October 2, 2014

Recommendation alarms rural hospitals

A program which helps rural hospitals in Wisconsin and nationwide now costs the federal government and Medicare beneficiaries up to a billion dollars a year more than the law establishing it originally allowed, according to a report by the Office of Inspector General of the Department of Health and Human Services. The report, released Thursday, recommends that Medicare take a second look at all of the hospitals in the Critical Access Hospitals program – and that recommendation is already drawing concern in Wisconsin.

“We’re quite taken aback by this report and recommendation that came out of the blue,” said Wisconsin Hospital Association President Steve Brenton. In its report, the OIG recommends removing the CAH payment status for hospitals that do not meet certain distance requirements. The report found that nationally, nearly two-thirds of hospitals would not meet CAH requirements, if required to re-enroll in Medicare.

In Wisconsin, the impact would be even more severe, resulting in 53 of 58 CAHs losing this status, according to the WHA. Brenton said the payments under CAH have become crucial. “Frankly, it’s the difference in many community hospitals, of making a small margin each year, and losing money on what is their biggest payer. In most of rural Wisconsin our hospitals, if you look at their actual volumes, sixty to seventy percent of their inpatient and outpatient volumes from Medicare patients, Wisconsin seniors.”

A press release from the WHA states that Medicare’s CAH status was enacted under the Balanced Budget Act of 1997 as Congress sought to address the closure of hundreds of rural hospitals which could not financially survive under Medicare’s traditional payment system, due to their small size and care for disproportionately older, sicker and poorer patients.

Hospitals in the program were supposed to have 25 or fewer beds and be at least 35 miles away from another facility. A loophole closed in 2006 allowed states to designate many other small rural hospitals as CAHs, and hospitals that already had the exemption were grandfathered in. The OIG recommendation would end that, leaving only five CAHs – in Ashland, Medford, Sturgeon Bay, Ladysmith and Park Falls – in Wisconsin, according to a list provided by the WHA.

READ: List of impacted Wisconsin CAHs (PDF)

“I’ve already been inundated from my rural members, relative to the kind of ‘shock and awe’ over this thing,” said Brenton. “It truly is a big deal.” The recommendation would require congressional action to be implemented, and a couple of members of the state’s congressional delegation responded on Friday.

“Closing down critical access hospitals would have a devastating impact on rural communities in western and central Wisconsin and across the nation,” said Representative Ron Kind, a Democrat from La Crosse.”Eliminating these hospitals is a shortsighted mistake that will have long-term consequences. Access to quality care is vital to the health of rural communities, and critical access hospitals are also an important part of the local economies in our rural areas.”

“If enacted, these policies would compromise access to health care and weaken rural economies in Wisconsin and across the country,” said Democratic Senator Tammy Baldwin. “I fear that these proposals could even force many rural Wisconsin hospitals to shut their doors – causing a ripple effect on our economy and leaving many without access to care. Critical Access Hospitals play a vital role providing access to medical services, as well as economic security and jobs to rural communities. Given the importance of these hospitals, it is essential that they receive proper Medicare reimbursement – not face devastating cuts.”