GMH May Have Given Discounts to Insurance Providers by Mistake

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Between Fiscal Years 2011 to 2015, GMH may have misapplied the 8 percent discount to insurance providers past the 30 day window.

Guam – Early reports indicate that the Guam Memorial Hospital may have been giving discounts to insurance carriers by mistake for years, resulting in a potential $3 million loss.

 

 

But the hospital’s advisory team says they are working on ways to recover the money.

The Governor’s Office recently announced that they will be terminating the 8 percent discount that is being applied to insurance providers who pay within 30 days at the Guam Memorial Hospital. We sat down with Hospital Management Advisory Team member Wil Castro.

 

“The local law already calls for payment in full for bills that are clean or are undisputed within a 45 day window. So HMAT recommended to Governor Calvo that he suspend the 8 percent discount afforded to insurance carriers,” explains Castro.

The implications, says Castro, will be an additional $150,000 to $250,000 a year in revenue for GMH. The 8 percent discount was introduced in 2006. At the time, Castro says, it was done to encourage insurance providers to make prompt payments.

PNC: “From people who might have been following this and hearing about the $20 million to $25 million debt that they’re in, hearing about a $150,000 to $250,000 yearly savings might seem like it’s insignificant to them.”

“It might, but at this point in time the governor’s been consistent that every penny counts,” says Castro.

But it also turns out that the 8 percent discount may have been mistakenly applied. Castro says that for five fiscal years, early reports indicate that about $3 million in discounts may have been given to insurance carriers after the 30 day period.

“Based on information that HMAT has received from the hospital, between fiscal year 2011 to fiscal year 2015, there have been some misapplications of the 8 percent and so that soft figure that I’ve provided you–I think it’s okay, it’s sufficient to say that the implications of suspending and reviewing the 8 percent policy will result in millions being recovered by the hospital,” Castro notes. 

Castro emphasizes that the $3 million amount of misapplied discounts is only a preliminary estimate and GMH is now working with each insurance provider to compare billing statements to determine the exact amount GMH may be able to recover.

In addition to the termination of the 8 percent discount, Castro says GMH will also be upgrading their telephone system. If they purchase a new system outright, GMH will have to pay about $200,000 up front, but instead of paying $300,000 a year with the current system, they will only pay $30,000 a year for maintenance.

If they lease the telephone conversion, it will only cost $10,000 a month instead of $25,000 a month.