbursement and high union 
     density in the Wilkes-Barre market. Area nurses used their 
     collective bargaining strength to hold hospitals accountable 
     to investing the additional reimbursements into increasing 
     nurse wages. These increased wages not only significantly 
     enhancing nurse retention and recruitment but also improve 
     the quality of care at area hospitals.
       While section 508 was tremendously helpful to our area 
     hospitals, currently this assistance is temporary. Section 
     508 reclassified our hospitals for only three years. Without 
     congressional action to extend section 508, these 
     reclassifications will expire in March 2007. A permanent 
     solution is needed in order to maintain a stable, well-
     trained health care workforce in area hospitals and guarantee 
     continued access to quality health care services in Wilkes 
     Barre/Scranton region. Retaining and strengthening the ranks 
     of a qualified, dedicated professional health care workforce 
     is essential to strengthening our region's health care 
     system.
       On behalf of our members, our families and the patients we 
     serve, SEIU District 1199P urges the United States Congress 
     to move toward fair and permanent reforms of the Medicare 
     wage index and extend the 508 reclassification until these 
     reforms take effect. Please contact me at (717) 238-3030, 
     ext. 1020 if I can provide further information or be of 
     service.
           Sincerely,
                                                       Neal Bisno,
     Secretary Treasurer.
                                  ____

                                                      BlueCross of


                                    Northeastern Pennsylvania,

                              Wilkes-Barre, PA, February 26, 2007.
       Hon. Arlen Specter: The following is submitted on behalf of 
     Blue Cross of Northeastern Pennsylvania (BCNEPA) in support 
     of our hospital partners throughout the northeast and north 
     central regions as we collectively strive to address the 
     impacts of Medicare Wage Index funding shortfalls.
       Across Pennsylvania, hospitals have been struggling to 
     achieve positive results for many years. Although we have 
     seen some positive changes in our region in recent years in 
     terms of financial results, the situation remains critical as 
     evidenced by the following:
       Only 9 of the 22 hospitals in our region had a positive 3 
     Year Average Total Margin.
       Of the 9, only 4 hospitals had a 3 Year Average Total 
     Margin of 4 percent or greater, which is commonly accepted as 
     an industry benchmark for acceptable performance.
       In Lackawanna and Luzerne Counties, only 1 hospital had a 
     positive 3 Year Average Total Margin and that margin was less 
     than 4 percent.
       Hospitals in our region are heavily dependent on Medicare. 
     In aggregate, approximately 44 percent of our regional 
     hospitals' revenue comes from Medicare. In Lackawanna and 
     Luzerne Counties, 48 percent of the hospitals' revenue comes 
     from Medicare. The hospitals' next closest payer to Medicare 
     is the Blues at 23 percent. As the second largest payer in 
     our region, BCNEPA--and unfortunately our ratepayers--will 
     continue to be negatively affected as Medicare reimbursement 
     falls short.
       The overall financial struggle for hospitals in our region, 
     coupled with the high rate of Medicare dependency, make the 
     current Medicare Wage Index situation a critical one for our 
     facilities. Due to their current Medicare Wage Index 
     classification, hospitals in the northeast and north central 
     regions receive disproportionately lower reimbursements when 
     compared to similar hospitals that compete with them for 
     services and staff. This reimbursement imbalance drains 
     trained clinical staff, primarily nurses, from the local 
     delivery systems. Our system continues to suffer and decline 
     as medical professionals move to hospitals in neighboring 
     locales because higher Medicare Wage Indexes allow these 
     regions to pay higher salaries.
       Our region has been fortunate, through the leadership of 
     Senator Arlen Specter and others, to have benefited from 
     temporary Section 508 funding adjustments over the past 
     several years. These adjustments have been a temporary yet 
     critical funding source for our area hospitals. The loss of 
     these funds will represent at least a $35 million financial 
     loss for area facilities, a loss that cannot be absorbed by 
     commercial insurers and their customers.
       We are therefore asking for consideration of a more 
     permanent solution to the current calculation of Medicare 
     Wage Index reimbursement for facilities in the northeast and 
     north central regions of Pennsylvania.
                                                 Denise S. Cesare,
                                                President and CEO.

[[Page 6847]]

     
                                  ____
            [From the Scranton Times Tribune, Feb. 24, 2007]

                    Resolve Funding for Quality Care

       Hospitals in Northeastern Pennsylvania face the same 
     economic pressures as hospitals everywhere else--and then 
     some. Here, hospitals also face a vicious cycle involving 
     Medicare funding that threatens the financial well-being of 
     regional hospitals and, therefore, access to quality health 
     care for hundreds of thousands of regional residents.
       Wage rates at regional hospitals are lower than those for 
     larger metropolitan areas, resulting in lower Medicare 
     reimbursements, resulting in the inability of many hospitals 
     to significantly increase wages, resulting in lower 
     reimbursements . . . and on it goes. The low reimbursement 
     issue is particularly difficult for hospitals in this region 
     because the relatively high average age here means that 
     regional hospitals have a higher percentage of Medicare 
     patients than do hospitals in other parts of the country. 
     Thus, they treat more Medicare patients for less money.
       Since 2004, the hospitals have done somewhat better because 
     of a temporary fix authorized by Congress, under which 
     indexes from nearby metropolitan areas have been applied to 
     the regional hospitals. That measure is due to expire in June 
     and, without an extension, 13 regional hospitals will return 
     to the standard reimbursement formula and lose $35 million a 
     year.
       According to several local hospital administrators who met 
     with Sen. Arlen Specter on the issue this week, they have 
     been able to reduce nursing shortages through better pay and 
     otherwise shore up their operations since Congress' action in 
     2004.
       Nationwide, about 80 hospitals are in the same position as 
     those in Northeastern Pennsylvania. Mr. Specter and Sen. Bob 
     Casey, along with Reps. Paul Kanjorski and Chris Carney, 
     should work with their colleagues from the other regions with 
     unrealistic reimbursement rates, in order to permanently set 
     fair rates that ensure access to quality care.

                          ____________________