Rural hospitals in dire need of regulatory relief
Since 2010, 86 rural hospitals have closed and 673 are financially stressed and at risk of closing.
CMS says it's working to improve access and quality of care in rural health settings, but the industry counters that it needs a much bigger effort to stem the bloodletting in the sector in recent years.
The agency, according to industry stakeholders, is also overlooking a key threat to hospitals in remote areas: the Medicare wage index.
Administrator Seema Verma issued a rural health strategy in May in a bid to "apply a rural lens to the vision and work of the agency."
Among the plan's key objectives are advancing telemedicine, empowering patients in rural communities to make decisions about their healthcare and leveraging partnerships to achieve rural health goals.
While short on specifics, the plan reflects a potential shift in how regulators approach rural health — yet affected hospitals say it may not be enough.
Under the Medicare wage index, for example, hospitals are paid based on a national average payment adjusted for local market conditions such as cost of living and how much clinicians earn in an area. During a Senate Appropriations Committee hearing in May, lawmakers called the wage index unfair and questioned why CMS has not fixed the problem.
But the problem is much bigger than the index. Rural hospitals must comply with an array of regulations and policies that ignore their unique needs and circumstances, advocates say.
"Rural is experiencing death by a thousand cuts," Leslie Marsh, CEO of Lexington Regional Health Center, a critical access hospital in south central Nebraska, told Healthcare Dive. "Reducing some of the costly regulatory challenges we face would help staunch the bloodletting."
Shrinking reimbursements and declines in inpatient admissions have taken a toll on rural hospitals. Since 2010, 86 rural hospitals have closed and 673 others — a third of all rural hospitals in the U.S. — are vulnerable and could shutter their doors. And currently, 44% of rural hospitals are operating at a loss, up from 40% last year.
If a hospital is losing money on its Medicare and Medicaid businesses and has a tiny sliver of patient population that is privately insured, "that's just not a balance that works financially," according to Diane Calmus, government affairs and policy manager at the National Rural Health Association (NRHA).
A January report by the Bipartisan Policy Center and the Center for Outcomes Research and Education concluded that rural communities face unique challenges in providing healthcare and should have flexibility to define their own needs and service sets. Policymakers also need to create funding mechanisms that reflect the realities of rural communities, the report said.
The report broke as CMS was expanding its Rural Community Hospital Demonstration from 17 to 30 hospitals. The pilot reimburses hospitals for the actual cost of inpatient services rather than the standard Medicare rates, which could be as little as 80% of actual costs. Participating hospitals have credited the demonstration with allowing them to maintain services that otherwise would be scaled back or cut altogether.
While the pilot project is a step in the right direction, rural hospitals say inpatient service rates are just one of many challenges that need some relief. At the top of the list is the "exclusive use" standard, which says that only employed physicians or billing contracted physicians can provide care in a provider-based clinic. If outside providers want to provide services, they must have a separate entrance, a permanent sign, a wall separating their area from the rest of the clinic, a separate waiting room and receptionist.
"All of these things are really prohibitive for a rural facility," says Calmus, who notes a cardiologist may come around once a month to see patients at a clinic or come exclusively to see one or two patients. And the fact that CMS references the Conditions of Participation in their enforcement citations discourages physicians, such as pediatric specialists, who don’t bill Medicare from treating rural patients.
The NRHA has urged CMS to adopt a "common-sense" approach to "exclusive use" when it comes to rural communities — for example, requiring that clinics hand patients a paper stating a particular provider is not part of the provider-based clinic and not bound by the clinic's rates.
Another barrier to access in rural communities is the 96-hour condition of payment rule, which requires doctors at critical access hospitals to certify at the time of admission that a Medicare patient will not remain at the facility longer than 96 hours. Critical access hospitals (CAHs) and the NRHA claim the rule creates unnecessary red tape and removes the flexibility for hospitals to provide general surgical services in the community.
One proposed solution would be to weigh the condition of payment and condition of the patients equally so that CAHs don't have to restrict a patient to 96 hours when there is a justified reason for keeping them longer. "Looking at an overall average would allow hospitals to better care for a broader range of patients that they're very able to care for and allow more people to remain in their communities to receive the care they need," Calmus says.
Another sticking point for rural hospitals is the "direct supervision" requirement, which says that physicians must be physically present during the delivery of care in outpatient therapy departments. Rural facilities argue that enforcing this requirement is a poor use of the limited pool of rural providers and threatens access to needed services for rural Americans. Shifting to a general supervision requirement would not harm patient safety and would allow for the flexibility rural providers need to continue providing outpatient services, experts say.
Rural hospitals say changes are also needed in CMS' star rating system and Merit-based Incentive Payment System (MIPS), which they say create a false impression of low quality. In the star rating system, if there are too few measures to report a star rating, due to volume of patients, that service or procedure shows up as a grayed-out star.
"No stars to a consumer looks like low quality," Calmus laments. "We think it’s a no-brainer to just completely remove that [category] or have some more consumer-friendly way of letting them know" the reason for the rating. Ideally, CMS could create metrics that are tailored to the reality of rural providers.
Rural systems face similar challenges with MIPS. Providers say it is unfair to compare a single practice physician in rural America with a big urban practice that’s part of a large hospital system. "We need to be comparing like cohorts to like cohorts," Calmus says.
Legislation could help
There are efforts on Capitol Hill to help rural hospitals. In May, critical access hospital administrators urged congressional lawmakers to pass the Critical Access Hospital Relief Act, which would end the 96-hour requirement. They also pushed for Congress to lift the requirement that doctors be present to supervise outpatient therapies, which the Protecting Access to Rural Therapy Services (PARTS) Act would fix.
The Save Rural Hospitals Act would reverse cuts to rural hospitals, provide some regulatory relief and create a new provider type, the community outpatient hospital, a 24/7 emergency room plus outpatient and primary care services.
Another bill, H.R. 4520, would require HHS to continue to instruct Medicare contractors not to enforce requirements for direct physician supervision of outpatient therapeutic services in critical access and small rural hospitals.
And the Rural Hospital Regulatory Relief Act would permanently extend the moratorium on enforcement of the direct supervision of therapy services requirement. There are other measures targeting the opioid crisis, community health center funding and maternity care shortage areas, but most are in early stages of consideration.
Squeezed by private insurers
Marsh points to another major pain point for rural hospitals: lack of reimbursement from other payers.
Because of high deductibles, CAHs often stabilize patients for transfer, administering expensive lifesaving care, but lose out on payment because the insurance doesn't kick in until after the patient is moved to a larger, urban facility.
"Payers are increasingly issuing denials, requiring prior authorizations for procedures that may be urgently necessary and in keeping with evidence-based protocols, and decreasing the time that a hospital has to submit a bill for payment," Marsh told Healthcare Dive via email.
"The window for reimbursement closes rather quickly," she said, noting Lexington Regional is on pace to deliver over $2.25 million in uncompensated care this year, up about $1 million since 2010.
"That might not seem like a lot of money to a large facility, but it is to most CAHs," she adds.
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