Lawmakers eye new outpatient designation
Congress is considering legislation to help rural hospitals shift to more financially sustainable models that refocus on services urgently needed in their communities. But political observers aren’t optimistic about legislative action in a gridlocked Congress during an election year.
In the Senate, the bipartisan Rural Emergency Acute Care Hospital Act, spearheaded by Chuck Grassley ( R-Iowa), would create a new rural emergency hospital classification for Medicare. Grassley’s office said it’s still seeking co-sponsors and that the bill hasn’t yet been scored by the Congressional Budget Office.
The REACH Act would allow small rural hospitals to continue to receive Medicare payments if they dropped inpatient care and shifted to providing only emergency and outpatient services. They would be able to do this independently, without the sponsorship of another hospital.
The new facilities would have to offer emergency and observation care 24/ 7, and be able to transport patients needing inpatient care. They would receive payment for outpatient and transportation services equal to 110% of the reasonable cost of providing such services.
In the House, the bipartisan Save Rural Hospitals Act similarly would allow hospitals to convert to a new Medicare payment designation, the Community Outpatient Hospital, and be paid at 105% of reasonable costs for emergency and outpatient services. A different bipartisan bill, similar to the REACH Act has also been introduced—the Rural Emergency Medical Center Act.
Joanna Hiatt Kim, vice president for payment policy at the American Hospital Association, said that while the rural emergency center model is promising, it needs to be tested, perhaps through a demonstration conducted by the Center for Medicare and Medicaid Innovation.
Beyond that, the House’s Save Rural Hospitals Act offers other forms of financial relief, including reversing cuts in reimbursement for bad debt, ending Medicare budget sequestration cuts, and eliminating disproportionate-share payment reductions.
Provider groups and rural health advocates generally support these bills, though the AHA prefers the REACH Act because it sets a higher cost-based payment rate for the new outpatient facilities.
But some experts question the wisdom of legislation that perpetuates the current fee-for-service and cost-based reimbursement system, which they argue would only delay the needed shift of rural providers to value-based payment.
Transitioning payment models would give rural hospitals financial flexibility to retarget their services from inpatient care to others more needed in their communities, said Keith Mueller, who heads the Center for Rural Health Policy Analysis at the University of Iowa. Such services might include emergency care, primary care, transportation services, behavioral health, dental care, telehealth and population health improvement.
To nudge rural hospitals into value-based care, the National Rural Health Association proposed giving critical-access hospitals a 2% bump in Medicare reimbursement for submitting quality data and requiring them to join an accountable care organization within five years.