OIG Challenges Rural Healthcare’s Critical Access Designations

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CCH-thumb1A series of recommendations from the Department of Health and Human Services’ Office of the Inspector General were proposed last week that could create yet another threat to rural healthcare organizations, John Commins reports over at HealthLeaders Media.

These recommendations would permit the Centers for Medicare and Medicaid Services “to strip critical-access designation from any hospital that was brought into the program under a state ‘necessary provider’ designation.”

Cost-cutting is the primary reason why the OIG is proposing this, program analyst for the OIG’s Office of Evaluation and Inspections in Chicago Brian Jordan explained, possibly saving Medicare up to $1.3 million per critical-access hospital “stripped of its designation.”

What the OIG is specifically challenging and ultimately looking to enforce is the distance requirement. A 2011 review found that “more than 300 critical-access hospitals were less than 15 miles from another hospital…” “…that could provide similar services.”

Jordan explained, “Remember, necessary-provider hospitals never had to meet the distance requirement. And, until March of 2013, CMS never went back to check that other critical-access hospitals still met the location requirements. With new hospitals being built and towns expanding, some of these hospitals might no longer qualify for critical-access hospital status. Since we pay these hospitals more to provide this critical access to rural patients, we wanted to know if these increased payments are tax dollars well spent.”

The National Rural Health Association is not happy about the OIG’s recommendations. CEO Alan Morgan asserted, “The practical effect is that it would kill rural health.”

Elaborating, he said “I know that is a strong statement, but OIG viewed this with blinders on, not looking at how healthcare is delivered in rural America. We aren’t talking about just closing 800 rural hospitals potentially. We are also talking about closing the EMS services in many of those communities and removing access to mental healthcare in many communities. Most of these hospitals have provider-based rural health clinics and a lot of these hospitals have nursing home beds in effect.”

He charged that the OIG is treating this as a payment issue and refusing to look at the totality of the rural healthcare safety net.

“It’s about access and this report is only about finances and not access. It is a spending and finance issue and we seem to have forgotten the rationale for the creation of this program, which was an access issue.”

Not surprisingly, the OIG doesn’t believe that the majority of the nation’s critical-access hospitals will lose their designation, but even if they do, Jordan said it has prepared other recommendations to stand in the gap: “…we recommend that CMS create alternative location related requirements for critical-access hospitals that don’t meet the distance or rural requirements. For example, CMS could allow critical-access hospitals to keep their designations—if they serve communities with high poverty rates.”

Morgan dismissed this out-of-hand, emphasizing how outrageous the OIG’s recommendations are at a time when two percent sequestration cuts have added extra pressure to many of these hospitals. Sure, the OIG will argue it “isn’t recommending that they shut the doors,” he said, “but they are.

“When they’re talking about removing that designation from facilities where a large percentage of them are operating in the red already, that will effectively close them. So it’s not an honest argument saying that ‘we are not recommending closing 800 rural hospitals.’”

As healthcare executives, perhaps in rural communities, what is your reaction to the OIG’s recommendations? Is this a continuation of the federal trend that seems to underestimate the importance of the rural safety net?

-by Pete Fernbaugh

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