Shannon Firth | October 15, 2015
WASHINGTON — Like amputating an arm to save a life, an advisory body to Congress explored whether eliminating the inpatient services of struggling rural hospitals could stop them from closing.
The Medicare Payment Advisory Committee (MedPAC) met last week to discuss whether converting some rural hospitals into one of two care models — free-standing emergency departments (ED) or primary care clinics with ambulance services — might preserve access to emergency care while channeling non-urgent cases to other inpatient facilities.
Most commissioners supported the new models, but with differing visions for their implementation.
Low Volume
The problem for rural hospitals is that admissions are declining, but Medicare’s current special programs tie add-on payments to the inpatient rates. Beneficiaries need access to local hospitals, but the quality of inpatient care suffers when providers see few patients.
The new models are clear-cut. Hospitals are already getting extra subsidies on the inpatient side, said Jeff Stensland, PhD, principal policy analyst for MedPAC. “Let’s take the existing extra subsidies and shift [them] to the outpatient side.”
Around 30 rural hospitals have closed since January 2013, or 41 facilities, if hospitals located in rural areas within metropolitan statistical areas (MSAs) are included, he said. While similar numbers of urban hospitals have closed, in rural communities the lack of emergency care alternatives creates concern.
“It is exactly these situations that motivate today’s discussion,” Stensland said.
Small rural hospitals under the traditional Medicare Payment System (PPS) saw their total discharges decline by 12% on average from 2003 to 2013, and Critical Access Hospitals (CAH) saw discharges drop by more than double that percentage, around 27%, Stensland said. The trend appears to be worsening. In 2013, one in 10 CAHs — roughly 130 hospitals — had two or fewer discharges per week.
Stensland attributes the low volumes to declining populations and to larger hospitals offering more specialized services.
Alternative Models
In one model Stensland described, a hospital converts to a free-standing ED that operates 24/7. The facility would rely on hospital outpatient PPS rates and would need fixed grants to finance stand-by capacity. These hospitals would drop all acute inpatient services and cost-based reimbursement for post-acute services, he noted.
In a second model, called the “Federally Qualified Health Center (FQHC) — Plus” model, rural hospitals would convert to primary care clinics with an ambulance service. Clinics would run 8 or 12 hours each day, with the ambulances working 24/7. Again, the clinics would be paid PPS rates per service and receive fixed grants to cover the cost of ambulances, stand-by capacity, and uncompensated care.
To avoid subsidizing competing hospitals near to each other, both models would target “low volume isolated providers” at a set distance — possibly 20 or 25 miles — from another facility.
Each model’s sustainability would depend on a strong payer mix and additional financial support, Stensland said, and programs might require local tax dollars to provide matching grants from the community.
Commissioners Responds
Herb Kuhn, president and CEO of the Missouri Hospital Association in Jefferson City, said the alternative models seemed reasonable and suggested incorporating new opportunities for telemedicine “as a sweetener” to help tackle the issue of clinician recruitment.
He also supported the idea of a local tax: “I do think there needs to be community skin in the game.” Kuhn added that facilities should have the option to convert back to full-service hospitals, otherwise few of their governing boards would be willing to take such a risk.
MedPAC vice chair Jon Christianson, PhD, of the University of Minnesota in Minneapolis, argued that closure aren’t caused by misaligned financing in Medicare, but by basic uncompensated care. He asked the commission to consider whether a more straightforward approach — one that targets uncompensated care — could be more effective.
Willis “Bill” Gradison Jr., MBA, DCS, of McLean, Va., agreed, stating said the commission should explore the causes of uncompensated care at rural hospitals, and compare the rate of such problems in states with and without Medicaid expansion.
“We don’t want to be in the business of filling buckets that others leave under-filled,” said Kate Baicker, PhD, of the Harvard T.H. Chan School of Public Health in Boston. She still supported the proposed new models, but her greatest concern was ensuring that beneficiaries could access quality care at the right facility.
“It’s important that everyone has access to timely emergency care, but when care is not time-sensitive, [we] want people going to other hospitals that have higher quality outcomes,” she explained. “Not that these [rural] hospitals and providers aren’t doing the very best that they can in providing critical services, but we know that you need a critical mass of different procedures to get them done effectively.”
William Hall, MD, of the University of Rochester, in Rochester, N.Y., works in rural Michigan for part of each year, and he suggested a third model. “What if we incentivized the closest full service hospital to … extend [its] own network?” he asked, noting that subsidies might be shifted away from the rural hospitals and into the nearest major hospital.
But Alice Coombs, MD, of Milton Hospital and South Shore Hospital in Weymouth, Mass., objected that small hospitals shouldn’t be forced “under the umbrella of a larger entity” that could become “dictatorial” and ignore the nuanced needs of rural communities. She said she would support a partnership but not a formal contract.
The next MedPAC meeting will be held on Nov. 5-6.
Source: Med Page Today