Buried within all the confusion about the federal budget and the "fiscal cliff" are important Medicare provisions that could make the difference in whether many rural hospitals in Texas can keep the doors open.
In the late 1980s, hoping to save money, Congress changed how hospitals are paid by Medicare. It shifted the payment system from the cost of services in individual hospitals to a more standardized and averaged payment method known as the prospective payment system. The problem with this urban, high-volume hospital model was that it did not take into account the unique operating dynamics of rural hospitals.Rural hospitals are different. They often have a narrower financial margin than urban hospitals. Few rural hospitals provide more profitable advanced services and medical procedures to offset losses in other areas such as emergency care. It is not unusual for the operating cost in a rural hospital to be slightly higher per patient because of low patient volume, swings in patient numbers and medical staff recruitment difficulties, which can drive up payroll costs.The emergency room must be there 24 hours a day, seven days a week, even with periods of nothing.The new payment system hit the rural hospitals hard. Almost 500 rural hospitals nationwide were boarded up in the late 1980s and early 1990s. More than 70 were in Texas.Reacting to the damage, Congress created a number of "fixes" or patches in the payment system to address the rural hospital issue. Congress decided it was worth spending a little more to make sure rural hospitals were open.Programs like the Critical Access Hospital and Sole Community Hospital designations were born, giving many small, low-volume hospitals a bump in Medicare payments. Over time, as more rural hospital problems developed, even more rural provisions were forged. These provisions were enacted long before the country had such a debt problem, and none can honestly be linked to creating the debt nightmare.Congress now finds itself searching for cuts. The situation is dangerous for Texas rural areas because most members of Congress were not around when many of the rural hospital provisions were created, which is helping drive talk of eliminating some provisions.Texas rural hospitals could collectively lose $75 million to $100 million annually if these provisions expire or payments to rural hospitals are reduced by even small percentages. Some hospitals could close, while others might hang on for a few years with reserve funds or higher local taxes and with reduced services.Rural hospitals are critical to their communities. Even those who live in urban centers should be concerned because they might have family living in rural Texas or might have medical needs while driving through a rural area.Those in rural areas will be watching to see if Congress is more interested in addressing budget cuts prudently without damaging the rural health safety net or if this country will return to the 1980s, with shuttered rural hospitals and long distances between emergency care.Don McBeath of Lubbock is director of government relations for the Texas Organization of Rural & Community Hospitals.Have more to add? News tip? Tell us
