Critical Access Hospitals
Medicare Rural Hospital Flexibility Program and Critical Access Hospitals
BACKGROUND
Significant health disparities between rural and urban populations have been a major concern in the United States. One prominent factor contributing to the disparities is lack of access to quality care in rural areas which is closely associated with challenges faced by rural health care providers (National Rural Health Association, 2007). Rural hospitals are the key health care provider in rural areas, offering essential health care services to nearly 54 million people (American Hospital Association, 2006). They face a series of challenges such as workforce shortages, rise in health care costs, difficulty in finding access to capital, difficulty in purchasing new technology, small size, limited assets and financial reserves, and a higher proportion of older residents resulting in higher number of Medicare patients than those in urban areas (Rural Assistance Center-Hospitals, 2012). Rural Healthy People 2010 reported that only 10% of physicians practice in rural America despite the fact that nearly one-fourth of the population lives there. In addition, over the past 25 years more than 470 rural hospitals have closed (Southwest Rural Health Research Center, 2003). "Eye on Health" by the Rural Wisconsin Health Cooperative reported that the population of rural areas is 18% seniors, and 14% below the poverty level (Rural Wisconsin Health Cooperative, 2002). A key contributing factor for substantial increase in number of rural hospital closures during the 1980s is the restructuring of the Medicare reimbursement policies in the 1980s from a cost-based system to a prospective payment system (PPS) (Capalbo S, Kruzich T & Heggem C., 2002). For an average rural hospital, nearly 60% of its revenue comes from the Medicare and Medicaid programs which is about 10% higher than for the average urban hospital (Mohr P, Franco S, Blanchfield B, Cheng M, and Evans W., 1999). Under the PPS,
BACKGROUND
Significant health disparities between rural and urban populations have been a major concern in the United States. One prominent factor contributing to the disparities is lack of access to quality care in rural areas which is closely associated with challenges faced by rural health care providers (National Rural Health Association, 2007). Rural hospitals are the key health care provider in rural areas, offering essential health care services to nearly 54 million people (American Hospital Association, 2006). They face a series of challenges such as workforce shortages, rise in health care costs, difficulty in finding access to capital, difficulty in purchasing new technology, small size, limited assets and financial reserves, and a higher proportion of older residents resulting in higher number of Medicare patients than those in urban areas (Rural Assistance Center-Hospitals, 2012). Rural Healthy People 2010 reported that only 10% of physicians practice in rural America despite the fact that nearly one-fourth of the population lives there. In addition, over the past 25 years more than 470 rural hospitals have closed (Southwest Rural Health Research Center, 2003). "Eye on Health" by the Rural Wisconsin Health Cooperative reported that the population of rural areas is 18% seniors, and 14% below the poverty level (Rural Wisconsin Health Cooperative, 2002). A key contributing factor for substantial increase in number of rural hospital closures during the 1980s is the restructuring of the Medicare reimbursement policies in the 1980s from a cost-based system to a prospective payment system (PPS) (Capalbo S, Kruzich T & Heggem C., 2002). For an average rural hospital, nearly 60% of its revenue comes from the Medicare and Medicaid programs which is about 10% higher than for the average urban hospital (Mohr P, Franco S, Blanchfield B, Cheng M, and Evans W., 1999). Under the PPS,
References: American Hospital Association. (2006). Rural Health Care. Retrieved from http://www.aha.org/advocacy-issues/rural/index.shtml American Hospital Association. (2011).The Opportunities and Challenges for Rural Hospitals in an Era of Health Reform. Trendwatch. Retrieved from http://www.aha.org/research/reports/tw/11apr-tw-rural.pdf Capalbo S, Kruzich T & Heggem C. (2002). Strengthening a fragile rural health care system: Critical Access Hospitals and Telemedicine. CHOICES, 26-29. Retrieved from http://ageconsearch.umn.edu/bitstream/132209/2/Capalbo.pdf Department of Health and Human Services. (2013). Medicare Learning Network; Critical Access Hospital. Retrieved from http://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network MLN/MLNProducts/downloads/CritAccessHospfctsht.pdf Department of Health and Human Services. (2011). Medicare Learning Network; Hospital Value-Based Purchasing Program. Retrieved from http://www.cms.gov/Outreach-and-Education/Medicare-Learning-NetworkMLN/MLNProducts/downloads//Hospital_VBPurchasing_Fact_Sheet_ICN907664.pdf Flex Monitoring Team. (2011). CAH Financial Indicators Report: Summary of Indicator Medians by State (No.9). Retrieved from http://www.flexmonitoring.org/documents/DataSummaryReportNo9_StateMedians2011 pdf Gapenski L. (2009). Chapter 3: Paying for Health Services. Fundamentals of Health Care Finance, 52-81. Retrieved from http://www.ache.org/pubs/PDF_Preface/Sample%20Gateway%20Chapter.pdf McNamara P. (2009). Rural Hospitals, Reimbursement Policy, and Health Care Reform. CHOICES. Retrieved from http://www.choicesmagazine.org/magazine/print.php?article=103 Mohr P, Franco S, Blanchfield B, Cheng M, and Evans W. (1999). Vulnerability of Rural Hospitals to Medicare Outpatient Payment Reform. Health Care Financing Review, Fall, 21(1), 1-18. Retrieved from http://www.cms.gov/Research-Statistics-Data-and Systems/Research/HealthCareFinancingReview/downloads/99fallpg1.pdf National Rural Health Association. (2007). About Rural Health; What 's Different about Rural Health Care? Retrieved from http://www.ruralhealthweb.org/go/left/about-rural-health 10 Medicare Rural Hospital Flexibility Program and Critical Access Hospitals Rand Health. (2006). Effects of Medicare’s Prospective Payment System on the Quality of Hospital Care. Retrieved from http://www.rand.org/content/dam/rand/pubs/research_briefs/2006/RAND_RB4519-1.pdf Rural Assistance Center. (2012). CAH Frequently Asked Questions. Retrieved from http://www.raconline.org/topics/hospitals/cahfaq.php#flex Rural Assistance Center, (2012). Health Care Workforce. Retrieved from http://www.raconline.org/topics/hc_providers/ Rural Assistance Center. (2012). Hospitals. Retrieved from http://www.raconline.org/topics/hospitals/ Rural Wisconsin Health Cooperative. (2002). Eye on Health. Retrieved from http://www.rwhc.com/eoh02/September.pdf Schoenman J, and Sutton J. (2008). Impact of CAH Conversion on Hospital Finances and Mix of Inpatient Services. NORC Walsh Center for Rural Health Analysis. Retrieved from http://www.norc.org/PDFs/Walsh%20Center/Main%20Page/ImpactofCAHConversion_F inalReport_NORC.pdf Southwest Rural Health Research Center. (2003). Rural Healthy People 2010 Project. Retrieved from http://www.srph.tamhsc.edu/centers/rhp2010/publications.htm Stensland J, Davidson G, and Moscovice I. (2004). The Financial Benefits of Critical Access Hospital Conversion for FY 1999 and FY 2000 Converters. University of Minnesota Rural Health Research Center Working Paper, 51. Retrieved from http://rhrc.umn.edu/wp-content/files_mf/wpaper051.pdf Stensland J, Davidson G, and Moscovice I. (2003).The Financial Effects of Critical Access Hospital Conversion. University of Minnesota Rural Health Research Center Working Paper, 44. Retrieved from http://rhrc.umn.edu/wp-content/files_mf/workingpaper044.pdf The National Rural Health Association. (2013). Benchmark Performance for Critical Access Hospitals; The Top 100 CAH Report of Findings. Retrieved from http://www.ivantagehealth.com/wp-content/uploads/2013/03/TOP-100-CAH-Report-ofFindings.pdf Virginia Department of Health. (2012). Medicare Rural Hospital Flexibility Program (Flex). Retrieved from http://www.vdh.state.va.us/healthpolicy/primarycare/ruralhealth/flex.htm 11 Medicare Rural Hospital Flexibility Program and Critical Access Hospitals Wendling, Noe, Nelson & Johnson LLC. (2002). Financial Success of the Critical Access Hospital Program in Kansas: a Comparative Study. Kansas Rural Health Options Project. Retrieved from http://www.krhop.net/reports/financialimpact.pdf 12