Rural health advocates often think they are an afterthought when policy is being debated, and many cite rural representation on the Medicare Payment Advisory Commission as an example.
The commission, which was established by the Balanced Budget Act of 1997, comprises 17 members, all appointed by the comptroller general of the Government Accountability Office. MedPAC is an independent federal body mandated to advise Congress on Medicare issues.
Currently, two commissioners--Ray Stowers and Nicholas Wolter--are considered rural experts. Wolter, a physician and chief executive officer of the Billings (Mont.) Clinic, was appointed to his second three-year term this year. Stowers, a doctor of osteopathic medicine and vice president and dean of the College of Osteopathic Medicine at Lincoln Memorial University in Harrogate, Tenn., is in his final year of his second three-year term, which ends in April 2006.
Report due on rural issues
MedPAC commissioners can serve a maximum of six years and need to be reappointed after their first three-year term. With Stowers finishing his sixth year in the spring, rural advocates are especially concerned about their lack of representation as MedPAC is scheduled in December 2006 to issue a report to Congress on rural provisions in the Medicare Modernization Act of 2003. Those include increases in payments to critical-access hospitals and bonus payments to rural ambulance services and physicians in underserved areas.
Alan Morgan, executive director of the National Rural Health Association, contends the GAO is not living up to its responsibility. "We would like well-rounded individuals that incorporate a rural background," Morgan says. "We are just not seeing that."
Two other MedPAC commissioners--David Durenberger and Sheila Burke--are knowledgeable about rural health issues, but aren't considered experts, Morgan and others say. Durenberger worked on rural health legislation when he served as a U.S. senator from Minnesota from 1978 to 1995. Burke, now the Smithsonian Institution's deputy secretary and chief operating officer, worked on rural health issues as chief of staff for Bob Dole when he was Senate majority leader.
It's difficult to say if the GAO is living up to its responsibility because the law that established MedPAC doesn't call for a specific number of rural experts to serve as commissioners, although it does state there should be a "balance between urban and rural representatives." The law doesn't define what a balance would be, however, and Marjorie Kanof, a spokeswoman for the GAO, says the rural and urban balance is only a guideline, not a requirement. She adds, "There's no magic number" regarding how many rural representatives should be appointed.
The law lists several criteria when selecting commissioners, including appointment of physicians, health-finance economists and representatives of third-party payers. Other criteria outlined say individuals should also be "skilled in the conduct and interpretation of biomedical ... and technology assessment." It also states that individuals should have health facility management expertise, but that the majority of commissioners can't be individuals who directly deliver care or manage the delivery of care.
Anyone or any group can nominate commissioners, but the responsibility of selecting them rests with David Walker, the GAO's comptroller general.
Kanof says the GAO has been fulfilling the requirements of the law. "We are concerned about rural representation," she says. "And we believe we have rural expertise." She says it's difficult to satisfy all the various healthcare groups' desires while remaining within the parameters of the law. The GAO receives about 25 formal nominations each year, but Kanof couldn't say by deadline how many typically have rural healthcare backgrounds.
Although Kanof says she hasn't heard of any complaints that there isn't enough rural experience on MedPAC, others--including Stowers--have expressed concern. Stowers says that once he leaves the commission, he believes it will be essential that someone else with rural expertise be appointed.
When Stowers departs, he will be the second MedPAC commissioner with rural expertise to leave the commission in a year's time. In April 2005, Mary Wakefield, executive director of the Center for Rural Health at the University of North Dakota at Grand Forks, left after completing her second term. "I do remain concerned," Stowers says. "Even though Dr. Wolter will be on (the commission), I think it's important the rural expertise is replaced."
Stowers also would like to see someone with an osteopathic background named to MedPAC, since he's the only commissioner with such expertise. Allopathic and osteopathic physicians are also listed under suggested titles in the law that established MedPAC.
Keith Mueller, a policy analysis director for the Rural Policy Research Institute, has previously been nominated by the NRHA but has never been selected. Mueller, who is a past president of the association, says he understands why advocates for a single group wouldn't be selected to MedPAC.
However, he says the NRHA is broad-based--representing patients and providers--and believes his service as head of the association would be beneficial to MedPAC. Whether he's selected or not, Mueller wants a rural expert to be appointed in the spring. "I hope the comptroller general makes rural (healthcare) a priority," he says.
He believes the intent of 1997's Balanced Budget Act was to link the number of MedPAC members with rural backgrounds to the number of beneficiaries in rural areas. Based on MedPAC data, about 24% of Medicare beneficiaries live in rural areas, which would mean three or four commissioners should have rural healthcare expertise, Mueller says. The percentage of rural hospitals compared with urban hospitals is even higher, with rurals representing 41% of total hospitals in 2004, or just over 2,000, according to the American Hospital Association.
Regarding rural health policy, the NRHA's Morgan contends that MedPAC's staff doesn't appear to have a strong understanding of some of the issues and cites the transcript of a March meeting that featured comments from Wakefield about a draft report on critical-access hospitals from the MedPAC staff. Wakefield, who was attending her last official MedPAC meeting, repeatedly objected to the tone of the report.
The transcript quotes Wakefield as saying, "Next on page 6, you talk about before hospitals deciding whether to convert to critical-access status they almost always have a consultant or an accounting firm to estimate whether their Medicare payments will increase." She later adds, "I think that's just good business" but "the tone that it implies (is), i.e., gamesmanship."
John Sheehan, a consultant who works mainly with critical-access hospitals-rural hospitals that receive 101% of their costs for Medicare reimbursement because of their low patient volumes-worked with MedPAC on the critical-access hospital report. He says his first impression from the March meeting transcript was that the preliminary report was slanted against those hospitals, which are all in rural areas. Commissioners say the final version was more balanced, according to transcripts from an April MedPAC meeting, but Sheehan says there seem to be some inconsistencies.
Increasing profit margins
He cites the report's findings that critical-access hospitals' all-payer profit margins increased from a negative 1.2% in 1998, the program's first year, to 2.2% in 2003. The report also says that hospitals that converted to critical-access status posted average revenue of about $3 million from Medicare payments in 2003 and saw an average increase of $850,000, which is roughly a 40% increase in Medicare revenue attributed to converting to critical-access status.
Sheehan says the critical-access hospitals he works with haven't seen revenue gains as large as those stated in the report, and that if the MedPAC findings in the final report were accurate, the margin increases would have been greater.
This was the only time Sheehan worked with MedPAC and he doesn't believe the commission has a bias against rural providers. However, he did say there seemed to be a bias against the cost-based reimbursement, which is how critical-access hospitals are paid, and says that's probably because Medicare's prospective-payment system is considered the gold standard.
"They knew what conclusions they wanted to draw" before finishing the report, he says of the MedPAC staff.
Sheehan adds that he himself holds a bias. He's a proponent of the critical-access program because it has helped many hospitals stay open and improve access to healthcare in rural areas.
Attempts to reach MedPAC Chairman Glenn Hackbarth for comment were unsuccessful, but a MedPAC staff member, who asked not to be identified, says the commission's researchers are familiar with rural issues. The staff member added that MedPAC has endorsed several provisions--including an increase in disproportionate-share payments and adjustment to payments for low-volume hospitals--that were beneficial for rural providers. Disproportionate-share payments are made to hospitals to compensate them for treating high levels of low-income patients.
Wolter disagrees that MedPAC was drawing conclusions before the critical-access study was finished. He says changes were made in the report after the first version and that's typical for MedPAC.
"It really happens quite frequently," Wolter says. "That was fairly normal. Really, that's part of the process."
Wolter agrees with the GAO's take that there's not a specific requirement regarding how many rural representatives should be members of MedPAC, saying that it's more important that staff and commission are open to each other's points of view. He adds that those who aren't familiar with rural issues are receptive when rural concerns are raised.
"Many of the other commissioners are sensitive and engaged when tackling rural issues," he says. "The track record in recent years shows that." He says the changes made to the critical-access program report are examples of that receptiveness. Furthermore, the MedPAC commissioners aren't supposed to be advocates for certain causes.
"It's also important for all the commissioners there to represent the Medicare program," Wolter says. "We don't want to only be there representing a niche."
Morgan says he understands that MedPAC's role is to provide Congress with a balanced report on the Medicare program and he knows its findings won't always support his association's agenda. But he also wonders how the critical-access hospital report would have turned out if Wakefield wasn't so vocal about the first draft and if she didn't call for comments from outside MedPAC, as she is quoted as saying in the March meeting.
Sheehan wonders, too, and says Wakefield's rural expertise should have been replaced after her term expired. "I am extraordinarily concerned," he says. "Mary was probably the most knowledgeable and most vocal" rural expert on MedPAC. He then asks, "What in the heck is going to happen in the rural report" in December 2006?