Health Care/Joan Retsinas

Rural Hospitals: Congress Acts

The search is on for a story that doesn’t revolve around COVID, vaccination, or the Trump administration’s zeal to “do harm.”

After all, in the spring we deserve a feel-good moment. We need to know that good-government, untinged by the partisan rivalries that have rent Congress for too long, still exists.

Here is such a tale. The headline: “Medicare has changed the reimbursement rules for rural hospitals” draws a ho-hum. The words “Medicare,” “reimbursement, and “rural hospitals” are almost soporific, promising a below-the-fold regulatory footnote for wonks.

Yet millions of Americans should cheer this long-awaited legislation. For rural hospitals, genuine help lies in those reimbursement details.

Rural hospitals — those with 25 beds, more than 35 miles from another hospital, in sparsely populated counties – serve a crucial need. People in rural America get sick, have babies, need medications, break limbs – the usual suspects for people falling into the health care maw. Those hospitals serve disproportionate numbers of older, poorer patients. And they are major employers in their towns.

Yet rural hospitals are almost an endangered species.

Before COVID, many were forced to close, because they couldn’t fill the few beds they had, couldn’t pay their bills. They showed “occupancy” rates lower than the urban hospitals, showed lower profit margins. In states that didn’t expand Medicaid, rural hospitals suffered from even lower revenue. Since they could not perform transplants, open heart surgeries, or any of the super-sophisticated procedures that are routine in urban hospitals, they generally served as emergency rooms and outpatient clinics, referring patients to larger hospitals. Patients who needed complex procedures went farther afield, as did younger, more affluent residents.

COVID exasperated those hospitals’ financial bind. Their costs soared as they bought personal protective gear and redesigned their operations in the wake of the epidemic. At the same time, rural America saw a surge of COVID patients. In Waterloo, Iowa; Sioux Falls, South Dakota; Dupin County, North Carolina, and other small towns the food-processing plants — considered major employers — emerged as major incubators of COVID. Infected workers added to the patient-load. Meanwhile telemedicine reduced the demand for inpatient hospital services, and reduced payments. While the CARES Act pumped money into all hospitals, including rural ones, that is a stopgap measure.

Rural hospitals continue to face the dilemma: not enough revenue to cover expenses. One estimate shows that more than 350 hospitals are on the brink of closing; states hardest hit are Tennessee, Oklahoma, Mississippi, Alabama and Kansas.

One problem: Medicare, which pays for much hospital care throughout the country, has cleaved to a definition of a Critical Access Hospital that relies on inpatients. The hospitals that serve largely as emergency rooms and outpatient clinics do not qualify for Medicare reimbursement. Medicare considers inpatient beds essential for “hospital” status, hospital reimbursement. But the template of the Massachusetts General Hospital doesn’t fit the Bigfoot Minnesota Hospital.

In 2017 a bipartisan group of senators (Amy Klobuchar, D-Minn.; Cory Gardner (R-Colo.; Chuck Grassley, R-Iowa) introduced the Rural Emergency Acute Care Hospital (REACH) Act. The bill promised to reimburse hospitals according to a formula that acknowledged their role as emergency rooms and outpatient clinics, without tying them to a funding formula based on inpatient stays. The bill languished in committee.

This December Congress came to the rescue. The Consolidated Appropriations Act blessed a new category, “Rural Emergency Hospitals.” Effective 2023, Medicare will reimburse Rural Emergency Hospitals that offer 24-hour emergency rooms, non-acute care inpatient beds, outpatient clinics and linkages to transfer patients. (“Congress Establishes New Medicare Provider Category and Reimbursement for Rural Emergency Hospitals,” National Law Review vol XI, n.39).

This new category may staunch the erosion of rural hospitals, giving some of them enough revenue to persist. Millions of Americans hope so.

Joan Retsinas is a sociologist who writes about health care in Providence, R.I. Email retsinas@verizon.net.

From The Progressive Populist, March 15, 2021

Populist.com