Medicare-Dependent Hospital Payments to Expire Oct. 1

First the bad news: Supplemental payments to Medicare-dependent hospitals will expire on Oct. 1, the start of the federal fiscal year, because a do-nothing Congress failed to extend the provision before it adjourned last week.

This means, of course, that a critical funding source is no longer available for the 212 rural hospitals across the nation that are classified as Medicare-dependent and that need those payments to keep their doors open.

Now, the good news: It is highly likely that when Congress returns on Nov. 13 it will pass the bipartisan Senate Bill 2620 (HR 5943), which will renew for one year funding for Medicare-dependent and low-volume hospitals. Assuming the bill passes, those additional MDH payments that would have gone into effect on Oct. 1 are expected to be added retroactively.

Maggie Elehwany, government affairs and policy vice president for the National Rural Health Association, acknowledges that inaction in Washington, DC has left rural providers "in a lurch," but she is upbeat about the prospects for the bill.

"We have about 24 sponsors on the bill, which is good news. We anticipated that this would expire on Oct. 1,  but our goal is to make retroactive payments," Elehwany tells HealthLeaders Media. "Congress has done this in the past. When the sustainable growth rate expired, they made retroactive payments to physicians as seamless as possible. It’s not ideal, but it’s the only situation we have right now. We are going to continue fighting for it in the lame duck session."

These days, it’s rare to find optimism for the success of any legislation, especially if it has a price tag, in this gridlocked and dysfunctional Congress. Elehwany, however, says rural providers have a strong and bipartisan argument for the legislation that makes fiscal sense and addresses critical access-to-care issues.

"Once we have their ear, the story is very compelling," she says. "It is not a costly provision. The budget score estimates are about $100 million over 10 years. That is a decimal point by Congressional standards. Once we give them the empirical data that shows the cost effectiveness of rural hospitals and they can provide Medicare coverage at 3.7% less than urban areas and have that primary care focus the argument makes itself."

"Even the most fiscally conservative folks—a lot of them are on the bill—see the importance of keeping that hospital open for their local communities and it makes sense for the taxpayers as well. It’s a strong argument. We are just running out of time."

Enacted by Congress in 1987, MDH status requires that hospitals be in a rural area, have no more than 100 beds, and show that Medicare patients represent at least 60% of their inpatient days or discharges.

A study done for NRHA found that in 2009 MDHs operated at a negative 4% margin on average. Without hospital-specific and transitional outpatient payments, the study estimated that those MDH margins would have fallen to negative 12.6%.

Elehwany credits rural hospital advocates from across the nation with generating much of the support for SB2620 when they rallied at the Capitol in late July to push for the bill.

Unfortunately, with the fiscal pressures and partisanship facing Congress, Elehwany is not optimistic about a long-term fix for MDH. Like the sustainable growth rate formula, she believes that MDH status is something that rural providers may have to fight for every year.

"We definitely think it needs to be made permanent, but this is a tough climate," she says. "It’s kind of all about treading water right now and just making sure that patients maintain access to care and we keep those hospitals open and that is probably the best we can hope for in this climate until a new Congress comes into town."

And while the prospects look good for SB2620 in November, Elehwany says now is not the time for complacency. Members of Congress are back at home preparing for elections and they are particularly sensitive to the concerns of hospitals, which are often the biggest economic drivers in their communities. 

"Your representatives are going to be home for six weeks," she says. "Make sure you go to the district office and the state office and talk to the members of Congress. Invite them to your hospital. Show them the work you do in that community. That hospital CEO is the best advocate we can possible have. No member of Congress wants to see a hospital close in his or her district no matter what side of the aisle they’re on, especially when they see the great work these folks do. So we are having a significant grassroots push during this time and hopefully we can transfer that back to Washington, DC, when they come back into town."