AHA throws support behind Rural Hospital Support Act

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Senators Bob Casey (D-PA) and Chuck Grassley (R-IA) have reintroduced the Rural Hospital Support Act, which has drawn support from the American Hospital Association.

The AHA applauded the bill's efforts to modify and extend some Medicare payments to rural hospitals.

The bill was first introduced in the House in 2021 and again in the Senate in 2022, but eventually sputtered out. It seeks to amend the Social Security Act to recalculate payments for standalone community hospitals and Medicare-dependent hospitals.

In a letter to Casey and Grassley, the AHA threw its support behind the bill, saying that provider network serving rural Americans is fragile, and more dependent on Medicare revenue because of the high percentage of Medicare beneficiaries who live in rural areas.

The Alliance for Rural Hospital Access also applauded the legislation it said would permanently extend the Medicare Dependent Hospital (MDH) program and the Low-Volume Hospital Payment Adjustment, providing vulnerable hospitals with more predictable Medicare reimbursements and greater financial stability

WHAT'S THE IMPACT

The AHA traced support for small rural hospitals back to the Medicare Dependent Hospital program that was established in 1987, which allowes eligible hospitals to receive the sum of their prospective payment system (PPS) payment rate, plus three-quarters of the amount by which their cost per discharge exceeds the PPS rate.

"These payments allow MDHs greater financial stability and leave them better able to serve their communities," the AHA wrote. "Your legislation would make this important program permanent and add an additional base year MDHs could choose when calculating their payments."

In addition, the bill would make the enhanced low-volume Medicare adjustment permanent. That's important, the AHA said, because while Medicare seeks to pay efficient providers their costs of furnishing services, there are factors beyond providers' control that can affect those costs. Patient volume is an example of this, and is particularly prevalent in small and isolated communities, which prohibit providers from achieving economies of scale.

The AHA said that while a low-volume adjustment existed in the inpatient PPS prior to fiscal year 2011, the Centers for Medicare and Medicaid Services had defined the eligibility criteria so narrowly that only two or three hospitals qualified each year.

"The current, improved low-volume adjustment better accounts for the relationship between cost and volume, helps level the playing field for low-volume providers and improves access to care in rural areas," the group wrote. "Your legislation permanently extends the low-volume adjustment to ensure that these providers will not again be at a disadvantage and have severe challenges serving their communities."

The AHA also lauded tweaks to the sole community hospital (SCH) program. SCHs must show they're the sole source of inpatient hospital services reasonably available in a certain geographic area to be eligible for the program. They receive increased payments based on their cost per discharge in a base year.

"By allowing SCHs to choose an additional base year from which payments can be calculated, your legislation provides the increased support needed now by many rural hospitals," the AHA said.

THE LARGER TREND

Last year, CMS proposed a new rule that creates a pathway for rural hospitals and critical access hospitals to increase access to emergency and outpatient care. It's the first step in the implementation of a new provider type: Rural Emergency Hospitals (REHs).

Small rural hospitals can seek this provider designation through a Conditions of Participation for REHs. This will allow them to provide continued access to emergency services, observation care, and additional medical and outpatient services, and to provide maternal health, behavioral health and substance use disorder services. Hospitals under the designation will be eligible to receive payment for services provided on or after January 1.

The new Medicare provider designation will allow rural hospitals to right-size their service footprint and avoid potential closure, CMS said.

Rural hospital closures occur disproportionately within communities with a higher proportion of people of color and communities with higher poverty rates, according to the Department of Health and Human Services.

Rural communities represent a fifth of the U.S. population. Rural populations experience shorter life expectancy and higher mortality, and have fewer local healthcare providers, leading to worse health outcomes than in other communities, HHS said.
 

Twitter: @JELagasse
Email the writer: Jeff.Lagasse@himssmedia.com