Proposed Medicare cuts to rural hospitals draw fire
Rural hospitals are set to launch an advocacy campaign on Capitol Hill aimed at limiting possible federal funding cuts by arguing that rural care generally is as good as urban care and overall costs Medicare less.
The move comes as a number of special Medicare rural payments and programs are set to expire before year-end and as rural providers find themselves increasingly a potential target of federal policymakers looking to trim spending.
Rural hospitals also would receive sharper Medicare cuts than their urban counterparts under a recent proposed Medicare inpatient prospective payment system. And still looming in the background is the likely 2% cut in Medicare reimbursement beginning in 2013
VIDEO that would result from the provisions of last year’s Budget Control Act that kick in, known as sequestration.
There is a perception in Washington that special Medicare payments and programs designed for rural hospitals are driving Medicare spending growth and offer an area for cutting in a climate when Congress is eager to trim where it can, said Brock Slabach, senior vice president for member services at the National Rural Health Association, Kansas City, Mo., which is leading the advocacy push.
But a new Nrha-commissioned report found Medicare average spending per beneficiary to be 3.7% less costly in rural settings than in urban settings, data that industry officials say will bolster their case with Congress. The report, prepared for the NRHA by ivantage Health Analytics, also found per-capita Medicare inpatient hospital service spending for rural beneficiaries to be 2% less than for urban beneficiaries and per-capita physician service payments to be 18% less for rural beneficiaries, though Medicare outpatient services spending in rural areas was 14% higher.
“To then penalize rural providers by taking away or limiting special payment provisions, that seems to be the wrong policy action to take,” Slabach said.
He said the lower spending did not come at the expense of quality care. The report’s authors found that neither urban nor rural providers could be considered a clear winner when looking at CMS Hospital Compare Process of Care measures. There also was no performance difference in outcomes measures related to 30-day readmission rates for heart attacks, heart failure and pneumonia, though urban hospitals outperformed in those three areas concerning 30-day all-cause mortality rates.
Among the areas that are subject to elimination if not extended by Congress is the Medicare-dependent hospital designation, which offers increased inpatient reimbursement
to rural hospitals with fewer than 100 beds and that have more than 60% of inpatient discharges covered by Medicare. That provision is slated to end Oct. 1, according to the NRHA.
That program has been in existence for years, Slabach said, and would not require extra outlays to keep it in place. Nevertheless, the CMS is preparing for the end of the program by helping hospitals in that program that qualify for what is called the sole community hospital designation, which offers a different set of bonus payments.
Also expiring Oct. 1 is a rural program created by the Patient Protection and Affordable Care Act that increased Medicare payments for hospitals considered to be low-volume and located at least 15 miles from another hospital, Slabach said.
The rural sector’s advocacy effort will be focused on the Senate side of the aisle, where the rural hospital sector historically has done well, said David Lee, manager of government affairs and policy manager for the NRHA. The plan is for the rural Medicare extenders to be attached to legislation that prevents expected cuts to physician reimbursement.
The NRHA also would oppose what appears to be a difference in rural reimbursement in the new Medicare Inpatient Prospective Payment System rule, Slabach said in an e-mail. An initial read of the more than 1,300page document indicates that the rule calls for rural hospitals on average to receive a 0.5% cut while hospitals in large urban areas will receive a 1.2% increase on average and other urban providers will experience a positive 0.9% update, he said.
Meanwhile, critical-access hospitals, while not generally vulnerable to the threat of expiring Medicare provisions, are in line to receive the sequestration-linked cuts at year-end and have been bandied about in different proposals as a program that is ripe for cutting, including one from the Obama administration. The presi- dent’s proposed budget for 2013 released in February included the suggestion to reduce critical-access hospitals’ Medicare reimbursement to 100% of reasonable costs from its current 101% of costs, and to prohibit critical-access hospital designation for facilities within 10 miles from the nearest rural hospitals.
“Our hospitals are very worried,” said Pat Schou, executive director of the not-forprofit Illinois Critical Access Hospital Network, Princeton, Ill., which has about 50 members in the state. The threat of a sequestration cut is causing CAH hospitals to try to prepare for that 2% drop in Medicare revenue, she said. “The hospitals have been running their numbers and making adjustments and trying to plan.”