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SGR Repeal Bill Holds Extra Promise for Rural Hospitals

 |  By John Commins  
   December 18, 2013

A raft of amendments to the Senate version of the bill to repeal the SGR should make life a lot easier for rural hospitals, says a National Rural Health Association official.

The move in Congress to repeal the much loathed sustainable growth rate funding formula for physicians got most of the attention from the healthcare sector in the past few weeks. That's understandable, especially when we remember that physicians were staring at a 24% cut in Medicare reimbursements on Jan. 1 if the SGR had actually kicked in.

Now it appears that rural healthcare advocates have more to cheer about.


See Also: SGR Bill's Payment Transparency Provision Elicits Concern


The Senate has included amendments in its version of the bill that should make life a lot easier for rural hospitals. The National Rural Health Association's blog, in a succinct breakdown of what's included in the Senate's version of the SGR Repeal and Medicare Beneficiary Access Improvement Act of 2013, tells us that:

  • Amendment 117 would return supervision requirements for outpatient therapy services furnished at Critical Access Hospitals back to "general supervision." This was the supervision level observed at nearly every CAH prior to 2009.
  • Amendment 121 would ensure that the new Alternative Payment Models do not interfere with or inhibit the development of telehealth technologies that are critical to the future of delivering care in rural America.
  • Amendment 18 would permanently extend, at current levels two crucial rural hospital payments, the Medicare Dependent Hospital program and Low Volume Hospital Adjustment.
  • Amendment 82 would set a permanent floor on the work component of the Geographic Practice Cost Index at its current level of 1.0 creating a stable and more equitable reimbursement rate for rural physicians.
  • Amendment 118 would establish demonstration project for tile-health remote patient monitoring services. This demonstration would help show the efficacy remote patient monitoring in keeping patients in their homes rather than in hospitals.
  • Amendment 90 was withdrawn by its sponsors after a number of Committee Members promised to petition CMS for regulatory relief from the certification requirement of physicians admitting patients to CAHs that the patient would be discharged or transferred within 96 hours.

Maggie Elehwany, NRHA's vice president for government affairs and policy, spoke with me this week to detail the Senate action, provide some context, prognosticate on the chances that the rural health amendments will survive the budget negotiations early next year, and describe other challenges that rural health faces at the Capitol. The following is an edited transcript.

HLM: Can you give us a sense of how rural healthcare is faring under these various budget bills?

Elehwany: On the Senate side are many important rural healthcare provisions that have long tracked with the SGR. The biggest was the critical access hospital program and others that were temporary were the Medicare dependent hospital program and the low-volume hospital adjustment. Those were extended every time we put the patch on the SGR. But they did expire last Oct. 1 at the end of the fiscal year.

That is why we felt it was so important for Congress to extend those. Not only did the Senate extend the payments but they made them permanent for the low-volume hospital adjustment. The initial Senate Finance Committee mark made the payments permanent but they did modify and cut the reimbursement levels. Senators (Charles) Schumer, (D-NY), and (Chuck) Grassley, (R-IA), restored the payments in full and made them permanent. So, we couldn't be happier.

HLM: Will these amendments pass in the final budget resolution?

Elehwany: This is a big step, an important step but certainly only one step in a long process. The Senate included the important rural amendments, but the House did not include them at all. The House knew the doc fix was going to happen sooner and they did a three-month patch on all of these provisions.

So, the bottom line is, the House and Senate have a continuing resolution as a temporary patch until the end of March that continues level funding for three months. We will fight the bigger fight for a permanent fix for both the doc problems and the rural provisions later on early next year. We are grateful because it is the season to be grateful, however, we know that we have a long fight ahead of us.

HLM: Are you concerned that the House did not include this language in its budget bill?

Elehwany: It is very troubling. There are a number of rural hospitals whose members of Congress's sit on the key committees—Ways and Means and Energy and Commerce—and we are urging these hospitals to let them know how absolutely critical these payments are. They are making the difference in many hospitals of whether they can maintain certain services and staff and in many cases whether or not they can keep their doors open.

The problem is that rural just doesn't have, obviously, the volume of urban centers so there are only a little over 200 of these Medicare-dependent hospitals across the country. It is a very critical payment. They are payments for hospitals that have a higher percentage of Medicare patients and seniors. It has to be at least 60% but for some of these hospitals it's 70% to 80%.

If they lost these payments, they would have to make up a 19% margin from the few private insurers they have and that is just not possible. Plus, the senior population in rural America is unusually challenging. There is a higher percentage per capita of poor seniors with higher percentages of chronic disease.

HLM: Will the feds attempt to strip some rural hospitals of their critical access status?

Elehwany: Maybe. That is a big concern we have. The reason we say 'maybe' is this very large proposal for fixing the SGR that sounds good on paper, but they don't have a pay source for it yet. That is where the sticking point is going to be – a lot of the 'pay fors.' President Obama has proposed cuts to critical access hospitals in three or so of the last administration budgets. We are worried that that could be on the chopping block— that it could be viewed as a piece of low-hanging fruit.

Our strong message to Capitol Hill is that first of all, these payments to rural hospitals are not bonus payments that you get simply because you are rural. Members of Congress need to look back in their history and see why these payments were established. They were not to give hospitals bonuses but to keep services going and keep doors open. That is part of the big education battle we are dealing with in Congress, specifically on the House side.

Congress arbitrarily came up with the 35-mile outline of where critical access hospitals should be at a distance from each other, but they knew that rural Iowa, rural Texas, rural Montana, and rural Alaska are very different animals.

So they said they would leave it up to the states' discretion to deem certain facilities within the states as critical access points. So states developed their criteria and it was the federal government that approved that designation. We're frustrated that the federal government said 'OK we agree with you that they are necessary providers,' but now they could rescind on that in an arbitrary manner.

The other big point we're making is that these small rural hospitals are actually a huge value for the taxpayer. Congress is not losing money on these facilities. Rural hospitals provide 18% of care but only get 15% of Medicare reimbursements.

If you compare apples to apples, a common treatment in a rural setting, pneumonia or something like that, compared with the treatment in an urban or suburban setting it is 3.7% less expensive because you are reimbursing at primary care levels. Almost everything in rural areas is primary care. Urban and suburban is much more often specialty care at a higher reimbursement rate.

Our message to Congress is really look at the math before you do these things. If you close these rural hospitals you are obviously causing a hardship for seniors who would have to travel further for care but you are also shifting the cost to a more expensive area.

HLM: What are the biggest challenges for these rural amendments as they are debated next year?

Elehwany: It's all about how to pay for these things, both the SGR and all of these rural provisions. It sounds like we are going to fight that fight early next year. But if I had to summarize we couldn't be more thrilled about our champions.

The Senate Finance Committee really understands the challenges of delivering healthcare in rural America and the importance of these rural payments. We appreciate that and we are ready to stand with them as they wage the long fight to get a permanent fix bill.

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.

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