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Help May Be on the Way for Ailing Rural Hospitals

Legislators work to stem the tide of hospital closures

Rural hospitals have been on the brink of financial disaster for years, but it now seems that state and federal lawmakers may finally be willing to help.

Since 2010, 71 rural hospitals have closed, driven by congressional spending measures that cut Medicare payments and by the Patient Protection and Affordable Care Act, which favors hospitals that do high-volume business, according to an article posted on the HealthcareDIVE website. Another 683 rural hospitals are at risk of closing—taking with them 36,000 health care jobs. Overall, 35% of rural hospitals currently operate at a financial loss.

These struggles aren’t new, the article says. They began in 1983 when the government moved to a prospective payment system that rewards volume over actual costs of treatment. During the next five years, more than 400 rural hospitals closed. Congress eventually stepped in with a series of payment models aimed at helping rural hospitals stay open. But then came the 2008–2009 recession, followed by a 2% Medicare payment cut in 2011, a 30% to 35% reduction in reimbursement for Medicare patients who can’t cover their out-of-pocket expenses in 2012, and the across-the-board 2% budget sequestration in 2013.

Last July, Reps. Sam Graves (R-Missouri) and Dave Loebsack (D-Iowa) introduced legislation aimed at providing some relief for rural hospitals by eliminating Medicare sequestration and reversing bad-debt reimbursement cuts. The bill, H.R. 3225, would also permanently extend the current Medicare-Dependent Hospital and Low-Volume Hospital payment levels and reinstate Sole Community Hospital “hold harmless” payments.

The bill would also create a new classification—Community Outpatient Hospital—that provides 24-hour emergency room services, outpatient services, and primary care. These centers would have no inpatient beds, but would be required to have an agreement with another facility allowing it to transfer patients who required hospitalization.

The Save Rural Hospitals Act introduced by Graves and Loebsack has not yet advanced in the House Ways and Means Committee. The measure currently has 31 co-sponsors.

A number of other bills have been introduced in the House dealing with various aspects of the rural health dilemma. In the Senate, Sen. Chuck Grassley (R-Iowa) introduced legislation last summer that would also create a Community Outpatient Hospital.

In addition, some states are trying to reverse the tide of hospital closures. California has come up with a funding plan to save five rural hospitals, and in Georgia, a proposal by a committee convened by Governor Nathan Deal (R) would use large regional hospitals as communication hubs to direct rural patients to appropriate care sites.

Sources: HealthcareDIVE; March 22, 2016; and Bill H.R. 3225; July 31, 2015.

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