More than 30 large rural hospitals are lobbying Congress for a resumption in Medicare payments that they say help them compete for employees with nearby urban hospitals.
Representatives of "rural referral centers" have asked members of Congress to fix a regulatory change that caused them to lose out on about $40 million because their Medicare payments no longer will be based on the wage rates in nearby metropolitan areas. The hospitals want it to be fixed either through HCFA regulation or legislation.
The regulatory change, effective Oct. 1, 1998, was issued Aug. 29, 1997. HCFA said it made the change because it no longer had the data to determine whether rural hospitals would qualify for the urban payment levels.
The twist for the hospitals, however, was that the regulatory change came only three weeks after President Clinton signed balanced-budget legislation that is expected to double the number of rural referral centers qualifying for urban payments.
To qualify as a rural referral center, a hospital must be outside a metropolitan area, discharge at least 5,000 Medicare patients a year, have at least 275 beds-or a Medicare case load at least as complex as nearby urban hospitals-and meet at least one of three other tests.
About 200 of the 5,000 U.S. hospitals are rural referral centers.
Since the rural referral centers resemble their urban counterparts in the services they provide, they must compete in the same labor market with the urban hospitals.
Medicare has paid rural referral centers more than other rural hospitals to allow them to pay their employees more.
To get urban payment levels, however, rural referral centers must demonstrate they have a work force that resembles those of urban hospitals. They do this by demonstrating that their wages were comparable to those of urban hospitals.
The 30 hospitals that are losing out on the urban-level payments previously had qualified by showing that their average hourly wages, if applied to the higher-skilled mix of practitioners working in nearby urban hospitals, would be at least 90% of the hourly wages at the urban hospitals.
That was allowed to account for the substitution of lower-skilled employees at rural hospitals, such as the use of nurse aides in place of nurses or generalist physicians in place of subspecialists.
In its Aug. 29 rule on Medicare prospective payments in federal fiscal 1998, HCFA said it would stop using the 90% threshold at the end of fiscal 1998 because the American Hospital Association in 1993 stopped conducting the survey that yielded the data showing whether a hospital had passed that test.
The rural referral centers argue that HCFA should use old AHA data for federal fiscal 1999 and then allow data collected by state or metropolitan hospital associations to determine whether the rural facilities qualify under the 90% threshold.