Two-thirds of participating rural hospitals re-enlist in revamped critical acces
Two-thirds of participating rural hospitals re-enlist in revamped critical access program
More planning funds are needed, but program won’t solve rural hospital crunch
More than two-thirds of the rural facilities designated as limited access hospitals under a 1989 law have re-enlisted under an updated version of the program, according to an analysis by the North Carolina Rural Health Research Program.
The count of facilities designated as Medicare critical access hospitals (CAHs), which receive cost-based reimbursement for a limited offering of outpatient, emergency, and impatient services, stands at 37 hospitals in five states. Expansion of the program is limited by lack of planning funds and hospitals’ skepticism about the financial benefits of operating as a Medicare CAH, say researchers at the Cecil G. Sheps Center for Health Services Research at the University of North Carolina at Chapel Hill.
For any hospital to participate, its state must get a plan approved by the regional office of the Health Care Financing Administration outlining how the program will be implemented. As of January 1999, 18 states had approved plans and another three had submitted plans.
Grant funds are available for implementation, and the first awards in the $25 million program will be made in September 1999.
"A needed idea"
"This is not the answer to all of rural health care’s problems," says Daniel Campion, author of a 1995 report on limited access hospitals by the Alpha Center, a Washington, DC-based public policy research organization. "This is intended to address some of the situations where access is reduced or eliminated if the hospital is closed."
Mr. Campion notes that while there is little research specifically linking the decline of rural hospitals to prospective payment, the programs responded to a political and service delivery need to keep rural hospitals open.
"It’s a good idea. It’s a needed idea," he says.
To receive cost-based reimbursement, hospitals must be willing to surrender their conventional hospital license and limit the range and duration of the services they provide. The length-of-stay requirement has been and likely will continue to be a problem for limited access hospitals. A General Accounting Office (GAO) report in February 1998 noted that 21% of the inpatient stays at limited access hospitals exceeded the 72-hour limit then in effect, costing the Medicare program an estimated $612,000 that would not have been incurred if the limit had been honored. The GAO calculates that even under the more generous 96-hour limit, "significant" costs still would have generated beyond the allowable length of stay—some $295,000.
"HCFA has not established a way to enforce the length-of-stay limit, and we believe one is needed to give CAHs an incentive to adhere to the limit," GAO investigators concluded. Without the days in excess of the limit, the GAO said costs at the limited access hospitals "likely" would have been lower than at full-service rural hospitals.
Kansas hospitals played a major role under the previous legislation and plan to expand their involvement even further under the Balanced Budget Act. Of the state’s 130 community hospitals, 23 are expected to be designated as critical access by the end of the year. In addition to the 16 facilities that have transitioned from the previous program, Kansas has certified a new critical access hospital, is reviewing two applications, and expects four more proposals by the end of 1999, says Tom Sipe, director of regulatory affairs for the Kansas Hospital Association.
A just-completed association analysis indicates that limited access hospitals in Kansas are doing "marginally or significantly" better than comparable hospitals that have not chosen to participate, he says.
"I think the program has made a huge difference to the hospitals that have participated in it, not only financially but in their ability to develop networks and relationships," he says.
Moreover, he says, the program’s been a godsend to county governments in Kansas, many of which support hospitals with local property taxes. Mr. Sipe notes the limited access designation helps communities sustain their local hospitals without huge tax subsidies.
The Balanced Budget Act discontinued financial incentives for referral hospitals to maintain formal relationships with the limited access facilities. Nevertheless, Kansas referral facilities have "stepped up to the plate" in continuing to supply expertise and other kinds of support to limited access hospitals beyond the minimum needed to ensure patient referrals, he says.
Outpatient payment an issue
A significant and perhaps unintended difference between the 1989 legislation and the Balanced Budget Act is the elimination of inclusive part B Medicare reimbursement. Previ ously, limited access hospitals could roll professional services into their inpatient charge and receive cost-based reimbursement for a given episode of care. Eliminating their cost-based reimbursement for outpatient care means rural hospitals no longer can afford to contract with specialty physicians for regular clinics in rural areas.
"The fee schedule amount would not bring these guys out to the rural areas," says Mr. Sipe.
Contact Mr. Campion at (202) 296-1818 and Mr. Sipe at (785) 276-3116. The UNC evaluation, "The First Year of the Medicare Rural Hospital Flexibi lity Program," by Susan Reif, MSW, and Tom Ricketts, PhD, is available from the Sheps Center at (919) 966-5541 and can be downloaded from the Web at www.shepscenter.unc.edu.
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