President Obama’s call to reduce reimbursement payments for Critical Access Hospitals
Yesterday, President Obama called for the reduction of payments to Critical Access Hospitals (CAHs) and to eliminate the CAH designation for those fewer than 10 miles from the nearest hospital to “better align payment to rural providers with the cost of care.” Currently, 41% of CAHs operate at a financial loss. Without Medicare reimbursements, over half of CAHs would lose money. Such devastating cuts will cause rural hospital doors to close, resulting in loss of access to health care and needed rural jobs. From the report: “Medicare makes a number of special payments to account for the unique challenges of delivering medical care to beneficiaries in rural areas. These payments continue to be important; however, in specific cases, the adjustments may be greater than necessary to ensure continued access to care. The Administration proposes to improve the consistency of payments across rural hospital types, provide incentives for efficient delivery of care, and eliminate higher than necessary reimbursement. First, the Administration proposes to end an add-on payment for hospitals and physicians in low-population States. Currently, hospitals and physicians in certain low-population States receive a special payment adjustment that exceeds the amount indicated by their labor costs or certain other costs. This proposal would end this add-on payment in 2013, to better align providers’ payments with their costs, and will save approximately $2 billion over 10 years. Secondly, to improve payment accuracy for Critical Access Hospitals (CAHs), the Administration proposes to reduce payments from 101 percent to 100 percent of reasonable costs and to eliminate the CAH designation for those that are fewer than 10 miles from the nearest hospital. This will ensure that this unique payment system is better targeted to hospitals meeting the eligibility criteria. These two CAH proposals will save approximately $4 billion over 10 years. Together, these rural proposals will save approximately $6 billion over 10 years.” To see the President’s full report click here. See also a fact sheet of the health provisions here. Stay tuned for more updates, and to learn how the White House proposal to cut $6 billion from rural hospitals will impact your community at NRHA’s Rural Health Clinic (Sept. 27-28) and Critical Access Hospital (Sept. 28-30) conferences in Kansas City, Mo. For more information, click here.