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Rural lawmakers fear loss of Critical Access Hospitals in Midwest

by Carolyn Orr ~ September 2013 ~ Stateline Midwest »
In Sen. Jean Leising’s eastern Indiana district, many of her residents — and communities — have long relied on their local “Critical Access Hospitals.” And like rural lawmakers across the Midwest, Leising has new reason to worry about the future of these hospitals, which rely in part on enhanced Medicare funding to keep their doors open.
The specter of many of these hospitals losing their “critical access” status was raised in a recent report by the U.S. Department of Health and Human Services. In that report, the department’s Office of the Inspector General recommends removing states’ authority to make “critical access” designations and handing these powers over to the U.S. Centers for Medicare and Medicaid.
The inspector general says federal officials should then use this authority to more closely scrutinize the status of hundreds of these hospitals. The recommended changes — which the report says could have saved Medicare $449 million in 2011 — would require congressional action.
“I am concerned not only about the future of our 35 [Critical Access Hospitals in Indiana], and the doctors and health care professionals that depend on the hospitals, but for the residents throughout rural Indiana that already have limited access to health care,” says Leising, a nurse and chair of the Indiana Senate Provider Services Subcommittee.
“I would hope that Congress would recognize the importance of these hospitals to the future of rural America.”
In fact, that recognition led Congress to establish the Critical Access designation. This was done in 1997, at the tail end of a two-decade period (1980-1999) in which about 15 percent of the nation’s rural hospitals (including more than 100 in the Midwest) had closed.
Under the federal law, states were given authority to identify “necessary providers” of health care based on factors such as the number of low-income patients, the state’s geography and the absence of other providers.
Once designated, these hospitals receive Medicare payments for most services at 101 percent of reasonable costs (as compared to 94 percent for other hospitals). In addition, physicians who provide care in a Critical Access Hospital may be eligible for a 10 percent bonus for services to Medicare patients.
Since enactment of the law, the number of hospital closures in rural areas has dropped significantly.
In the Midwest, 597 Critical Access Hospitals provide beds for 13,833 patients as well as 24-hour emergency care for more than 8 million residents.
One requirement for a Critical Access Hospital is that it not be less than 35 miles from the nearest hospital. But although about 75 percent of the nation’s 1,300 Critical Access Hospitals do not meet this requirement, they have been designated by their states as necessary providers and thus been granted “permanent exemptions.”
The inspector general believes these exemptions should be removed — which would put the future of many Critical Access Hospitals in doubt. In some states, up to 90 percent of the rural hospitals could be impacted; for example, 53 of Wisconsin’s Community Access Hospitals would lose their designation.
Rural communities already have fewer than half the primary care practitioners per capita that urban areas do — a gap the proposed change would likely widen.
Alan Morgan, CEO of the National Rural Health Association, says cutting the added Medicare funding would cause closures of many of the hospitals and “create huge voids in access to health care.”
He notes, too, that the cost of primary care in a rural setting averages 3.7 percent less than in urban areas.


Article written by Carolyn Orr, staff liaison for the Midwestern Legislative Conference Agriculture & Natural Resources Committee. Indiana Rep. Bill Friend and Minnesota Rep. Rick Hansen are the committee’s co-chairs.