To get a glimpse of that new legislation and also size up regulations and new programs for the coming year, more than one hundred fifty national association representatives, government executives, legislative aides and policy analysts met Jan. 28^th, 1999 for a Capital Area Rural Health Roundtable forum at which Congressman Jim Nussle (R-IA), National Rural Health Association representative Darin Johnson, and Federal Office of Rural Health Policy director Wayne Myers spoke. An appearance by Senator Baucus (D-MT) was cancelled at the last minute, but Congressman Nussle extended himself at the forum to answer a wide range of questions.

    The meeting was the ninth in a series of forums sponsored by the George Mason University Center for Health Policy and Ethics to explore rural health issues.

    Details on rural health legislation were somewhat limited, since the Senate and House coalitions are still at their drawing boards.

    "The coalition’s agenda is not yet out," said Congressman Nussle, who co-chairs the House Rural Health Care Coalition. It was clear from his remarks, however, and from comments by Pat Bousliman, speaking for Senator Baucus and the Senate Rural Health Caucus, that rural-friendly legislators in both houses plan to whittle their rural wish list to a realistic set of modifications to the Balanced Budget Act of 1997 that could be appended opportunistically to other legislation rolling through Congress this year.

    If the Bipartisan Commission recommendations on the future of Medicare that are due March 1st inspire Congressional legislation, it might be the opportunity to attach something rural," said Bousliman.

    Though not the subject of the forum, the Bipartisan Commission on Medicare and the Medicare Payment Advisory Commission (MedPAC) were frequent reference points for the speakers, given the potential of these Congressional advisory bodies to dramatically alter the landscape of rural revenues. They also represent a policy dilemma for rural health proponents because of their focus on using the market to ‘reform’ or reduce government spending for health care. Small rural communities tend to lack for health services and often lack the market power to acquire or support rural-oriented medical training, programs for the uninsured, and technical expertise to compete with managed care.

    Meanwhile, rural providers, who depend heavily on Medicare and Medicaid to pay the bills for a high proportion of poor and elderly clients, are nervous about the latest round of proposed federal regulations unleashed by the Balanced Budget Act and designed to check national spending.

    Forum speaker Darin Johnson, of the National Rural Health Association, reviewed those regulations – ranging from risk adjustment to capping payments for outpatient care - to urge attendees to make public comment.

    He pointed to a study by the Bethesda-based Project Hope Walsh Center for Rural Health Analysis that found rural hospitals far more dependent on revenues from outpatient services than urban hospitals. Small volume rural hospitals will be very vulnerable under outpatient prospective payment, said Johnson. The NRHA has proposed an alternative payment floor for such hospitals.

    Reviewing in-patient payment rates for Medicare, Johnson cited MedPAC chairman Gail Wilensky’s opposition to any further reductions in reimbursements for inhospital care. Nevertheless, he said it’s "crucial" that the Administration look at the significantly lower operating margins experienced by rural hospitals before making across-the-board reductions.

The Art of the Possible

    As Congress debates ways to preserve the Medicare/Medicaid programs and keep health care costs under control, rural-sympathetic legislators, especially in the House, have to find opportunities to explain how rural health issues are different from urban issues, said Congressman Nussle, whose own district spans 19 rural counties. He cited an example of how an 8-minute emergency dispatch, which prompted complaints in a suburban New Jersey community, would be barely enough time for rural volunteers to merely reach their ambulance. But a hospital closing in a rural community has dire consequences: "If our local hospital closes in a town of 4,000 and a county of 20,000, you’re done," he said of the local economy.

    "We have to try to sensitize others to rural problems," said Nussle. Otherwise, "one hundred twenty-five [votes] is about all you’re going to get unless you can figure out ways to broaden the issue, broaden the perspective."

    The Iowa Congressman outlined the House coalition goals this year as two-fold. He said they would work to "increase rural Americans’ access to physicians and other practitioners," and to "protect the rural health [service] infrastructure." Under the first goal, Nussle placed a high priority on tax relief for National Health Service Corps scholarships, on tax credits or other incentives for doctors already practicing in rural areas, and on reforming the graduate medical education system "to produce more of the primary care practitioners needed in rural areas." On that score, he said, "We always felt it was a matter of fairness that we address the needs of underserved rural areas."

    The Congressman also said he would be supporting legislation to be reintroduced by Congressman Bob Etheridge (D-NC) to improve rural EMS.

    Nussle said he has also reintroduced a bill to keep Medicare from "discouraging conservative care" by forcing hospitals to return a portion of their allotted reimbursement when patients are transferred to a less costly setting, a BBA reg that had cost his district’s 90 rural hospitals some $5 million. Nussle said he also introduced a bill to repeal a budget neutrality provision in the BBA that postponed geographic equalization of Medicare managed care rates.

    The Health Care Financing Administration has announced it will implement the geographic "blend" in Year 2000 (a "blend" of local and national rates), but Nussle said, "I’ll believe it when I see it." Implementation of the blend would affect 60% of U.S. counties, according to NRHA’s Johnson.

    Nussle said, meanwhile, that the work of the Bipartisan National Commission on Medicare "begs the question of rural’ and its recommendations would be carefully examined for their impact on rural beneficiaries and on medical education. Asked about the prospects for redirecting more graduate medical education funding to rural and community-based training sites, the Congressman indicated it would be difficult, given the fact that residency training slots will be jealously guarded now that the BBA has capped their numbers.

    According to Nussle aide Steven Berry, however, a Nussle GME initiative will seek to create more flexibility in the way the residency caps are assigned.

    On another key workforce issue, Berry said any attempt to eliminate the J-1 visa program providing foreign medical graduates in   underserved rural areas would meet rural opposition, unless there is another strategy to replace those lost physicians, such as with a substantial increase in the National Health Service Corps.

    Commenting on MedPAC’s upcoming examination of the J-1 visa program, NRHA’s Johnson said, "It’s never been more important to have rural representation on MedPAC."

Promoting Health in Rural Areas, Act II

    Senator Baucus will reintroduce last year’s Promoting Health in Rural Areas Act of 1998 with some changes, his legislative aide, Bousliman, told the forum. Referred to by Senate Rural Health Caucus staff as an omnibus rural health bill, the measure is a collection of legislative fixes or refinements to the BBA, especially for telemedicine. Although a bipartisan group of caucus staffers has been circulating a draft to rural health groups, Bousliman said at the forum he could not yet gauge the level of support in the Caucus.

    Among other provisions, the new bill would provide tax relief for National Health Service Corps scholarships, support the Medicare payment blend for managed care, update the payment formula for Sole Community Hospitals, and liberalize criteria for the Medicare-Dependent Small Rural Hospital. Bousliman said the bill would also require more rural representation on MedPAC.

    The bolder steps in the omnibus bill may be those that broaden Medicare reimbursement for mental health (to all state-licensed practitioners if they serve in health professional shortage areas), and that extend Medicare reimbursement for telemedicine to all rural areas, for all procedures currently covered, and for all types of telemedicine services including the more common "store-and-forward" type consultation.

    Under the BBA, the Health Care Financing Administration has limited Medicare reimbursement to real-time consultations in health professional shortage areas. Also, patient presentation by nurses, a common practice in rural telemedicine networks, does not qualify for reimbursement.

Critical Access Hospitals and the Home Front

    With discussion of the new Critical Access Hospital option for rural areas, newly-appointed Office of Rural Health Policy director Wayne Myers shifted the focus and temper of the forum somewhat away from national policy adjustments and laid more of the future of rural health at the doorstep of state and local initiative.

    Under the new Rural Hospital Flexibility Program sponsored by Senator Baucus and passed last year, rural hospitals that are more than 35 miles from another hospital and find themselves under serious financial stress can, with state designation, convert to a limited service facility called the Critical Access Hospital. Networked into a full-service hospital, the CAH will have regulatory relief from traditional full-staffing requirements and enjoy cost-based Medicare reimbursement.

    Although a closed rural hospital can not qualify for the program under the original legislation, the new Baucus bill calls for including rural hospitals closed in the past five years. It would also allow CAHs to use an all-inclusive rate payment option for facility and physician services to outpatients.

    Implementation of the Rural Hospital Flexibility Program has two phases: To begin designating CAHs, states must first submit a plan or a notice of intent to plan to the Health Care Financing Administration. Once accepted by HCFA, states can apply to the HRSA Office of Rural Health Policy for funds to actually engage in planning. Recently-appropriated to the tune of $25 million in the last omnibus spending bill, the planning grants are expected to make community development, network design, and improvement of local emergency medical services a viable corollary of the CAH program.

    About 43 states have expressed interest in the program, according to the North Carolina Rural Health Research Center, which has been tracking state activity. Many candidate hospitals have lacked funding for the necessary financial and community needs assessments that conversion requires. States expect to use the planning grants to provide that technical assistance and to develop a statewide plan that fosters network development and the enhancement of rural emergency medical systems.

    Myers said the planning grants will be available in "two installments" with preliminary funding of about $200,000 to each state available as early as March. The office later clarified that states will have to have submitted their applications of assurance to HCFA before qualifying for the planning funds. As of January, eighteen states had a HCFA-go-ahead and another three states were awaiting HCFA approval, according to the University of North Carolina.

    Technically the planning grants go to states, said Myers but "we’d hope a fair bit of it will go to the community. We’d like to say     there is an opportunity here for hospitals to get in a dialogue with their communities."

    Myers, a physician and former developer of rural-based health care training programs in Alaska and Kentucky, told his audience that an important challenge for rural communities is to see health care in terms of economic development. Speaking softly, he said, "You have to start with the recognition that there is money to run health care [locally]." He invited listeners to consider that individually-controlled health expenditures average $3,000 a year and that 20,000 people living in a county could carry as much as $60 million away from a town when they decide to go elsewhere for their health care.

    Dr. Myers pointed to the accomplishment of Harlan, Kentucky which put its own hospital back in the black following a year of community meetings and changes. "It’s the only method I’ve seen work," he said of the local brainstorming.

    "We in the [Nussle] Congressional office(s) find this is very true," said Berry. "It’s really essential that the community get involved."

    NRHA’s Johnson, too, lauded local initiative, but said rural hospitals and communities still need the advice and planning resources that the CAH program can provide. Johnson also called the CAH model "evolutionary," and a foundation for keeping as much health care services in the community as possible. His association’s interest in Medicare capitation rates, he said, is not to drive managed care into rural areas but to open up opportunities for a mix of rural providers to work together to finance a local system. Calling on HCFA to create a rural demonstration program with the Medicare Choice plan, Johnson said, "Let’s provide rural communities with the technical expertise they need to create a PSO [provider service organization]."

    Myers’ review of the federal programs supporting rural health included a reminder that rural advocates should be concerned with all national health policy. "The most important education and training programs are the ones that are ostensibly not rural," he same, noting the nearly $10 billion expended through Medicare and Medicaid for graduate medical education in largely affluent urban and suburban areas – compared with the $300 million his agency spends to educate professionals for service in poor and undersupplied areas.

    In other news, forum attendees also learned that the Office of Rural Health Policy expects to award approximately 50 of the popular Rural Health Outreach Grants to communities near the end of the current fiscal year. Myers also said it would be a "reasonable" year for rural network grants – predicting about 15 awards.

    Dr. Dena Puskin, Director of the new HRSA Office for the Advancement of Telehealth (OAT) responded to a question on funding for telehealth by noting that the OAT anticipates some new revenues for a small pilot urban telemedicine program in FY 2000. Her office expects to make an August announcement.