Rural Hospital Crisis

Leaders at Rural Hospitals Fear Cuts

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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Leaders for the National Rural Health Association stressed all hospitals have faced cuts in recent years, but the impact is harder in rural areas than cities. (DTN file photo)

WASHINGTON (DTN) -- Lawmakers told rural hospital leaders this week they are trying to protect and even expand health care in rural America even as rural hospital administrators stressed the struggles they are facing to stay open for rural residents.

A parade of senators and congressmen trekked more than 30 minutes from Capitol Hill on Tuesday to talk to members of the National Rural Health Association, which is made up of hospital administrators and rural clinic providers. The association's policy conference comes as Congress is moving to repeal the Affordable Care Act, better known as Obamacare, but there is no clear strategy for repealing the law that doesn't eliminate insurance options for millions of people.

Hospital administrators also are afraid the push to repeal the Affordable Care Act will also translate into more cuts to Medicare -- insurance for seniors -- and Medicaid, which is insurance for the poor.

Besides often being among the largest employers in a town, hospitals are critical for business recruitment in rural areas. The loss of a hospital can bring down property values in communities as well.

Leaders for the National Rural Health Association stressed all hospitals have faced cuts in recent years, particularly to Medicare reimbursement, but the impact is harder in rural areas than cities.

"They aren't seeing the same kind of crisis we see in rural America," said Maggie Elehwany, vice president of government affairs for the association.

Rural hospitals have faced a series of cuts in recent years, including a 2% cut in Medicare reimbursement because of sequestration. Congress also has cut the reimbursement hospitals get when Medicare patients can't pay their copays. The so-called "bad debt" reimbursement was cut from 100% to 65% for rural critical access hospitals, amounting to a 35% cut in payment over the past three years.

Patients going to rural hospitals are more likely to be on either Medicare or Medicaid than patients going to urban hospitals. Generally, Medicaid and Medicare combine for more than 60% of the revenue for rural hospitals.

"When they cut Medicare, it's a bigger share of our budget," said Tim Wolters, who works on reimbursement at two rural hospitals in southern Missouri. "It is a bigger hit on our bottom line."

Since 2010, 80 rural hospitals have closed. Another 670 rural hospitals -- basically one out of three -- are considered in financial risk of closure because of continually running in the red. States that did not expand Medicaid coverage under the Affordable Care Act are more likely to have hospitals at financial risk. Wolters stressed that whatever Congress does to Medicaid payments, lawmakers have to make it equitable to states that did not expand Medicaid or hospitals in those states will be in more financial risk.

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Rural hospital administrators are hanging their hats on legislation expected to be introduced soon in the House called the Save Rural Hospitals Act. The bill is co-sponsored by Rep. Sam Graves, R-Mo., and Rep. Dave Loebsack, D-Iowa. The crux of the bill would allow rural hospitals to eliminate inpatient beds, but maintain emergency rooms and outpatient care. The bill could include a boost in Medicare reimbursement as well.

Sen. Cory Gardner, R-Colo., is working on a comparable bill in the Senate with Sen. Charles Grassley, R-Iowa. Gardner said his legislation also would focus on keeping the emergency rooms in rural areas. That is critical for that "golden hour of care" in a medical emergency, Gardner said.

"This concern about rural is at the forefront of everybody's mind when it comes to payment reimbursement rates," Gardner said.

Sen. Debbie Stabenow, D-Mich., whose mother was a nurse, told the health-care advocates that she is concerned about the lack of competition in states under the ACA. Insurance rates won't come down without competition.

"The message you bring is incredibly important right now," Stabenow said. "As you may have heard, we are talking a little health care. So we need your perspective and voices as to what we can do to make it better and what we make sure we don't do to make it worse, which is a real concern to me right now."

Stabenow added that Republicans would like to create a voucher system for Medicare and turn Medicaid into a block-grant program for states. The problem with block grants, Stabenow said, is they always end up getting cut later on.

"There is an appeal to block grants, but not an appeal to cut 20% to 30%," Stabenow said.

Sen. Heidi Heitkamp, D-N.D., is proposing a bill dubbed the Rural Hospital Relief Act to undo some of the reimbursement cuts hospitals have taken. Heitkamp noted that the push to repeal the Affordable Care Act has created more uncertainty in the insurance and health care markets. She also added there can be no repeal without a clear plan to replace the benefits of Obamacare.

"We're being asked to 'just trust us' but we cannot go back to a time where people have to worry whether they can afford health care," Heitkamp said.

Heitkamp called on hospital administrators to aggressively lobby on law changes they need to protect rural health care. "If you don't speak loudly about your needs as rural health care providers in this noise going on, then you will get left behind," she said.

Sen. Dean Heller, R-Nev., told hospital administrators that rural residents have always struggled with access to care, but he believes it has gotten worse under the Affordable Care Act. Heller wants to ensure more young physicians are placed in rural areas to deal with doctor shortages.

"In any replacement, one of my top priorities is to stabilize the market and transition to a system that works for all patients and not just the counties that have higher populations," Heller said.

Rep. Evan Jenkins, R-W.Va., noted Senate Republicans may have to use a budget reconciliation strategy to dump parts of the Affordable Care Act as a way to avoid the 60-vote cloture standard. Budget reconciliation, however, is only used for taxes and spending. If that's the case, then budget reconciliation could drop the tax penalty for not buying insurance, but not the actual requirement that people buy health insurance.

"You can do away with the penalty, but you can't do away with the mandate," Jenkins noted.

Beyond the government insurance, there is the question of what to do with the private insurance market if the Affordable Care Act is repealed. The ACA has increased the number of insured people in rural America by 8% but left people with annual premium increases on average of 20% to 30%. On top of that, more than 40% of rural residents nationally who buy insurance through the ACA exchanges are largely offered only one enrollment option.

South Dakota is one of the lucky states that has two competing insurers working to sign up business under the ACA around the Sioux Falls area because they are provider-sponsored insurers seeking to steer patients to the hospitals and clinics they own. Dr. Tom Dean, a physician from Wessington Springs, S.D., is also a board member for health insurance company Avera in South Dakota. Avera increased rates an average of 18% during the last ACA sign up but still saw more people enroll. Dean said even aggressive competition has not lowered premiums because each hospital chain is trying to one-up the other to get business.

"These huge premium increases we see are driven almost entirely by the cost of care," he said.

Adding a plug for the farm bill, Stabenow also noted the farm bill plays a role in health care through areas such as funding of broadband internet access and grants for telemedicine. "Also part of what happens in the farm bill is health foods and the family safety net," she said.

Later Sen. John Barrasso, R-Wyo., reiterated Stabenow's emphasis for broadband to boost health care in rural America. "Technology is going to be part of the solution to our problem," Barrasso said.

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on Twitter @ChrisClaytonDTN

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Chris Clayton