Medicare proposal could ‘decimate’ rural health care

By Correne Martin

A proposal in a report released Aug. 15 would have staggering implications for rural health care across the country and negatively impact almost every rural hospital and community in Wisconsin, according to the Wisconsin Hospital Association-Rural Wisconsin Health Cooperative (WHA-RWHC).

“What a federal agency is proposing is nothing short of astounding,” said Wisconsin Hospital Association President Steve Brenton, referring to a report released by the federal Department of Health and Human Services’ Office of Inspector General (OIG). “These recommendations would decimate 20 years of health care stability and access to care for Medicare beneficiaries in rural communities across America.”

In its report, the OIG recommends removing a Medicare payment status known as “Critical Access Hospital” (CAH) for hospitals that do not meet certain distance requirements. It also recommends reducing the rate of reimbursement from 101 percent to 100 percent of reasonable costs in the 2014 fiscal year budget. These actions are estimated to save more than $2 billion over 10 years, with some $690 million of that coming from eliminating the CAH designation for hospitals that are close to others.

The WHA-RWHC says the recommendation disregards the fact that each of the impacted hospitals was deemed a necessary provider by their respective states. Nationally, the OIG recommendation would rescind this status for roughly two-thirds of the nation’s CAHs.

“This proposal lacks understanding of life in rural America. Twenty percent of Americans live in rural communities, but only 9 percent of physicians practice in a rural community,” said Bill Sexton, chief executive officer at Prairie du Chien Memorial Hospital (PDCMH). “CAHs take care of 2.3 million Medicare beneficiaries at less cost than their urban counterparts. Half the hospitals in Wisconsin are CAHs and 53 of the 58 CAHs could be affected by this.”

Medicare’s CAH status was enacted under the Balanced Budget Act of 1997, as Congress sought to address the closure of hundreds of rural hospitals across the country, which, due to their small size and care for disproportionately older, sicker and poorer patients, could not financially survive under Medicare’s traditional payment system. The CAH designation provided an alternative reimbursement structure for these very small, rural hospitals in order to keep their doors open.

Since that time, the CAH program has operated efficiently, represents less than 5 percent of Medicare’s total hospital budget and has provided more than 60 million rural Medicare beneficiaries in the U.S. with access to health care that is close to home.

According to Sexton, closing these CAHs would also impact local economies as a result of the loss of 209,808 jobs and over $8.7 billion in wages, salaries and benefits to the communities they serve.

“The OIG reported a savings, but the shift to other hospitals (not including ambulance transfer expense) would not only cost the government an estimated additional $993 million, but it would take that money out of the communities in which it was earned forcing patients and families to travel needlessly,” he stated. “The models created for large urban medical centers simply do not work for rural communities. Congress needs to reexamine why this model was created and support it. Unfortunately, many of the leaders and staffers who created this model are no longer in office and the purpose and history have been lost.”

Sexton is confident in the overall strength of Prairie du Chien Memorial Hospital as well as its ability to adapt through the numerous Medicare and Medicaid changes that have taken place over the past 57 years of the hospital’s existence. However, he said removal of the CAH status would reduce the payments to the hospital for needed services, forcing PDCMH to provide those services to Medicare beneficiaries for less than it costs to provide them.

“The hospital has and continues to subsidize multiple services needed by the community that might not be available if we were not reimbursed what it costs us to provide needed medical care,” he added. “One example is the construction of the new nursing home to replace the old Prairie Maison facility. The hospital was able to provide over $18 million to upgrade and save this needed community service that was in jeopardy.

“PDCMH has always been cost-conscious and a good value to our patients. In fact, the 2010 Medicare data shows that rural hospitals like ours outperform urban counterparts and do it at 10 percent less per Medicare beneficiary in the north central region of the U.S.”

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