If you're a rural hospital with fewer than 101 beds and charge at least 60% of your inpatient days to Medicare, you may be one of the big winners under the recently passed federal balanced-budget law.
That's because lawmakers reinstated a payment program for Medicare-dependent small rural hospitals that had expired Oct. 1, 1994. HCFA says 368 hospitals will qualify for the program.
The renewed program, which according to the Congressional Budget Office will funnel about $200 million to rural hospitals, will run through Oct. 1, 2001.
It allows small rural hospitals to receive a higher Medicare reimbursement rate similar to sole community hospitals, which are paid on a "modified cost basis." That means they can choose whichever reimbursement level is highest: the baseline for 1982 or 1997 or the Medicare fee schedule.
But that's not the only provision in the budget designed to benefit rural heath providers. In fact, a whole subtitle in the budget is dedicated to a "Rural Initiative."
Another major change for rural hospitals initiated by the balanced-budget law is the elimination of the Essential Access Community Hospital and Rural Primary Care Hospital program.
The EACH-RPCH program had been active in seven states and paid grants to the states to develop rural health networks. EACH hospitals are full-service facilities, while RPCHs provide outpatient and short-term inpatient care on an urgent or emergency basis.
In fiscal 1995 Medicare spent $2 million on the program, but since then Congress has eliminated funding over the objections of hospital groups and rural lawmakers.
The EACH/RPCH project will be replaced by a new nationwide program that will designate hospitals as Critical Access Hospitals. States will be allowed to designate specified hospitals as CAHs.
The legislation authorizes $25 million for implementation of the CAH program, but the funds are unlikely to be available until fiscal 1999 at the earliest.
Hospitals designated as CAHs will be reimbursed by Medicare on the basis of their reasonable costs. They must be more than 35 miles from any other hospital (15 miles in mountainous areas) and must provide 24-hour emergency services.
The 38 hospitals currently participating in the RPCH program are grandfathered into the CAH program, as are 13 hospitals operating in Montana under the state's Medicare Assistance Facility program.
In its recently released regulations updating the prospective payment system for fiscal 1998, HCFA said it expected the impact of the new law to be felt at a limited number of rural hospitals.
The National Rural Health Association estimates as many as 200 hospitals might participate in the CAH program.
Regardless of their number, participating facilities will have greater flexibility under the new law.
For example, under the RPCH rules, hospitals could maintain only six beds. But under the new CAH rules, the limit is expanded to 15 beds. Swing-bed facilities will be allowed to have 25 beds that can be used for inpatient care or for skilled-nursing care, but only 15 beds can be used for inpatient care at any given time.