OIG report tells only part of the critical access hospital story

Guest post by Jerry Seelig

Critical access hospitals (CAHs) are having a very bad Sweet 16 birthday party.  

The U.S Department of Health & Human Services' Office of the Inspector General (OIG) recently issued a report to set clear guidelines for what is considered critical access, using a digital mapping process to see how many CAHs actually comply with the program's requirements. The result: Up to two-thirds of rural hospitals getting the special reimbursement for Medicare services granted by the CAH program shouldn't truly qualify.

The CAH program was created in 1997 to ensure the survival of the rural hospital. More than 1,300 hospitals in 45 states participate in the CAH program and the OIG report estimates that in 2011 CMS and 2.3 million Medicare beneficiaries paid more than $8 billion for services at CAHs. They key financial advantage for CAH hospitals is that they are reimbursed at 101 percent of their reasonable inpatient and outpatient costs, although the sequester has reduced that to 99 percent.

The Balanced Budget Act of 1997 set requirements, including: The hospital cannot have more than 25 beds, must have an emergency department open around the clock, and the average patient stay cannot exceed 96 hours. There also were two "location-related requirements" for hospitals participating in the CAH program. First, they cannot be located within certain distance from virtually any type of hospital, and second, they must be in a rural area.

Prior to the passing of the Budget Act, states could grant a "permanent exemption" from these two requirements, establishing hospitals as "necessary providers" of rural health services that were grandfathered into the CAH program. And like grandparents enforcing the rules, heads turned the other way when exemptions were granted.

The CAH program's higher reimbursements and grants provide the core funding needed to operate rural hospitals while also allowing them access to bonds or other financing to expand or improve the local facilities.  

OIG is not recommending an end to the CAH hospital program; rather it is looking to send the permissive grandparents home and only grant the greater financial reimbursement to the truly rural and truly isolated CAH participants. Additionally, Medicare admission data found that unless a community is truly isolated, more than half of Medicare enrollee hospital admissions in those areas occur at large regional or urban healthcare providers. 

A variety of national and local organizations criticize change driven by digital mapping and remind us of the horrors facing the rural patient traveling many miles for simple care at a distant hospital. What digital maps and apocryphal tales do not tell us is that for today's Medicare recipients, their kids and grandkids, and the big city hospital providing tertiary care, there are many people of all ages who are best treated locally. Importantly, for many acuity levels, any increase in quality or resources is simply not worth an hour or more drive to another facility.

Among the care to best deliver locally:

  • More than half of the CAH hospitals provide obstetrics services, meaning expectant mothers can avoid a long trip to a distant city.  And care through the first year of life also is best accomplished in a local community.  

  • Short-stay simple cardiology, rheumatology and respiratory conditions

  • Interventions regarding short-term drug, alcohol and drug treatment for those community residents presenting in the emergency department

  • Intensive intervention for non-compliant patients, often diabetics who can be taken off the path to higher acuity and surgery

  • On-going critical illness management and care--be it infusion drugs, coagulation clinics, and a variety of respiratory, diabetic, and pulmonary care

  • End-of-life care, which in my recent experience is often 30 percent of a rural hospital's census. A long trip to a large hospital could prove confusing to the patient's family, believing this will help lead to a recovery. Keeping the patient in the local facility helps to communicate that other than pain management there is no more medical care to deliver, and thereby make the transition to care and caring at hospice or home easier to accept.

The projected increase in the insured as part of the Affordable Care Act means the big city hospital's numbers only work if the CAH hospital does not merely triage and transfer but triages then offers quality care to many patients and transfers only a handful of critically ill patients. 

Today's rural is not yesterday's rural. A small town can be a haven for telecommuting entrepreneurs and tech employees. It can be talented people replacing the urban grind with a small town business, and so on.  Like schools and infrastructure, a quality local hospital attracts and keeps residents. And equally as important, that hospital will more easily attract primary care and specialist physicians, nurses and other medical professionals. We now have to go beyond digital topography and to the appropriate allocation of resources to maintain a properly functioning CAH program.

Jerry Seelig serves as a federal court-appointed patient care ombudsman for three rural hospitals, and works with a wide variety of safety-net healthcare providers.