MedPAC suggests alternative models for rural hospitals

With rural hospitals closing throughout the country, the Medicare Payment Advisory Commission (MedPAC) has made a few fairly radical suggestions to try and reverse their fate.

Among MedPAC's suggestions: Converting rural hospitals to freestanding emergency rooms or clinics. Although such a move would eliminate inpatient care, it would preserve services in a region that is opposed to residents having to travel scores of miles to receive care elsewhere.

"Let's take the existing extra subsidies and shift [them] to the outpatient side," said Jeff Stensland, Ph.D., principal policy analyst for MedPAC, during a recent meeting, according to MedPage Today.

Thirty rural hospitals have closed since early 2013, according to MedPAC. The closures rise to 41 if those in the rural portions of metropolitan statistic areas (MSA) are included. Total discharges from rural hospitals have declined 12 percent from 2003 to 2013 and 27 percent for critical access hospitals. In the latter category, discharges declined 4 percent just from 2012 to 2013.

Two of the most recent closures were in Nevada and Arizona, where Nye Regional Medical Center in Tonopah and Cochise Regional Medical Center in Douglas shut down. However, a Missouri rural hospital, Putnam County Memorial Hospital in Unionville, was actually able to help its bottom line by expanding its service lines and focusing on services that residents would normally have to drive hours to obtain.

For standalone emergency departments, MedPAC has suggested that such entities receive Medicare prospective payments (PPS), plus grants to pay for standby capacity costs, as PPS alone could not sustain such a model.

The clinic model would have the facility open eight to 12 hours a day, and have round-the-clock ambulance service. Payments would be based on PPS units of service, similar to the Federally Qualified Health Clinics model, along with additional grants.

Such changes would focus on low-volume and isolated providers, at least 20 to 25 miles away from their nearest competitor. 

MedPAC delved into the proposals during an Oct. 9 meeting in Washington, but has not made any specific recommendations.

To learn more:
- read the MedPac slide presentation (.pdf)
- check out the MedPage Today article

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