Dive Brief:

• The CMS has announced it is adding 13 more hospitals to its Rural Community Hospital Demonstration. Those hospitals will join 17 other previously participating hospitals that will continue the demonstration.

• The demonstration reimburses hospitals for the actual cost of care for inpatient services rather than the standard Medicare rate that could be as low as 80%.

• Officials with hospitals involved in the demonstration have said the project allows them to maintain services that might have been scaled back or cut otherwise. 

Dive Insight:

The 13 new hospitals began their participation starting on Oct. 1. They include facilities in Colorado, Iowa, Wyoming, Oklahoma, Maine, Mississippi, Kansas, South Dakota and South Dakota.

The rural hospital demonstration requires that the hospital have fewer than 51 acute care beds, provide 24-hour emergency services and not be considered a critical access hospital. The program was originally authorized for a five-year period in 2003 and has been extended twice more for five years, most recently as part of the 21st Century Cures Act.

The demonstration expansion is a positive for rural hospitals and the healthcare industry in general. HHS and the CMS are currently in a holding pattern for new initiatives with the federal agencies reviewing and revamping policies and programs. So, while officials look to make changes to programs and policies, healthcare organizations aren't seeing much in the way of leadership from HHS, especially given that the agency is down a department secretary after Tom Price’s departure.

Rural hospitals have been especially hit hard in recent years because of dwindling reimbursements. Since 2010, 80 rural hospitals have closed and 673 are at risk of closing — 210 of which are at “extreme risk,” according to iVantage Health Analytics.

In addition to lower reimbursements, patient admissions are also down as more patient care shifts to outpatient settings. Plus, President Donald Trump’s fiscal year 2018 budget proposal calls for $627 billion cuts from Medicaid over a decade. That could serve as a potential death knell for rural hospitals serving largely low-income populations.

Rural health took another hit this month with the planned closure of Lakeland Community Hospital in Haleyville, Ala. Hospital officials blamed lower reimbursements for the closure at the end of the year.

However, it’s not all grim news from rural hospitals. Some rural facilities are actually prospering through shifting to value-based care and aligning themselves with quality-driven, cost-conscious trends in healthcare. “There’s a lot of doom and gloom about rural,” Lexington Regional Medical Center CEO Leslie March recently told Healthcare Dive. “But if we’re allowed to be creative and do some fun things like the (accountable care organization), then there’s a lot we can do to maintain local healthcare for our communities.”