fah hospital policy blog

Perspectives on health policy affecting America’s hospitals and the patients we serve.

Legislative Lifeline: Bipartisan Bill Can Cure Funding Issue for Rural Hospitals

September 18, 2017 | FAH Policy Blog Team

Category: FAH News, Medicare, Rural

Rural hospitals provide a vital lifeline to nearly 60 million Americans. Whether you are taking you child for a check-up at Mad River Community Hospital in Arcata, California or need emergency care at Desoto Memorial in Arcadia, Florida, facilities from coast to coast keep small communities healthy physically and fiscally.

Now rural hospitals need Congress’ help.

Having a hospital in a rural community can literally save lives. When seconds matter most, having essential health care minutes away, instead of hours, can mean the difference between life and death.

But these facilities are also the center of people’s livelihoods. Around 14% of total employment in small communities is attributed to the health care sector and hospitals are often the largest or the second largest employer in most rural communities. The economic impact radiates far beyond the four walls of the hospital. From the dry cleaner who takes care of workers uniforms and the restaurant where the staff go to lunch to realtors, car dealers and day cares, you would be hard pressed to find a business not touched in some way by those who work for or get treatment at one of these facilities.

However, their locations create unique challenges, like limited workforce options, physician shortages, difficult patient mix and razor tight budgets. This can often make it tough for rural hospitals to keep their doors open.  We saw this reality play out in the 1980’s, when hundreds closed.

Congress stepped in to revive many rural hospitals with payment modifications, which included the Medicare Dependent Hospital (MDH) and the Low Volume Hospital (LVH) programs.

MDHs are hospitals that meet specific criteria that care for a larger portion of Medicare recipients (more than 60%) than their urban counterparts.  Because the rural Medicare patient populations in these areas are older, suffer from higher rates of chronic illness, and have lower incomes, these rural hospitals struggle to stay financially stable under the Medicare fee schedule.  In 1987, Congress recognized these challenges, by providing MDH designated hospitals payments based on their historical costs of providing care rather than the prospective payment schedule based on how other hospitals preform.

The LVH program recognizes that certain hospitals are more isolated and simply do not have the patients volume for economies of scales.  The sliding-scale payment adjustment created by the LVH program helps compensate for such a competitive disadvantage.   

Both programs expire at the end of this month and if Congress doesn’t act patients could suffer. Hospitals might be forced to cut back on services and staff and in worst cases scenarios shut down completely.

The good news – it doesn’t have to get to that point. There is bipartisan legislation that would make these programs permanent. The Rural Hospital Access Act of 2017 (H.R. 1955/S.872), which was introduced by Congressman Tom Reed (R-NY) and Peter Welch (D-VT) and Senators Chuck Grassley (R-IA) and Chuck Schumer (D-NY), gives certainty to rural hospitals and the patients and communities they serve.

With the deadline approaching, FAH President and CEO Chip Kahn has been highlighting the importance of these programs for community hospitals during a radio tour. He has conducted interviews with hosts in local markets from Tennessee, Ohio, Pennsylvania, New York and North Carolina. He also spoke with Tim Farley on Sirius/XM Radio’s POTUS channel.

Kahn’s message is simple – there is a vaccination that can treat this problem before it starts. FAH is asking Congress to package the Rural Hospital Access Act with other must-pass health care legislation, like the Children’s Health Insurance Program (CHIP) reauthorization, and pass it this month.

It is time for lawmakers to stand up for the rural hospitals that so many Americans depend on.

You can listen to Chip’s Sirius XM interview here and find his interview on Pennsylvania Public News Service here.