CMS, Rural Care Advocates Rip OIG Report Targeting Swing Beds

"They view rural as simply a small version of urban. They don't recognize that it is a different healthcare delivery system," says Alan Morgan, CEO of the National Rural Health Association.

A federal audit that recommends cutting payments to rural hospitals for skilled nursing swing beds is being panned by hospital advocates and the federal government.

The Department of Health and Human Services' Office of the Inspector General released a report on Monday that estimates that the federal government overpaid critical access hospitals about $4.1 billion over six years to provide skilled nursing services using hospital swing beds.

Among its recommendations, OIG's report called for the Centers for Medicare & Medicaid Services to push for legislation that will adjust CAH swing-bed reimbursement rates to match the lower rates paid to skilled nursing facilities.

Former CMS Administration Marilyn Tavenner, in a Nov. 13, 2014 response published with the OIG report, agreed that swing bed use was on the rise, and that new efficiencies and cost savings must be identified for rural care delivery.

She sharply disagreed with the OIG recommendations, however, faulted the study methodology, and suggested that OIG doesn't understand rural healthcare.

"The report does not take into account the burden on patients on being treated farther from home and family, and being transferred in an ambulance to a new facility," Tavenner said. "The OIG's cost estimations exclude transportation costs of moving a patient to an alternative facility, as opposed to using a CAH swing bed, which would decrease the savings from using an alternative facility."

Tavenner's comments were echoed by Priya Bathija, senior associate director, policy, at the American Hospital Association.

"The report demonstrates an unfortunate lack of understanding of how healthcare is delivered in rural communities," Bathija said by email:

"It inappropriately focuses on [the] potential savings Medicare could realize, rather than the needs of individuals living in rural America. The OIG's analysis is clearly flawed – a conclusion that CMS reached as well. OIG failed to account for many important factors that come into play in rural areas, such as the level of care needed by swing bed patients, transportation fees to alternative facilities, and the use of point-to-point mileage distances instead of road miles. The AHA continues to strongly advocate for maintaining the CAH program as it is currently structured in order to help ensure that all patients in rural communities have access to healthcare."

Alan Morgan, CEO at the National Rural Health Association, says the landscape in rural healthcare has shifted greatly since OIG began its study several years ago.

"Timing is everything, and so I don't think this report is going to get much traction," Morgan says. "When they started looking at this three or four years ago the talk was all about efficiencies and saving money in Medicare. Now, we have a rural hospital closure crisis. Congress is trying to find ways to keep hospital doors open but the administration is still trying to find ways to save money. I don't think they have caught up with the reality of what is happening now."

The problem at OIG, Morgan says, is that they apply an urban mindset to rural healthcare. "You see this time and again. They view rural as simply a small version of urban. They don't recognize that it is a different healthcare delivery system."

"While I don't see this report gaining any traction, it is something we are taking seriously. We're talking to policymakers and our members. This is bad medicine. It's bad for the hospitals and it's horrible for the patients. That is the kicker. CMS's response is that this is terrible for rural population."

Morgan says Tavenner's comments were illuminating.

"I can't stop laughing about that," he says. "CMS is never one to shy away from saving a buck when it comes to Medicare, but even CMS called them out on the findings and the methodology."