Rural Hopes Riding High on BBRA II Wave

September 2000

Medicare legislation expected to move through Congress this September to reduce the financial cuts of the 1997 Balanced Budget Act will likely give rural facilities a package of changes that could ease their financial stress.  In a Sept. 6th Capital Area Rural Health Roundtable that drew a record crowd of 150, rural legislators Kent Conrad (D-ND) and Jim Nussle (R-IA) outlined a number of proposals that have bipartisan support from House and Senate rural health coalitions.

 “Strap on your seatbelts,” Senator Conrad told his audience.  “The next few weeks are going to be fascinating.”  Both he and Congressman Nussle, who co-chairs the House Rural Health Care Coalition, warned it would take a concentrated effort to keep rural interests competitive in the frenetic few weeks that will close the 106th Congress.  Conrad said rural providers can’t continue losing money every time they treat an elderly patient.

Nussle said a list of rural priorities forwarded by the House Rural Health Care Coalition to the chairmen of the chamber’s major health subcommittees had no formal response yet -- from Rep. Bill Thomas (R-CA) and Michael Bilirakis (R-FL) -- but he expressed optimism that the needs of rural facilities would get better treatment this year than they did in last year’s Balanced Budget Refinement Act.

Rural legislators are calling for:

• a full inflationary update for Medicare inpatient payments; and (noting sizable recent losses for rural hospitals), an additional market basket update plus 1.1 percent for them.
• rescinding of cuts to Medicaid DSH payments for FY 2001 and 2002.
• permanent authorization for the Medicare DSH program with better updates for rural hospitals and an equitable threshold for qualification.
• improvements to the reimbursement formula for Sole Community Hospitals.
• Critical Access Hospitals:  the inclusion of lab services in their reasonable-cost reimbursement status, and the option to bundle their payments for facility and professionals.
• funding the BBA-authorized program of grants for small rural hospitals to retool for Medicare prospective payment systems.  Also (Conrad), a capital infrastructure loan program.

Also on the priority list are measures for:

• permanent repeal of the 15% reduction in Medicare home health payments.
• a one-time update of 13.5% for PPS payments to skilled nursing facilities; also improvement operating cost surveys that provide the basis for reimbursements.
• cancellation of the rescheduled phase-outs for Medicaid cost-based payments to Rural Health Clinics and FQHCs.
• putting the new reimbursement formula for Medicare managed care into effect by removing the budget-neutral impediment to funding; raise the minimum per capital payment to $500 per beneficiary per month; and speed the blend of national and local rates.
• for telemedicine:  expand Medicare reimbursement to all rural areas (not just underserved areas), reimburse for facility and technology charges, and broaden range of practitioners who can present the patient.

Rural EMS:
Missing from the House priority list is a provision to address the fixed-cost, low-volume dilemma for rural emergency medical services, said Paul Moore, CEO of a Critical Access Hospital in Atoka Oklahoma and a guest speaker at the Sept. 6th Roundtable.  He said the Medicare fee-scale is inadequate and one of the many reasons “no one wants to be in the ambulance business in rural areas.”  Rural counties and hospitals are left to finance ambulance service, he said.  Some provision for reasonable cost-based reimbursement, as exists in Snowe (R-ME) and Roberts-sponsored (R-KS) Senate bills “would complete the vision” for  Critical Access Hospitals, he said.

Reforms for a Rural Model:
Responding to audience comments that piecemeal revisions to the BBA fall short of Medicare reforms that would promote a rural model for health care, speakers acknowledged the limits of revising policies born of urban conditions and broad budget cuts.  In his remarks, Senator Conrad had also told attendees he and Iowa Senator Charles Grassley (R-IA) will have to address the wage index” portion of the Medicare payment formula.  He called “intolerable” the contrast between Medicare’s $4,200 reimbursement for a pneumonia case at Mercy Hospital in North Dakota and its $8,560 reimbursement at Mother of Mercy hospital in New York City, saying such discrepancies can’t be attributed to a 100 percent differential in wages.

Rural Recommendations for a Medicare Drug Benefit:
The Roundtable also featured a presentation on possible rural requirements for a Medicare prescription drug benefit, should Congress take up that reform in earnest some time next year.  University of Southern Maine researcher, Andrew Coburn, presented a new study by the Rural Health Panel of the Rural Policy Research Institute that measured a sampling of legislative proposals against a set of rural-needs criteria.  Offering a range of statistics, Coburn said the rural elderly are already poorer, sicker, have less insurance, and pay more out-of-pocket for their medication than the urban elderly.  He said a well-designed benefit under Medicare would have to consider not only affordability, but ways to assure that plans and pharmaceutical providers would actually be available.

Capital Area Rural Health Roundtable
Center for Health Policy Research & Ethics
George Mason University
Fairfax, Virginia
703-993-1907