House and Senate lawmakers recently introduced legislation to make sure Medicare continues to provide extra payments to Medicare-dependent and low-volume hospitals.
Reps. Tom Reed, R-NY, and Peter Welch, D-VT, on June 8 introduced the “Rural Hospital Access Act,” H.R. 5943, in the House. Sens. Charles Schumer, DNY, and Charles Grassley, R-IA, last month introduced a similar measure, S. 2620, in the Senate.
The legislation would extend for one year Medicare-dependent Hospital (MDH) payments and low-volume Medicare adjustments for prospective payment system (PPS) hospitals, which are set to expire Sept. 30.
The AHA had urged the lawmakers to introduce the legislation and on June 11 urged Congress to approve it before the programs expire in September (see related story on page 3). The legislation would provide special Medicare payments to rural hospitals that are too big to be critical access hospitals, and thus are ineligible for cost-plus reimbursement, but too small to manage under the traditional PPS. “Without the Medicare-dependent Hospital program, we would struggle to generate enough revenue to continue to make the upgrades, programs, facilities and services necessary to continue to serve our entire community,” says Drake Lammen, M.D., president and CEO of 58-bed UHS Chenango Memorial Hospital in Norwich, NY. “Our future depends on this important program, and we are very supportive of the bill.”
Low-volume adjustment. The “Patient Protection and Affordable Care Act” (ACA) improved the low-volume adjustment for fiscal years 2011 and 2012 to better account for the relationship between cost and volume, help level the playing field for lowvolume providers, and sustain and improve access to care in rural areas. Established in 1988, the program defines a low-volume hospital as one that is more than 15 miles from another comparable hospital and discharges fewer than 1,600 Medicare patients a year.
MDH payments. Congress established the MDH program in 1987 to provide a special Medicare inpatient rate for rural hospitals that have 26 to 100 beds, are not classified as a Sole Community Hospital and have at least 60% of inpatient patient days or discharges covered by Medicare. The program pays 211 MDH-eligible hospitals the sum of their PPS rate, plus 75% of the amount by which their cost of caring for Medicare patients exceeds their PPS rate.
“Because of the low-volume environment we live in, without these types of programs, hospitals like ours couldn’t survive in tough economic times,” says Steve Long, CEO of 48-bed Skiff Medical Center in Newton, IA.
The MDH program also reim- burses hospitals if their Medicare patient admissions fall by at least 5% from the previous fiscal year, due to situations outside their control. That happened to Skiff Medical Center when Maytag, which invented its washing machine in Newton 105 years ago, closed its factory there. The company’s departure put 5,000 people out of work. “It led to a big decline in [patient] volume,” Long says. MDH reimbursements helped keep the hospital financially stable.