Mount Nittany Now Projects $15.1M Annual Loss From Cancellation of Sole Community Hospital Status

Mount Nittany Medical Center stands to lose about $6.2 million more than initially projected from the revocation of its sole community hospital status, according to a new court filing in the hospital’s lawsuit against the federal government.

Loss of the designation will cost the College Township hospital at least $15.1 million a year in Medicare reimbursements if it is not restored, Mount Nittany attorneys wrote in filings accompanying a Sept. 22 motion requesting a summary judgment in favor of the medical center.

The loss of funds would put at risk Mount Nittany’s plans to expand services, recruit and hire new physicians and nurses, and improve facilities and equipment, Kurt Kissinger, chief strategy and system development officer, said in a sworn declaration.

“The losses in Medicare reimbursement will harm MNMC’s operations and its ability to serve its patients and the community, including Medicare beneficiaries,” Kissinger said, adding that, “[d]ue to the loss of its SCH designation and the resulting financial and operational harm, MNMC is likely to lose patients or patient encounters.”

Sole community hospital status provides higher rates of Medicare reimbursements and other financial protections because they are in geographically isolated areas with limited other options.

Mount Nittany held the designation from 2017 until April, when it was notified by the Center for Medicare and Medicaid Services that it was cancelled. The medical center filed a lawsuit in June seeking to have it restored, contending that the agency wrongly combined data to determine that Penn Highlands State College, which opened in 2024 as a campus of Penn Highlands Huntingdon, is a “like hospital” in the same geographic area.

In its June filings, Mount Nittany projected at least $8.9 million in annual losses from the cancellation. But those figures only accounted for traditional Medicare inpatient and outpatient reimbursements.

According to the new filing, the hospital determined it also would incur at least $6.2 million more in lost Medicare Advantage reimbursements, a figure that is likely to increase over time with inflation and other factors.

Plans to expand medical oncology and infusion, cardiovascular, musculoskeletal, behavioral health and rehabilitation services may be delayed, cut back or not pursued because of the loss, Kissinger said.

The hospital would be likely to forgo hiring new physicians, nurses and other healthcare professionals and workers at the same levels as would be the case if MNMC’s SCH designation had never been terminated,” and the loss would also limit the extent of a plan to improve its facilities and replace or acquire new medical equipment, according to the filing.

Mount Nittany held the sole community hospital designation because it is 25 to 35 miles from the nearest “like hospital” and accounted for at least 75% of the total inpatient admissions of individuals residing in its service area. CMS canceled the designation after determining that Penn Highlands State College, which opened in 2024 as a campus of Penn Highlands Huntingdon, is a “like hospital” in the same geographic area.

Penn Highlands State College advertises 18 inpatient beds, but the lawsuit states that state health department records indicate that as few as six are set up and staffed. Because it has considerably fewer beds, the lawsuit argues, Penn Highlands State College could not total the 8% or more of Mount Nittany’s total inpatient acute care days needed to be considered a like hospital.

But CMS combined Penn Highlands State College’s inpatient days with those of the 71-bed Penn Highlands Huntingdon, which is about 33 miles and hour drive away, to calculate a total of 23.1% of Mount Nittany’s inpatient days.

An analysis by accounting firm Baker Tilly concluded that the inpatient days for the Penn Highlands State College campus could only be 5.41%, well below the 8% threshold.

A 260-bed facility, Mount Nittany offers more than 60 medical specialties, 24 ICU beds and other services, most of which it says are not offered at Penn Highlands State College.

The government has until Oct. 26 to respond to the motion for summary judgment, with further filings by both parties scheduled for November and December.

U.S. District Judge Matthew Brann has not set a date for ruling on the motion.