Inside Health Policy: NRHA Says Rural Hospital Closures On The Rise, Pushes Legislation

A National Rural Health Association-backed report found that more than 650 rural hospitals are at risk of closing, and both the association and Sen. Charles Grassley (R-IA) are pushing bills with new hospital classification systems to reverse the trend of rural hospital closures.

The pace of rural hospital closures is increasing, NRHA Vice President of Government Affairs and Policy Maggie Elehwany told attendees at the group’s annual conference, pointing to an iVantage Analytics report backed by NRHA. Three rural hospitals have already closed in 2016, she said. Since 2010, 67 rural hospitals have closed, and the rate of rural hospital closures was six times higher in 2015 than in 2010. At this rate, 25 percent of rural hospitals will shut down in less than 10 years, Elehwany said.

NRHA says medical deserts are forming in different parts of the country; Texas has 75 rural hospitals that are vulnerable, the most of any state, according to the iVantage Analytics report. Mississippi has the highest percentage of vulnerable rural hospitals.

Rural hospitals are hit harder by bad-debt reductions, sequestration cuts and other Medicare cuts than urban hospitals because the population they care for is older, poorer and sicker per capita than the population in urban areas, NRHA CEO Alan Morgan said in a statement. George Pink, senior research fellow at the University of North Carolina Cecil G. Sheps Center for Health Services Research, said that the profitability of urban hospitals is increasing while the profitability of rural hospitals is decreasing. That’s unusual, he added. Most of the time the profitability of urban and rural hospitals moves in the same direction.

Elehwany said neither party is focusing enough on what is happening to health care in rural areas. Part of the problem is that programs were put in place to help rural hospitals — including the critical access hospital designation — after more than 400 hospitals closed in the 1980s and 1990s, but many legislators that enacted those programs have left Washington and some legislators now see rural hospital payments as bonus pay, Elehwany said.

“We can’t go back to those ways, we can’t go back to those dark days where it took Congress over a decade to figure out the problem and to slowly create these unique rural payments,” Elehwany said. She added that Congress could choose to stop the Medicare cuts that have occurred and are contributing to hospitals’ vulnerability.

Grassley told the NRHA conference that caring about rural communities, not only in terms of health care but also economic development, means changing the trend of rural hospital closures.

Grassley said the Rural Emergency Acute Care Hospital Act is one part of a solution to help stop hospital closures. The bill would create a new Rural Emergency Hospital classification under Medicare, and allow a hospital to have an emergency room and outpatient services without maintaining inpatient beds, according to a press release on the bill. Grassley told NRHA the value of rural hospitals is their ability to quickly stabilize a patient before they are transferred to a higher level of care.

Elehwany told Grassley there is a concern that hospitals could close before they would be able to transition to the new designation under the REACH Act. The House built on the REACH Act to create the Save Rural Hospitals Act, she said.

NRHA has been pushing Congress to pass the Save Rural Hospitals Act to help keep rural hospitals open, and members lobbied for the bill during Capitol Hill visits this week. The bill would create a new category of hospital for critical access and rural hospitals with 50 beds or less. Hospitals would also have the flexibility to provide additional outpatient services. Community outpatient hospitals would be encouraged to provide primary care services through a Federally Qualified Health Center or rural health clinic to make sure emergency rooms aren’t used inappropriately and communities don’t lose access to primary care. Hospitals would be reimbursed at 105 percent of reasonable cost, and would also be eligible for population health grants. The bill would also include new grants for rural hospitals.

The bill also would reverse bad debt reimbursement cuts and Medicare and Medicaid disproportionate share hospital payment cuts.

Elehwany encouraged Grassley to consider supporting the Save Rural Hospitals Act, and he said he would take a hard look at the bill.

One NRHA member said that while the bill has movement in the House, the group is frustrated by the Senate’s slowness to act. The member asked Sen. James Lankford (R-OK) what the group should do to improve the bill’s chances in the Senate.

“It’s not going to be a great shock to you, the federal government is dealing with the same thing you’re dealing with, and that’s cost,” Lankford said. “We’re still trying to score it and figure out what the final cost is on it and where the offset is going to be. So that’s the hold up in the Senate.”

Lankford cautioned that most health care changes that can be expected will be incremental.

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