States get federal grants to help rural hospitals make transition
States get federal grants to help rural hospitals make transition to cost-based reimbursement
The federal program creating "critical access" hospitals in rural areas has made "substantial progress" toward full implementation, says a recent report from the Health Resources and Services Administration (HRSA).
As of Sept. 1, 35 states had won approval from the Health Care Financing Administration for their plans to convert conventional hospitals into those eligible for cost-based reimbursement under the Medicare program. HRSA in mid-September awarded more than $13 million to 43 states for the planning and analysis needed to evaluate participation in the program (see chart, p. 9). The funds also will be used to develop rural health networks that include the enhancement of emergency medical services.
HRSA Rural Hospital Flexibility Program | |
Grantee | Grant Award |
Alabama Department of Public Health | $162,650 |
Alaska Department of Health & Social Services | $382,705 |
The University of Arizona | $124,379 |
Arkansas Department of Health | $478,381 |
California Department of Health Services | $220,055 |
Colorado Department of Public Health and Environment | $382,705 |
Florida Department of Health | $191,352 |
Georgia Department of Human Resources | $411,408 |
Hawaii Department of Health | $162,650 |
Idaho Department of Health and Welfare | $334,867 |
Illinois Department of Public Health | $478,381 |
Indiana Department of Health | $287,029 |
Iowa Department of Public Health | $231,378 |
Kansas Department of Health and Environment | $550,138 |
Kentucky Department for Public Health | $191,352 |
Louisiana Department of Health and Hospitals | $220,055 |
Maine Department of Human Services | $124,379 |
Maryland Department of Health and Mental Hygiene | $ 83,717 |
Massachusetts Department of Public Health | $ 81,325 |
Michigan Department of Community Health | $224,839 |
Minnesota Department of Health | $550,138 |
Mississippi Department of Health | $171,403 |
Missouri Department of Health | $ 81,325 |
Montana Department of Public Health & Human Services | $574,057 |
Nebraska Health and Human Services System | $550,138 |
University of Nevada School of Medicine | $220,055 |
New Hampshire Department of Health and Human Services | $ 95,676 |
New Mexico Department of Health | $153,082 |
New York Department of Health | $550,138 |
North Carolina Department of Health and Human Services | $287,029 |
University of North Dakota School of Medicine and Health Sciences | $541,712 |
Ohio Department of Health | $ 95,676 |
Oklahoma Department of Health | $478,381 |
South Carolina Depart. of Health and Environmental Control | $263,110 |
South Dakota Department of Health | $287,029 |
Tennessee Department of Health | $399,448 |
Texas Department of Health | $478,381 |
Vermont Department of Health | $167,433 |
Virginia Department of Health | $167,433 |
Washington Department of Health | $550,138 |
West Virginia Department of Health and Human Resources | $358,786 |
Wisconsin Department of Health & Family Services | $550,138 |
Wyoming Department of Health | $220,055 |
Total | $13,114,506 |
Of the 35 states with approved plans, the report lists 12 with certified critical access hospitals: Colorado, Georgia, Idaho, Kansas, Maine, Minnesota, Nebraska, New York, North Carolina, Oklahoma, South Dakota, and West Virginia. It was completed for HRSA by the Sheps Center for Health Services Research at the University of North Carolina at Chapel Hill.
The report noted several problems in the existing legislation and suggested modifications:
• Hospitals do not have sufficient clinical flexibility to work within the 96-hour maximum for every hospital stay. Hospital representatives could work more easily with an annual average cap of 96 hours. Even lowering the cap to an annual average 72-hour cap would provide more flexibility than the existing fixed 96-hour maximum.
• Some hospitals in rural communities are in metropolitan counties and are thus ineligible for the program. Respondents suggested that the definition of "rural" be modified to accommodate such situations.
• There is confusion over the degree of necessary involvement of emergency medical service providers. With a shortage of volunteers and other factors putting pressure on the delivery of emergency medical services in rural areas, hospitals are uncertain how to incorporate EMS into their plans, says Tom Ricketts III, PhD, MPH, director of the North Carolina Rural Health Research Program at the Sheps Center.
• Other recommendations dealt with the credentialing of critical access hospitals and the creation of a central clearinghouse for information on the program.
For about a year, Texas officials have been studying how to use the program to restructure the local health systems of designated hospitals, not just change their Medicare reimbursement strategy. Since the program was rolled out July 1, the state has received two applications, from Palmer Memorial Hospital in Friona and Linden Memorial Hospital in Linden.
"Some people expected there to be a deluge," says Sam Tessen, executive director of the state’s Center for Rural Health Initiatives. "But I think because we took a conservative approach and expect hospitals to go through an intense process of self-evaluation, the decision on the part of the local hospitals is far more soul-searching." The count of likely candidates for designation is 43 and another six interested hospitals are located in rural outposts of metropolitan counties.
Any Texas hospital applying for critical access designation must provide a detailed pro forma on the impact of cost-based Medicare reimbursement on its facility. In addition, it must make a "concerted" effort to educate the community about what the designation would mean for residents and the hospital, Mr. Tessen says.
Texas, like many other states, is using its HRSA money to help hospitals ascertain whether the switch to cost-based Medicare reimbursement makes sense. For example, part of the state’s $478,381 award was given to a hospital association to construct a model for a "mini" pro forma. By plugging in local data concerning utilization, finances, and demographics, a hospital can gauge whether it makes sense to proceed to the next step of a detailed analysis.
More importantly, says Mr. Tessen, the state is making the point that Medicare cost-based reimbursement can’t be equated with a "hospital survival program." Texas wants to give at-risk rural hospitals the marketing, financial, and other tools they need to survive even beyond those offered by critical access designation.
"Simply going to critical access hospital designation is not going to change the demographics of the community or the county. It’s not going to change the utilization of the hospitals; it’s not going to change the long-term survivability of that hospital unless some other things change," he says.
The legislature is helping in the effort. Two endowments established with the proceeds of Texas’ share of the tobacco settlement are targeted toward rural health concerns. Interest from a $100 million endowment will go to emergency medical services and trauma care, with 60% of the proceeds earmarked for rural areas. In addition, interest from a $50 million endowment will be available for grants or loan guarantees for capital improvements in rural hospitals. The first funds from the capital improvement endowment will be available Nov. 30. (See related story, State Health Watch, June 1999, p. 9.)
Contact Mr. Tessen at (512) 479-8891 and Mr. Ricketts at (919) 966-7361. More information about the program is available on the Internet at www.hrsa.dhhs.gov/Newsroom/releases/HHSrhfp.htm.
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