Critical Access Hospitals, as of 2014

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This story originally appeared here and is published by Carolina Public Press through a content-sharing agreement with N.C. Health News.

By Taylor Sisk, N.C. Health News

Since January 2013 more rural hospitals have closed than in the previous decade combined, according to the National Rural Health Association.

Factors contributing to these closures are many and varied. Some pertain to demographics: Rural populations are, generally speaking, dwindling and aging, and the younger people who stay around are more apt to opt to drive to urban hospitals.

Rural hospitals also have been more affected than urban ones by advances in medicine that allow for more procedures to be performed as outpatient services. For an increasing number of rural hospitals, it’s no longer practical to maintain more than a few, if any, inpatient beds.

More recently, many rural hospitals have been staggered by slashes to reimbursements from the federal government.

Congressional House Bill 3225, the Save Rural Hospitals Act, introduced in July by Rep. Sam Graves (R-MO), could be a partial remedy to rural closures. It would replenish those reimbursements and loosen some restrictions.

The bill is now with the House Subcommittee on Health.

The bill’s proposals

One of the primary financial blows rural hospitals have absorbed was an outcome of infighting in 2011-12 among members of Congress over the debt ceiling. In March 2013, those battles resulted in the nation going over the “fiscal cliff,” spurring across the board cuts known as sequestration. Under sequestration, the Medicare payments hospitals receive were cut by 2 percent – a significant reduction for hospitals already operating on tight margins.

The Save Rural Hospitals Act calls for the reversal of those sequestration cuts.

The bill also stipulates the reversal of cuts to federal discounts hospitals receive for bad-debt, something that frequently affects rural hospitals. An even bigger reversal would be to cuts made to the Disproportionate Share Hospital program, money paid to hospitals in areas with higher rates of poor and uninsured, as is often the case in rural areas. People show up at the door of those hospitals without a means to pay; but before the DHS cuts, hospitals provided care, knowing DSH payments would close the gap.

The Save Rural Hospitals Act would also extend a requirement that expired last year allowing rural hospitals to increase payment rates for Medicaid primary care services to match the levels they receive through Medicare, which is better reimbursed.

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The bill would eliminate payment conditions placed on critical access hospitals that require doctors to certify that a Medicare patient will be discharged or transferred to another hospital within 96 hours.

“Critical access hospital”  is a designation given by the federal Centers for Medicare and Medicaid Services that provides preferential reimbursement to small hospitals in rural areas in order to maintain essential services.

The American Hospital Association argues that, “While CAHs typically maintain an annual average of 96 hours per patient, they offer some medical services that have standard lengths of stay greater than 96 hours.”

The bill also addresses a supervision requirement for outpatient therapy services provided at CAHs. The requirement today is that a supervising physician be physically present when Medicare patients receive these services.

Finally, it also stipulates grant funding for population-health initiatives.

A quick look at CAHs

The critical access hospital designation was introduced in 1997 in response to a trend in the 90s that saw an uptick in hospital closures.

To qualify, CAHs must have no more than 25 acute-care inpatient beds, be located no closer than 35 miles from another hospital (with some exceptions)  and provide around-the-clock emergency care services.

If a hospital can meet these requirements, it can receive the CAH designation and receive “cost-based” Medicare reimbursement, rather then a standard rate. Other, non-CAH hospitals are reimbursed based on a fixed rate, as determined by CMS. Before sequestration, payment to a CAH was 101 percent of allowable costs, but was reduced under sequestration to 99 percent.

More than 1,300 hospitals have been designated as CAHs around the country; nineteen of North Carolina’s 135 hospitals are designated CAHs. The program is widely credited for helping place rural hospitals throughout the country on more stable fiscal foundations.

At risk

Nonetheless, many CAHs are finding it difficult, or impossible, to remain afloat. These include the recently shuttered Yadkin Valley Community Hospital in the central region of the state.

In July, the Yadkin County Board of Commissioners issued a resolution in favor of a different Congressional bill introduced in June of this year, prior to the Save Rural Hospitals Act.

Senate Bill 1648, the Rural Emergency Acute Care Hospital Act, sponsored by Sen. Chuck Grassley (R-Iowa), also aims to help CAHs keep their doors open. It proposes legislation that would offer them the option to be redesignated as “rural emergency hospitals,” which would allow them to continue to provide emergency services without maintaining inpatient beds.

Diane Calmus, the National Rural Health Association’s government affairs and policy manager, said the NRHA favors the Save Rural Hospitals Act, calling it “a comprehensive solution to the rural hospital closure crisis.”

The Grassley bill, Calmus said, “only looks at an alternate provider type that may work for some rural hospitals without resolving the underlying problem of all of the cuts rural hospitals have been forced to absorb and the regulatory burdens” placed on them.

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Meanwhile, down east in the Beaufort County town of Belhaven, another community that’s lost its hospital, Mayor Adam O’Neal has advocated for the expansion of Medicaid, among other measures, as a remedy for the ills of rural hospitals.

Is there need?

The 21st Century Rural Hospital: A Chart Book,” published by the North Carolina Rural Health Research Program at UNC’s Cecil G. Sheps Center for Health Services, provides data suggesting why hospitals in general, and critical access hospitals in particular, are needed in rural communities. (Slightly more than half of all rural hospitals are CAHs.)

The typical rural hospital is located in a county with a median population of 27,980, of which 16.8 percent are 65 or older.

The national average for seniors is 14.1 percent.

Average per capita income in these rural counties is $32,781; in the South, it’s even less, only $29,801 in annual earnings. About 17.5 percent of rural residents live below the federal poverty level ($24,250 for a family of four), that’s 20 percent more people living in poverty than in counties with urban hospitals.

According to a study published in 2014, overall life expectancy is two years lower in rural counties than in urban – a gap that’s widened over the past four decades. More children are overweight (25 percent compared with 19 percent). And more rural residents are uninsured.

As for revenue generation: According to the NRHA, the average CAH creates 107 jobs, produces $4.8 million in payroll annually and can mean as much as 20 percent of a rural economy.

NC Health News

North Carolina Health News is an independent, not-for-profit, statewide news organization dedicated to covering health care in North Carolina employing the highest journalistic standards of fairness, accuracy and extensive research. NCHN seeks to become the premiere source for health reporting in North Carolina. Visit NCHN at northcarolinahealthnews.org.

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