Although rural hospitals contend they are big victims of the Balanced Budget Act of 1997, they are big winners under the federal government's rule that sets Medicare hospital payment rates for fiscal 2000.
The final rule will raise Medicare inpatient prospective payment rates by 1.1% Oct. 1. It will result in a collective increase of $700 million in payments to hospitals, according to the American Hospital Association.
A HCFA analysis of the rule said some hospitals will get increases in their per-case payments, while others will get decreases. Overall, per-case payments to hospitals will drop to $6,747 from $6,779.
Decisions to equalize reimbursement between some rural hospitals and nearby urban hospitals will contribute to a per-case payment increase of 1% for all rural hospitals.
The effects are more pronounced by payment categories. For example, per-case payments will increase 2.1% for 158 rural hospitals that are designated as "sole community hospitals" and that receive special payments for serving a disproportionate share of low-income beneficiaries, HCFA said.
But per-case payments will be cut by 1.5% for 242 teaching hospitals with more than 100 residents.
"I think HCFA is beginning to realize that rural is different," said Darin Johnson, government affairs director at the National Rural Health Association.
Teaching hospitals, meanwhile, said the payment cuts they face further indicate the need for changes in the Balanced Budget Act of 1997.
Along with their urban counterparts, rural hospitals have been pushing Congress to roll back many provisions of the budget law. The hospital lobby, led by the American Hospital Association and other groups, have used financially strapped rural hospitals to illustrate why the budget law should be amended.
Their campaign has found a sympathetic ear on Capitol Hill and in the administration. Congress is likely to consider some changes to the budget law when it reconvenes in September.