NRHA Supports Changes to Improve Payments for Rural Hospitals

In April 2019, Centers for Medicare and Medicaid Services Administrator Seema Verma unveiled a proposal to increase Medicare’s reimbursements to hospitals in the bottom quartile of the wage index by decreasing payments to hospitals in the top quartile. This week, NRHA met with Health and Human Services Secretary Alex Azar and other key officials to discuss how to ensure this rule will impact rural Americans positively. NRHA strongly supports this change since it will decrease wage index inequities that have plagued rural hospitals for years. NRHA has an extended history, dating back to the start of our organization, of fighting the wage index inequities harming rural providers seeking to care for rural Americans. The focus and willingness of CMS to reexamine and adjust the wage index is long overdue and appreciated. This strong policy improvement will create greater equity among providers and will significantly help the many struggling rural hospitals.

Trends demonstrate that more and more rural hospitals are operating at a loss. As of last year, 46% of rural hospitals were operating at a loss, up from 44% in 2017 and 40% in 2016. Since 2010, 106 rural hospitals have closed, and two more will have occurred within a week of this writing. Rural hospitals are struggling to remain open and provide health care access to their communities, but they are in dire need of relief. Many rural hospitals in low wage index areas struggle daily to remain solvent following a plethora of payment cuts and policy changes that have led to the current astounding rate of rural hospital closures. For those hospitals with low wage indexes, this change will improve their financial viability, however, more is still needed to stop the crisis of rural hospital closures.

Rural communities are greatly affected by the maldistribution of health professionals; the majority of Health Professional Shortage Areas are in rural America. However, the Robert Wood Johnson Foundation found that maldistribution was a much larger problem than an absolute shortage of primary care providers. One aspect of this maldistribution is the fact that urban facilities offer their employees better salaries and benefits, plus the additional benefits of greater peer support from a larger workforce. These reasons contribute to why 20% of all U.S. citizens live in a rural area, yet only 9% of U.S. physicians practice in rural areas. Economic forces would indicate that paying higher, not the lower rates already provided for under the wage index, is the appropriate response to this workforce maldistribution. Sadly, the wage index has actually caused some of this inequity, when a facility is reimbursed with a low wage index they do not have the funds to pay providers more, leaving many unfilled rural provider positions because the facility cannot afford to pay the salary required to recruit and retain someone to fill the position.

NRHA has provided comments to CMS regarding the FY20 IPPS NPRM and encourages you to also provide comment on this important IPPS rule in support of the proposed payment changes for rural hospitals. Additionally, utilize the sample letter NRHA has drafted to send a personalized message to your Members of Congress to urge them to reach out to CMS in support of this rule. We have also included a letter signed by 11 senators in support of the wage index changes. If you have questions or would like assistance drafting comments to CMS, please contact NRHA Government Affairs Director Maggie Elehwany ([email protected]).

Now is the time we must protect our rural health care access, so now is the time we need you to advocate.  

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