Rethinking Rural Hospitals

From JAMA:

Congress has responded to closures of rural hospitals in the past through policies that increase the hospitals’ Medicare reimbursement. The program with the largest participation—more than half of all rural hospitals now take part—is the Critical Access Hospital Program, which provides 101% reimbursement of allowable costs of inpatient and outpatient services for Medicare patients. The program, established in 1997, specifies that eligible hospitals must have fewer than 25 beds and operate emergency services 24 hours a day. The American Hospital Association has called for shoring up this program by protecting or increasing the reimbursement rate and ensuring that the eligibility requirements are not prohibitive, including providing flexibility in bed capacity.

Most proposals to bolster rural hospitals focus on finances and critical services. For example, the Rural Emergency Acute Care Hospital Act, introduced into Congress in 2015, would establish a new Medicare payment designation—Rural Emergency Hospital—to pay for emergency care, observation care, and outpatient services.

The National Rural Health Association is advocating the Save Rural Hospitals Act, also introduced in 2015. It would provide financial relief for rural hospitals by getting rid of the sequestration reduction in Medicare payments, reversing the cuts in bad debt relief and DSH payments, increasing payment for ground ambulance services, and improving Medicaid payments for primary care.

This act would also create a new Medicare designation of community outpatient hospital (COH) to support innovation in providing emergency and nonacute services, including robust primary care. This approach will be limited if rural hospitals are not linked into larger health systems with tertiary care facilities that can provide telehealth and emergency access by air or ground. The need for capital is crucial to purchase the telehealth technology and transport systems, as is the need to provide ongoing payment for these services.


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