Some 300 jobs will be eliminated at Springfield, Massachusetts-based Baystate Health, a decision the health system blamed in part of CMS's decision not to adjust one hospital’s mistakes that will cost facilities across the state millions in reduced Medicare reimbursements.

Baystate’s president and CEO, Mark A. Keroack, MD, MPH, said Aug. 12 the system is facing a $75 million budget deficit for the next fiscal year and bridging the entire budget gap wouldn’t be possible without a reduction in its workforce of approximately 12,500 employees.

“We expect that these reductions will affect management as well as frontline team members, prioritizing non-clinical areas for reductions, and most importantly preserving the quality and safety of the care we provide,” Keroack said. “We expect the majority of these reductions will take place in Springfield-based operations, but we anticipate some impact throughout many parts of Baystate Health. As we know more specifics about impact on teams and individuals, we will share them.”

Keroack said $23 million of the deficit is related to the change in Medicare reimbursement. The problem was caused by Partners Healthcare-run Nantucket Cottage Hospital, the state’s only rural hospital, submitting incorrect data to CMS and only correcting it past an agency deadline. Since the hospital sets the floor for reimbursement under a quirk in Medicare rules, the mistake will lead to $84 million in reduced payments for 2017.

CMS recently rejected a request to consider the corrected data. 

The layoffs are expected to save Baystate about $20 million. After $40 million in cost-saving “strategies,” a $15 million budget gap will remain, which Keroack promised to address while the system does “all we can to preserve jobs.”

The Massachusetts Nurses Association (MNA) told the Boston Globe it’s worried about the effect the layoffs could have on care at Baystate facilities.

“A decision to eliminate any front-line staff may jeopardize safe patient care,” said MNA spokesman, Joe Markman. “It is vital for those assisting and providing patient care who live in the communities served by Baystate to have a strong voice in any contemplated changes.”

Boston Business Journal reported the health system’s most recent financial statements didn’t show signs of a budget gap. Its operating income for the first half of fiscal year 2016 was $33.7 million, an increase of more than $5 million compared to the same time period in the prior fiscal year. 

It's possible other hospitals in the state could follow Baystate in cutting staff. In May, Massachusetts Council of Community Hospitals had estimated more than 2,000 hospital jobs could be eliminated unless CMS reversed course on the reduced Medicare reimbursements.