While their teaching hospital counterparts were still seeking sympathy last week for their alleged financial plight, rural hospitals apparently won over some members of Congress.
Proposed legislation would bandage some wounds the rurals say were caused by the Balanced Budget Act of 1997.
But a relief bill is also on the way for teaching hospitals, whose Medicare profit margins historically have been much higher than rural hospitals' margins.
Last week, a group of high-ranking senators-including Senate Minority Leader Thomas Daschle (D-S.D.) and Special Committee on Aging Chairman Charles Grassley (R-Iowa)-unveiled a bill that would undo some of the Medicare payment changes resulting from the 1997 balanced-budget law.
The bill would tinker with the disproportionate-share payments rural hospitals receive from Medicare to cover the costs of caring for large numbers of poor patients. Urban hospitals receive about 90% of those payments, which totaled $4.6 billion in 1998, according to background material accompanying the bill.
It would also allow some rural hospitals to add residency positions while allowing other rurals to recalculate their number of residency slots (See chart).
The American Hospital Association wants the bill to fund the increase in rural hospital payments by using the federal budget surplus. As written, the measure would take some money from urban hospital coffers and redistribute it to rural facilities.
"Talking about redistribution in times of constraint is difficult," said Carmela Coyle, AHA senior vice president for policy. "You'll see broader support across all hospitals if we can take a look at relief (from budget cuts) out of new money."
In its campaign against the balanced-budget law, the AHA is using the financial plight of small and rural hospitals (See story, p. 6).
It's unclear exactly how the bill would affect other hospitals, such as teaching and urban hospitals, because the Congressional Budget Office has yet to do a financial analysis of the bill, said a spokeswoman for Sen. Pat Roberts (R-Kan.), who co-sponsored the bill.
Darin Johnson, director of government affairs for the National Rural Health Association, said his group of nearly 400 rural hospitals worked very closely with the Senate caucus in designing the bill and generally supported it.
John Parker, a spokesman for the Association of American Medical Colleges, said his group was evaluating the bill and wants to ensure it would create no unintended consequences for its 125 members that are teaching hospitals.
In the teaching hospitals' corner is Sen. Daniel Patrick Moynihan (D-N.Y.). This week, Moynihan plans to roll out a bill that would give teaching hospitals some relief from the 1997 budget law changes.
That would come just weeks after teaching hospitals publicly groused about their declining Medicare margins (May 3, p. 3). The AAMC, which led that charge, said it would comment on the Moynihan proposal when it is made public.