No signs of relief: Rural providers remain on edge over ACA'S uncertain future
Skip to main content
MDHC_Logotype_white
Subscribe
  • My Account
  • Login
  • Subscribe
  • News
    • This Week's News
    • COVID-19
    • Providers
    • Insurance
    • Government
    • Finance
    • Technology
    • Safety & Quality
    • People
    • Regional News
    • Digital Edition
    • Biden more bullish on vaccines, open to 1.5M daily shot goal
      Billing, antitrust exemption changes upend negotiations between insurers and providers
      Few nursing home residents have received second COVID-19 vaccine dose
      Fresenius building renal genomic registry to inform precision care for kidney disease
    • Biden more bullish on vaccines, open to 1.5M daily shot goal
      Few nursing home residents have received second COVID-19 vaccine dose
      The missing piece in our fight against COVID-19: primary care
      Google to convert office space for COVID-19 vax clinics
    • Ascension’s St. Mary’s Hospital Surgery Center at Towne Centre and Allegheny Health Network’s Bethel Park surgery center
      Hospitals see opportunity, risk in ambulatory surgery centers
      Health suffers as rural hospitals close
      Medicare ACO participants fell in 2021
      Louisiana gets reports vaccine providers are discriminating
    • Billing, antitrust exemption changes upend negotiations between insurers and providers
      MAIN-Health Bill_iStock_i.jpg
      Insurance-tech firm MultiPlan makes $155M buy after blank-check deal
      Last-minute COVID costs cut into UnitedHealthcare's $396 million operating income
      CMS approves rule forcing insurers to ease prior authorization
    • It's a secret: California keeps key virus data from public
      lacewell_linda_supertinendent_dept_of_financial_services_8.47.jpg
      New York state investigates drug price spikes during pandemic
      Health experts blame rapid expansion for vaccine shortages
      HHS freezes rule targeting community health centers' drug discounts
    • KPMG says deal activity will stay high in '21: 10 takeaways
      By the Numbers: 20 largest healthcare investment banks in 2020
      Providers await new HHS coronavirus grant reporting deadline
      Operation Warp Speed Dr. Moncef Slaoui, Pfizer Group President Angela Hwang, Moderna CEO Stephane Bancel, CVS Health Executive Vice President Karen Lynch and McKesson CEO Brian Tyler participate in a panel discussion on the COVID-19 vaccine.
      Hospitals, drug companies strive to stand out virtually at JPM
    • Google to convert office space for COVID-19 vax clinics
      Next Up Podcast: What to expect with telehealth and healthcare technology in the next 4 years - Transcript
      Dr. Karen DeSalvo
      Next Up Podcast: What to expect with telehealth and healthcare technology in the next four years
      A man in a room with servers.
      Momentum grows to outsource hospital tech functions in 2021
    • China pushes conspiracy theories on COVID origin, vaccines
      An older man wearing a mask receiving a vaccine.
      Want more diversity in clinical trials? Start with the researchers
      Avocado
      Avocado a day keeps the doctor away
      50% of Americans make resolutions. Fewer than 27% keep them over time.
      Data Points: Sticking with your resolutions
    • WEb_i.jpg
      Q&A: Dr. Cliff Megerian, University Hospitals' soon-to-be CEO
      ZentyWeb_i.jpg
      Tom Zenty is leaving a legacy of transformational growth at University Hospitals
      Cerner names Erceg as new CFO
      Elizabeth Richter will serve as acting CMS administrator
    • Midwest
    • Northeast
    • South
    • West
  • Insights
    • ACA 10 Years After
    • Best Practices
    • InDepth Special Reports
    • Innovations
    • The Affordable Care Act after 10 years
    • New care model helps primary-care practices treat obesity
      doctor with patient
      COVID-19 treatment protocol developed in the field helps patients recover
      Rachel Wyatt
      Project to curb pressure injuries in hospitals shows promise
      Yale New Haven's COVID-19 nurse-staffing model has long-term benefits
    • Modern Healthcare InDepth: Breaking the bias that impedes better healthcare
      Videos: Healthcare industry executives describe their encounters with racism
      Michellene Davis
      Healthcare leadership lacks the racial diversity needed to reduce health disparities
      Dr. James Hildreth
      How medical education can help fight racism
      Quotes from rebadged employees
      Outsourcing IT, revenue cycle takes toll on internal culture
    • A phone screen showing the question, "Mary we hope this information was helpful and we'd like to keep guiding you. Are you interested in knowing when it's your turn to receive the vaccine?"
      Chatbots, texting campaigns help manage influx of COVID vax questions
      A woman with a wearable sensor talking to her provider.
      Wearable sensors help diagnose heart rhythm problems in West Virginia
      self service station
      COVID-19 pushes patient expectations toward self-service
      Targeting high-risk cancer patients with genetics
  • Transformation
    • Patients
    • Operations
    • Care Delivery
    • Payment
    • Highmark Health inks six-year cloud, tech deal with Google
      Study: 1 in 5 patients report discrimination when getting healthcare
      HHS proposes changing HIPAA privacy rules
      Android health records app launches at 230 health systems
    • California hospitals prepare ethical protocol to prioritize lifesaving care
      Amazon, JPMorgan Chase, Berkshire Hathaway disband Haven
      Digital pathways poised to reshape healthcare continuum in 2021
      Healthcare was the hardest hit by supply shortages across all U.S. industries
    • A phone screen showing the question, "Mary we hope this information was helpful and we'd like to keep guiding you. Are you interested in knowing when it's your turn to receive the vaccine?"
      Chatbots, texting campaigns help manage influx of COVID vax questions
      A woman with a wearable sensor talking to her provider.
      Wearable sensors help diagnose heart rhythm problems in West Virginia
      New care model helps primary-care practices treat obesity
      How hospitals are building on COVID-19 telehealth momentum
    • Regional insurers bet big on virtual-first plans
      MedPAC votes to boost hospital payments, freeze or cut other providers
      Most Next Gen ACOs achieved bonuses in 2019
      Congress recalibrates Medicare Physician Fee Schedule after lobbying
  • Data/Lists
    • Rankings/Lists
    • Interactive Databases
    • Data Points
    • Health Systems Financials
      Executive Compensation
      Physician Compensation
  • Op-Ed
    • Bold Moves
    • Breaking Bias
    • Commentaries
    • Letters
    • Vital Signs Blog
    • From the Editor
    • Wellstar CEO calls adapting for the pandemic her bold move
      Howard P. Kern
      Recognizing the value of telehealth in its infancy
      Dr. Stephen Markovich
      A bold move helped take him from family doctor to OhioHealth CEO
      Dr. Bruce Siegel
      Why taking a hospital not-for-profit was Dr. Bruce Siegel’s boldest move
    • Barry Ostrowsky
      Ending racism is a journey taken together; the starting point must be now
      Laura Lee Hall and Gary Puckrein
      Increased flu vaccination has never been more important for communities of color
      John Daniels Jr.
      Health equity: Making the journey from buzzword to reality
      Mark C. Clement and David Cook
      We all need to 'do something' to fight inequities and get healthcare right, for every patient, every time
    • The missing piece in our fight against COVID-19: primary care
      Ambulatory surgery centers offer extraordinary value in a high-cost healthcare system
       Alan B. Miller
      Looking ahead with optimism as we continue to transform healthcare
      Dr. Bruce Siegel
      By protecting the healthcare safety net, Biden can put us on the path to a stronger country
    • Letters: Eliminating bias in healthcare needs to be ‘deliberate and organic’
      Letters: Maybe dropping out of ACOs is a good thing for patients
      Letters: White House and Congress share blame for lack of national COVID strategy
      Letters: VA making strides to improve state veterans home inspections
    • Sponsored Content Provided By Optum
      How blockchain could ease frustration with the payment process
      Sponsored Content Provided By Optum
      Three steps to better data-sharing for payer and provider CIOs
      Sponsored Content Provided By Optum
      Reduce total cost of care: 6 reasons why providers and payers should tackle the challenge together
      Sponsored Content Provided By Optum
      Why CIOs went from back-office operators to mission-critical innovators
  • Awards
    • Award Programs
    • Nominate
    • Previous Award Programs
    • Other Award Programs
    • Best Places to Work in Healthcare Logo for Navigation
      Nominations Open - Best Places to Work in Healthcare
      Nominations Open - Health Care Hall of Fame
      Nominations Open - 50 Most Influential Clinical Executives
    • 100 Most Influential People
    • 50 Most Influential Clinical Executives
    • Best Places to Work in Healthcare
    • Health Care Hall of Fame
    • Healthcare Marketing Impact Awards
    • Top 25 Emerging Leaders
    • Top 25 Innovators
    • Top 25 Minority Leaders
    • Top 25 Women Leaders
    • Excellence in Nursing Awards
    • Design Awards
    • Top 25 COOs in Healthcare
    • 100 Top Hospitals
    • ACHE Awards
  • Events
    • Conferences
    • Galas
    • Webinars
    • COVID-19 Event Tracker
    • bright.md logo lockup webinar
      Sponsored Content Provided By Bright.md
      Webinar: Enabling a hybrid care model — Streamlining the patient path to both telehealth and in-person care
    • Leadership Symposium
    • Healthcare Transformation Summit
    • Women Leaders in Healthcare Conference
    • Workplace of the Future Conference
    • Strategic Marketing Conference
    • Social Determinants of Health Symposium
    • Best Places to Work Awards Gala
    • Health Care Hall of Fame Gala
    • Top 25 Minority Leaders Gala (2022)
    • Top 25 Women Leaders Gala
  • Listen
    • Podcast - Next Up
    • Podcast - Beyond the Byline
    • Sponsored Podcast - Healthcare Insider
    • Video Series - The Check Up
    • Sponsored Video Series - One on One
    • Dr. Karen DeSalvo
      Next Up Podcast: What to expect with telehealth and healthcare technology in the next four years
      Carter Dredge
      Next Up Podcast: Ready, set, innovate! Innovation and disruption in healthcare
      Next Up Podcast: COVID-19, social determinants highlight health inequities — what next?
      Ceci Connolly
      Next Up Podcast: How to navigate the murky post-election waters
    • Beyond the Byline: Regulators aim to boost value push with fraud and abuse law updates
      An older man wearing a mask receiving a vaccine.
      Beyond the Byline: Verifying information on the chaotic COVID-19 vaccine rollout
      doctor burnout
      Beyond the Byline: How healthcare supply chain struggles contribute to employee burnout
      Beyond the Byline: Covering race and diversity in the healthcare industry
    • Leading intention promote diversity and inclusion
      Introducing Healthcare Insider Podcast
    • The Check Up: Dr. Joseph Kerschner
      The Check Up: Dr. Joseph Kerschner of the Medical College of Wisconsin
      The Check Up: Chip Kahn
      The Check Up: Chip Kahn of the Federation of American Hospitals
      The Check Up: Trenda Ray
      The Check Up: Trenda Ray of the University of Arkansas for Medical Sciences
      The Check Up: Dr. Kenneth Davis
      The Check Up: Dr. Kenneth Davis of Mount Sinai Health System
    • Video: Ivana Naeymi Rad of Intelligent Medical Objects
  • MORE +
    • Advertise
    • Media Kit
    • Newsletters
    • Jobs
    • People on the Move
    • Reprints & Licensing
MENU
Breadcrumb
  1. Home
  2. Providers
July 22, 2017 01:00 AM

No signs of relief: Rural providers remain on edge over ACA'S uncertain future

Steven Ross Johnson
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print

    Roger Knak has made some especially tough decisions in the past few years.

    Knak, CEO of Fairview (Okla.) Regional Medical Center in the northwest part of the state, had to lay off one of the center's three staff physicians. The rest of the employees haven't gotten a raise in three years.

    But the past month has been especially hard. As Senate GOP lawmakers worked toward passing a bill to replace the Affordable Care Act that would have severely cut back Medicaid and tax subsidies to purchase individual health insurance plans, Fairview's leadership had been preparing for what they feared to be the inevitable—a loss of revenue from cuts to federal healthcare programs.

    Consequently, Fairview Regional had started slashing its non-essential services, which could put its Medicare eligibility at risk.

    Fairview, a 25-bed critical-access hospital that serves a patient population of roughly 9,000, is just one of the many rural hospitals in Oklahoma and across the country that has been operating on slim margins for some time.

    "I don't know what the next cut would be without taking a drastic action to revisit us as being licensed as a medical-surgical hospital and changing our licensing to some other form," Knak said.

    The latest Republican effort to replace the ACA failed to garner enough vote to pass the Senate, leaving Medicaid programs as they are, for now.

    But rural healthcare providers such as Fairview remain concerned that the partisan wrangling over the healthcare law's future will just perpetuate the inertia over addressing the financial problems most rural hospitals now face.

    THE TAKEAWAY

    The GOP-backed effort to repeal the Affordable Care Act may be losing steam for now. That's good news for rural hospitals, but the rural sector's problems are far from resolved.

    "It seems to be the same uncertainty without any clear direction," Knak said.

    Republican lawmakers are continuing their effort to get a majority of senators to vote "yes" on the Better Care Reconciliation Act, but remained four votes shy as of deadline. The Senate's GOP-backed bill would stop Medicaid expansion and cut $700 billion from the program by 2026.

    President Donald Trump on July 19 met with GOP senators to try and persuade them to pass the bill, but with seemingly little effect. Sen. Majority Leader Mitch McConnell (R-Ky.) has called for a vote on a repeal-only measure that the Congressional Budget Office estimated would lead to 32 million losing health coverage by 2026.

    Medicaid covers nearly one-quarter of non-elderly adults, including 52 million Americans in rural areas. Thousands of previously uninsured Americans received coverage thanks to the ACA's Medicaid expansion, which increased eligibility to cover adults earning up to 138% of the federal poverty level in those states that chose to do so. Medicaid expansion was a real boon for rural hospitals in expansion states since rural residents are more likely to be uninsured.

    But the ACA's treatment of Medicaid ended up hurting hospitals in non-expansion states. To help pay for the expansion, policymakers settled on Medicare reimbursement cuts as the primary source, said Andy Fosmire, vice president of rural health for the Oklahoma Hospital Association. Oklahoma never expanded Medicaid after the Supreme Court in 2012 ruled the ACA couldn't require states to do so, yet hospitals there are still caring for uninsured patients while facing related hits to Medicare reimbursement.

    "I don't know what the next cut would be without taking a drastic action to revisit us as being licensed as a medical-surgical hospital and changing our licensing to some other form."

    Roger Knak, CEO of Fairview Regional Medical Center

    In addition, since 2013 many hospitals have seen Medicare reduce the share of beneficiaries' unpaid debt it covers for out-of-pocket costs; the rate dropped from 70% to 65%. But the cut was much deeper for critical-access hospitals, which went from having 100% of that debt covered down to 65% .

    "Though we strongly, strongly supported the objectives of the ACA to get people insured, unfortunately where some of the ACA has failed has been in rural areas," said Maggie Elehwany, vice president of government affairs and policy for the National Rural Health Association.

    Ironically, some of the financial problems rural providers have incurred in recent years are a byproduct of having more insured patients since the ACA was passed, with many buying insurance plans through a healthcare marketplace. Many of those patients who visit rural hospitals have low-premium, high-deductible plans. Rural hospitals that receive patients through their emergency department often hold them long enough to stabilize them before transporting them to a larger facility, but are stuck with the cost of the deductible if a patient can't cover it.

    "A patient's insurance finally kicks in once they are at a larger facility, because they already met their deductible with the rural hospital," Elehwany said.

    Such scenarios have led to a 50% increase in the bad debt rural hospitals have taken on since implementation of the ACA, according to the NRHA.

    In Oklahoma, where four rural hospitals have closed since 2010, 53 of the 65 facilities in rural areas operate with a negative margin every month, Fosmire said. Thirty-seven operate with less than 14 days of operating cash on hand.

    Nationally, 41% of rural hospitals are operating at a loss, according to a 2016 study by the Chartis Center for Rural Health. Since 2010, more than 80 rural hospitals have closed; the majority were in the 19 states that did not expand Medicaid. Another 670 rural providers are at risk of closing, mostly in non-expansion states that Trump won in last year's presidential election.

    Other federal programs were reduced by the ACA as a result of the expected increase in Medicaid coverage, with Medicare being reduced by more than $1.25 billion in 2015 and by another $1.2 billion last year.

    "I've been laying off employees over the last 12 months," said David Keith, CEO of McAlester (Okla.) Regional Medical Center, a 171-bed rural hospital. McAlester serves a population of about 200,000 in the southeastern part of the state. For some time now, Keith hasn't been replacing staffers who quit or were fired. Keith estimated he was on pace to lose 50 of his staffers and see a 30% decline in total revenue if the GOP plan were to pass.

    A recent projected the Better Care Reconciliation Act could lead to 919,000 fewer healthcare jobs by the year 2026. That could hit rural communities with a double whammy: fewer jobs and the loss of essential services.

    McAlester is the only local provider with urology and interventional cardiology lines, and it receives referrals from many smaller, critical-access hospitals. Still, Keith is contemplating cutting those lines to make sure it can still provide primary and emergency care.

    "If we don't have those tertiary services, those hospitals are going to have to send their patients 3½ hours away to the big urban centers for their specialty services," Keith said.

    Rural hospitals also may feel the squeeze from proposed changes to the federal 340B drug discount program, which could cut another lifeline for some hospitals (See related story, p. 10).

    The ACA allowed more rural and critical-access hospitals to save about $10,000 a month in drug costs as prescription drug spending skyrocketed, according to a 2015 Marshall University study.

    But the outlook is not good for the 340B program. Critics say it's mismanaged and prone to fraud and waste. The CMS this month proposed cutting hospital payments for 340B to 22.5% less than the average sales price for drugs instead of the current rate 6% above the average sales price.

    Though HHS Secretary Dr. Tom Price said the move was part of Trump's promise to address rising drug prices, the change might not influence drug companies to drop their prices. Instead, it would just hit hospital budgets, said Brad Gibbens, deputy director of the Center for Rural Health at the University of North Dakota School of Medicine and Health Sciences.

    While only 20% of the population lives in rural areas, rural residents make up more than half of the population of areas that lack basic medical care, according to the U.S. Health Resources and Services Administration. Rural areas make up 58% of all dental-care shortage areas and 53% of all mental health shortage areas across the country.

    Gibbens estimated that 54% of North Dakota rural hospitals now have positive financial margins since the state's Medicaid expansion compared with 46% of providers that still have negative balances. He said providers most at risk of closing were those in counties with populations of just a few thousand residents where the only other healthcare provider is hours away.

    For providers such as Fairview and McAlester, continuing the current system is unsustainable.

    "We have such short cash reserves on hand that all it's going to take is one hiccup with reimbursement and we could be (tapping) into an operating line of credit, which is usually the first step toward bankruptcy," Fairview's Knak said.

    Letter
    to the
    Editor

    Send us a letter

    Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.

    Recommended for You
    Hospitals see opportunity, risk in ambulatory surgery centers
    Hospitals see opportunity, risk in ambulatory surgery centers
    Health suffers as rural hospitals close
    Health suffers as rural hospitals close
    Sponsored Content
    Get Free Newsletters

    Sign up for free enewsletters and alerts to receive breaking news and in-depth coverage of healthcare events and trends, as they happen, right to your inbox.

    Subscribe Today

    The weekly magazine, websites, research and databases provide a powerful and all-encompassing industry presence. We help you make informed business decisions and lead your organizations to success.

    Subscribe
    Connect with Us
    • LinkedIn
    • Twitter
    • Facebook
    • RSS
    • Instagram

    Stay Connected

    Join the conversation with Modern Healthcare through our social media pages

    MDHC_Logotype_white
    Contact Us

    (877) 812-1581

    Email us

     

    Resources
    • Contact Us
    • Advertise with Us
    • Ad Choices Ad Choices
    • Sitemap
    Editorial Dept
    • Submission Guidelines
    • Code of Ethics
    • Awards
    • About Us
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Modern Healthcare
    Copyright © 1996-2021. Crain Communications, Inc. All Rights Reserved.
    • News
      • This Week's News
      • COVID-19
      • Providers
      • Insurance
      • Government
      • Finance
      • Technology
      • Safety & Quality
      • People
      • Regional News
        • Midwest
        • Northeast
        • South
        • West
      • Digital Edition
    • Insights
      • ACA 10 Years After
      • Best Practices
      • InDepth Special Reports
      • Innovations
    • Transformation
      • Patients
      • Operations
      • Care Delivery
      • Payment
    • Data/Lists
      • Rankings/Lists
      • Interactive Databases
      • Data Points
    • Op-Ed
      • Bold Moves
      • Breaking Bias
      • Commentaries
      • Letters
      • Vital Signs Blog
      • From the Editor
    • Awards
      • Award Programs
        • 100 Most Influential People
        • 50 Most Influential Clinical Executives
        • Best Places to Work in Healthcare
        • Health Care Hall of Fame
        • Healthcare Marketing Impact Awards
        • Top 25 Emerging Leaders
        • Top 25 Innovators
        • Top 25 Minority Leaders
        • Top 25 Women Leaders
      • Nominate
      • Previous Award Programs
        • Excellence in Nursing Awards
        • Design Awards
        • Top 25 COOs in Healthcare
      • Other Award Programs
        • 100 Top Hospitals
        • ACHE Awards
    • Events
      • Conferences
        • Leadership Symposium
        • Healthcare Transformation Summit
        • Women Leaders in Healthcare Conference
        • Workplace of the Future Conference
        • Strategic Marketing Conference
        • Social Determinants of Health Symposium
      • Galas
        • Best Places to Work Awards Gala
        • Health Care Hall of Fame Gala
        • Top 25 Minority Leaders Gala (2022)
        • Top 25 Women Leaders Gala
      • Webinars
      • COVID-19 Event Tracker
    • Listen
      • Podcast - Next Up
      • Podcast - Beyond the Byline
      • Sponsored Podcast - Healthcare Insider
      • Video Series - The Check Up
      • Sponsored Video Series - One on One
    • MORE +
      • Advertise
      • Media Kit
      • Newsletters
      • Jobs
      • People on the Move
      • Reprints & Licensing