“We're looking at how we can do it, how we can fit into the guidelines, if it can even work,” says Lee Barron, CEO, chief financial officer and administrator of Southern Inyo Healthcare District, Lone Pine, Calif., one of six rural healthcare organizations participating in the Southern Sierra network.
The rural telehealth network is just getting off the ground by filing for not-for-profit tax status, Barron says, but the six hospitals that connect electronically to four academic urban hospitals are already looking at the next step.
“We're looking at more grant funding to develop the network further,” says Barron, whose service area includes the highest point in the Lower 48, Mount Whitney, as well as the lowest point in North America, in Death Valley. They are considering such moves as creating an ACO, a health information exchange or a medical home. Regarding a medical home, she says “it's something we already kind of do. I can see the efficiencies in that.”
Members of the Southern Sierra network are only a few of the many rural providers watching what is happening with the implementation of the Affordable Care Act and wondering where and how they might fit into the nation's healthcare system as it changes under the law.
The law's numerous provisions and subsequent rulemaking from HHS and its divisions don't include a lot of direct references to rural providers, but the major provisions have the potential to affect them directly or indirectly. In addition, the goals of the law parallel what rural hospitals are already trying to do, experts say.
“The bill is a mixture of trying to save money and trying to improve care,” says Todd Linden, president and CEO of 49-bed Grinnell (Iowa) Regional Medical Center. “I think rural hospitals are in a position to benefit from that,” he says. Rural providers already offer high-quality care, Linden adds.
Still, rural providers deal in much lower volumes, making such things as ACO quality-rating processes potentially suspect. Linden asks whether the quality data for rural hospitals will produce statistically valid data.
Another of the overriding concerns is the added cost of implementing healthcare reform, as rural providers often run on thinner margins than do urban hospitals and may rely more on the lower reimbursement rates under Medicaid.
“The intent of health reform is perfect for rural healthcare,” says Thomas Miller, assistant professor in the School of Rural Public Health at Texas A&M Health Science Center, College Station. But there's a question of money and whether a provider should try to take on such things as ACOs and medical homes independently or with others, he says.
In addition to ACOs and medical homes, other aspects of the law that rural providers are tracking include the use of value-based purchasing by Medicare and the planned expansion of coverage that would increase Medicaid programs, a large payer in rural areas.
Rural hospitals' dependence on government payers even before reform began could be a limiting factor, according to a recent report from the American Hospital Association that found that Medicare and Medicaid combined paid for nearly 60% of rural hospitals' gross revenue. In 2009, Medicare paid for 44.8%; private-pay covered 39.7%; Medicaid paid for 14%; and other government programs covered 1.5%, according to the April TrendWatch report, which was based on an AHA survey.
Indeed, many rural providers already have their hands full and their bank accounts stressed by the normal course of business and the healthcare information technology requirements of the American Recovery and Reinvestment Act of 2009. Adding the operational and financial burden of trying to form an ACO or medical home might prove to be too much.
In a March report, a federal committee charged with making recommendations to HHS Secretary Kathleen Sebelius underscored rural providers' tenuous position.
“Improved efficiency and quality do not always mean less costly care,” according to the National Advisory Committee on Rural Health and Human Services' report to Sebelius. “Although the payment reform outlined in the ACA holds promise to bring costs down while also improving the quality of healthcare, many rural providers are burdened by reimbursement rates that make it difficult for them to provide services currently, and these providers do not see how improvements can be made by seeking further reductions,” according to the report. The committee recommended that HHS “evaluate reimbursement schemes to make sure they operate in a way that fairly accounts for the cost of delivering care in a rural setting.”