Two federal payment programs that give financial support to rural hospitals are set to expire on Oct. 1.
The Federation of American Hospitals (FAH) is urging Congress to reauthorize two federal programs that provide financial assistance to rural hospitals.
Rural hospitals face multiple financial challenges, including low patient volumes and relatively high numbers of Medicare, Medicaid, and uninsured individuals in their patient populations. Over the past decade, more than 130 rural hospitals have closed and more than 30% of rural hospitals are at risk of closing, according to the Center for Healthcare Quality and Payment Reform.
Two Medicare payment programs that provide financial support to rural hospitals—the Medicare-Dependent Hospital (MDH) program and the Low-Volume Hospital (LVH) program—are set to expire on Oct. 1. Last week, FAH President and CEO Charles N. Kahn III sent a letter to Congressional leaders imploring them to reauthorize the MDH and LVH programs.
"Rural hospitals traditionally serve patient populations that are older, lower income, uninsured and more likely to rely on Medicare and Medicaid when compared to the national average and to their urban counterparts. This challenging patient demographic means rural hospitals have a high volume of Medicare-dependent patients, and a lower volume of total patients overall. The MDH and LVH Medicare payment programs provide eligible rural hospitals with the financial stability and support they need to prevent closures and ensure continued access to care in rural communities," Kahn wrote.
Citing rising inflation and supply chain challenges, he wrote that rural hospitals are facing "unprecedented times" and financial pressure. "The nation's healthcare workforce shortage, in particular, is having a devastating, disproportionate impact on rural hospitals. Long-documented recruitment challenges have been exacerbated by an aging healthcare workforce, burnout, price gouging by traveling nurse staffing agencies, competing higher wages in larger cities, and a slowing of visas granted to foreign healthcare workers—all factors that are contributing to higher average payrolls and strained resources."
Dire consequences
Many rural hospitals are desperate for federal assistance, Jonathan Jagoda, MPP, senior vice president of legislative affairs at FAH, told HealthLeaders. "When you look at the role that rural hospitals play in their communities, you are often talking about the sole comprehensive provider for patients within many miles—sometimes hundreds of miles. It is critical that those facilities remain open and that services remain available to their patients. Even before the coronavirus pandemic, we saw the struggles that rural hospitals faced across the nation. They were cutting services lines, and many were being forced into closure. It is the community that suffers when service lines are cut or hospitals close."
If the MDH and LVH programs are not reauthorized, the consequences for rural hospital would be severe, he said. "If these programs are not reauthorized, the risk of rural hospitals closing is significant. Obviously, it depends on the hospital and the extent to which they utilize these programs to offset costs. Every rural hospital would not close, but you would see difficult decisions having to be made, whether that is eliminating services or hospital closures in the worst-case scenario. These programs help keep the doors open at rural hospitals. I would be very worried if the MDH and LVH programs were not renewed."
Congressional support
The MDH and LVH programs have bipartisan support in Congress. Last month, U.S. Rep. Terri Sewell (D-Alabama) and U.S. Rep. Carol Miller (R-West Virginia) introduced H.R. 8747, the Assistance for Rural Community Hospitals (ARCH) Act. The bill would reauthorize the MDH and LVH programs for five years.
The FAH, which represents more than 1,000 for-profit health systems and hospitals across the country, supports the ARCH Act.
Federal lawmakers know the stakes for reauthorization are high, Jagoda said. "They know they have to do it on a bipartisan basis. Leadership and the committees of jurisdiction have indicated support for these programs. They want to ensure that rural hospitals have the resources they need. So, we are fighting tooth and nail to ensure reauthorization comes by October 1 to make sure there is no gap in funding for rural hospitals."
Photo credit: Antonina Heeres
Related: Can the Hospital at Home Model Help Rural Hospitals Thrive?
Christopher Cheney is the CMO editor at HealthLeaders.
KEY TAKEAWAYS
More than 30% of rural hospitals are at risk of closing, according to the Center for Healthcare Quality and Payment Reform.
Financial pressures at rural hospitals include rising inflation, supply chain challenges, and a patient population that often relies on Medicare and Medicaid coverage.