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AHA concerned over proposed RHC rule changes

John Commins, for HealthLeaders Media, August 27, 2008

The American Hospital Association is right to raise concerns about proposed rule changes that could adversely affect payments for rural health clinics and federally qualified health centers.

In an Aug. 22 letter to Kerry N. Weems, the Centers for Medicare & Medicaid Services' acting administrator, AHA singled out for criticism the proposal to implement section 1833(a)(3) of the Social Security Act, which requires that beneficiaries' deductibles and coinsurance be subtracted from reasonable costs to determine the amount of the Medicare payment. The proposal would also limit payments to no more than 80% of an amount deemed to be "reasonable and related to the cost of furnishing such services."

Currently, CMS pays RHCs 80% of their all-inclusive rate with a payment limit, but does not factor in coinsurance and deductibles.

In the letter to Weems, AHA Executive Vice President Rick Pollack says that the rule change "will have serious negative implications for the financial viability of RHCs, which will experience substantial reductions in Medicaid payments."

In addition, Pollack notes, the cuts would come at a time when RHCs are already being required to implement mandatory quality assessment and performance improvement, which will drive up operational costs.

What's odd about all of this is the timing. The fact is, the Social Security Act provision has been around for more than 30 years and is as old as the act that created RHCs in the first place. Why has CMS suddenly decided to implement section 1833(a)(3)? In a vaguely worded press release that announced the proposed rule change last June, Weems said: "The flexibilities we are proposing will help to ensure that beneficiaries and Medicare get the best value from RHC providers." The press release also said something about putting RHC reimbursements "in line with statutory requirements."

Well, that answers all our questions!

The fact is, RHCs have proven themselves to be desperately needed, cost-efficient, effective healthcare providers in chronically underserved areas. As Pollack points out, nobody is raising concerns about the growing costs of operating RHCs—not federal advisory committees, nor oversight agencies, nor Congress.

AHA is asking CMS to scrap the idea, or at least to define reasonable costs as those derived from the RHCs' Medicare cost report, rather than blanket-impose the Social Security Act's payment caps.

The rule changes proposal has prompted other concerns. Despite reassurances from CMS, the AHA is concerned that new language used to define the requirements for essential provider exceptions are subjective and ambiguous. AHA is also calling for an explanation and a timeline for the appeals process for RHCs that are denied essential provider status. Additionally, there is concern that a provision requiring a 48-hour window for authentication of patients' health records is unrealistic and would be difficult to enforce for weekend admissions. AHA wants the window pushed back to 72 hours.

CMS is not the bad guy here. The agency oversees massive and vitally important programs and has an obligation not only to its beneficiaries, but to taxpayers as well. But cutting funding for RHCs or bogging them down with vague verbiage or unreasonable timeframes seems counterproductive at a time when rural America is already struggling to find healthcare.


John Commins is the human resources and community and rural hospitals editor with HealthLeaders Media. He can be reached at jcommins@healthleadersmedia.com.
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