August 22, 2013

Critical Access Hospitals: Lessons Learned from Ice Caps?

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Among those w­ho know — really know — that the ice sheets at the north and south poles are melting is one scientist who reports that the rate of ice loss in Greenland has increased “five-fold since the 1990’s.” 1

Coincidently, a presidential taskforce on Monday of this week released a report noting that coastal communities should be prepared for more flooding because of ravaging storms and rising seas.

While adding more evidence to the existence of a parallel universe, the Office of Inspector General for the U.S. Department of Health and Human Services last Thursday released a report stating that two-thirds of the nation’s critical access hospitals (CAHs) would not meet the distance requirement if they were to reenroll in the Medicare program. Could CAHs go the way of the polar ice caps — melting as they retreat, causing disruption to an already fragile healthcare ecosystem?

“When a hospital closes in rural America, the ripple impact is enormous,” wrote Kimber Wraalstad, administrator of the Cook County North Shore Hospital and Care Center in Grand Marais, Minn., whose CAH is 83 miles from the next-closest hospital. “Jobs are lost and recruitment of primary care providers becomes more difficult, because many physicians, including nurse practitioners and physician assistants, do not want to practice in an area without a hospital.”

Rural hospitals and clinics have a significantly harder time recruiting and retaining medical and administrative staff because of inequities in the Hospital Wage Indexes and Geographic Practice Cost Index, wrote the National Rural Health Association (NRHA) in a fact sheet sent to its members and posted on the association’s website.

“If a rural hospital closes, severe economic decline in the rural community is the result,” the release read. “Soon after, physicians, nurses, pharmacists and other healthcare providers in the community will be forced to leave (and) patients will have to travel farther distances for care or will delay receiving care, resulting in poorer health outcomes.”

Noting that CAHs are job generators in the communities they serve, the NHRA reminded its members that CAHs encompass approximately 138,000 jobs.

“(CAHs) are often the largest or second-largest employers in a rural community,” the release read. “The average CAH creates 107 jobs and generates $4.8 million in payroll annually, and can mean as much as 20 percent of a rural economy.

“(Currently), hospitals can be certified as (a) CAH if they meet, among other requirements, of being located a certain driving distance from other hospitals (including CAHs) and being located in rural areas,” the OIG wrote in a report to the Centers for Medicare & Medicaid Services (CMS). “Prior to 2006, states could exempt CAHs from the distance requirement by designating them as a “necessary provider” (NP).”

The OIG explained that CMS doesn’t have the authority to decertify those facilities that are classified as NP CAHs. Those CAHs, according to OIG, are permanently exempt from meeting the distance requirement.

“The CAH certification was created to ensure that rural beneficiaries are able to access hospital services,” OIG added in its report, noting that “Medicare reimburses CAHs at 101 percent of their reasonable costs, rather than at the rates set by prospective payment systems or fee schedules.”

David J. Muhs, chief financial officer for Henry County Health Center in Mt. Pleasant, Iowa, contends that elimination of the NP provision that suspended the 35-mile requirement would put two-thirds of the CAHs at risk by putting them back on the perspective payment system.

“Our facility is currently 22 miles away from the nearest hospital,” Muhs wrote in a statement to RACmonitor. “Our current service area encompasses about 25,000 lives in and around Henry County.”

Muhs believes that most CAHs would survive the change, but many possibly would become outpatient facilities to provide local services to the communities they serve. 

“That alone would bring a whole new set of challenges for patients and families,” Muhs added. 

Looking for ways to reduce healthcare expenditures, the OIG is reporting that the federal government could save Medicare millions of dollars if the CAHs were recertified for not meeting two criteria: distance and rural location.

“The vast majority of these CAHs would not meet the distance requirement,” the OIG noted.

On the other hand, officials warn, if CMS were authorized to reassess whether all CAHs should maintain their certifications and concluded that some should be decertified because they were 15 miles or less from their nearest hospitals in 2011, “Medicare and beneficiaries would have saved $449 million.” 

“This (the mileage requirement) is just another attempt to reduce payments to the CAHs when CAHs make up less than 5 percent of the federal Medicare budget,” Muhs wrote. “We realize that the overall Medicare costs need to be reduced, but feel that there are other strategies that could be identified to reduce the overall cost.”

Noting that CAH certification results in increased spending for Medicare and beneficiaries, OIG argued that the only CAHs that should remain with their certification are those whose patients (beneficiaries) “would be otherwise unable to reasonably access hospital services.”

The OIG proposed four recommendations, first writing that CMS should seek legislative authority to remove NP CAHs’ permanent exemption from the distance requirement. This, according to the OIG, would allow CMS to reassess those CAHs.

“The elimination of the NP designation would change the operations for the NP CAHs, ranging from possible reduction of services, elimination of jobs and/or closure,” Muhs wrote. “Eliminating (the) NP provisions would impact our ability to deliver the same level of service that is currently provided to the communities that we serve.”

“The 34-page report on (CAHs) would eradicate individual state determinations on which small, rural hospitals are critical ‘necessary providers’ in a state by overriding state decisions with complete federal authority,” NRHA noted. “This report seeks to kill rural health care by shutting down as many as 70 percent of a state’s rural hospitals.”

Another recommendation from OIG, and one that CMS did not concur with, was to revise the CAH Conditions of Participation to include alternative location-related requirements. The OIG also recommended that CMS apply its ‘uniform definition of mountainous terrain’ to all CAHs.”

Wraalstad wrote that her initial reaction to the OIG recommendations to CMS was that it constituted “another instance when a federal agency fails to understand and/or value the programs that have been developed to ensure that care is available to those of us who live in rural America.” 

“I do not believe that the staff members in the OIG or CMS know the history surrounding the development of critical access hospitals,” she wrote. “Nor do I believe that they have any type of understanding about what it is like to live and work in rural America; they definitely do not understand the obstacles to provide healthcare to these communities.”

Given the prevailing gridlock that has come to characterize the manner by which Congress conducts business, is it likely that there would be bipartisan support to adopt some of the OIG’s recommendations?

“We believe the possibility of this (OIG list of recommendations) getting approved by the House and Senate is minimal due to partisanship in dealing with any issue,” Muhs noted. “Rural Democrats and Republicans have a vested interest in insuring that the CAH program remains viable to ensure high-quality services and economic prosperity in their respective districts.”

On the other hand, cost-conscious lawmakers could come together on this issue, according to Emily Evans of Obsidian Research.

“At the end of every year, there is a danger that Congress will rely on OIG recommendations to help ’pay for’ the extension of certain policies,” Evans wrote in an email to RACmonitor. “This year is particularly fraught with danger, as Congress is looking to repeal the Sustainable Growth Rate, which is estimated to cost the taxpayers about $138 billion.”

Evans cautioned that the only divide more prominent in Congress than that between Republicans and Democrats is the one between rural and urban areas. 

“Rural lawmakers have traditionally held great sway over national healthcare policy as they seek to protect what hospitals which are typically large employers in their districts,” she added. 

About the Author

Chuck Buck is the publisher of RACmonitor.

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Footnotes:

1. ww.dw.de/polar-ice-sheets-melting-faster-than-ever/a-16432199 

2. http://portal.hud.gov/hudportal/HUD?src=/sandyrebuilding

Chuck Buck

Chuck Buck is the publisher of RACmonitor and is the executive producer and program host of Monitor Mondays.

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