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Alex Kacik: Rural hospitals have struggled to keep their doors open as fewer people use their inpatient beds. Lawmakers have proposed new reimbursement models to keep them afloat. Which models are expected to have the most staying power? Welcome to Modern Healthcare’s Beyond the Byline, where we offer behind the scenes look into our reporting. I’m Alex Kacik, senior operations reporter. Our Rules and Regulations Reporter Maya Goldman is joining me today to talk about rural healthcare. Thanks for joining me, Maya.
Maya Goldman: Happy to be here.
Alex Kacik: All right. So we’ve reported on rural hospitals that have had to cut services or shift their operating models to remain viable. Some new models will tweak fee-for-service reimbursement, while others have tried to adopt an entirely different payment framework. What is, or should I say what was the Accountable Care Organization track for rural hospitals?
Maya Goldman: Yeah, so the Center for Medicare and Medicaid Services decided in February to eliminate a program that was aimed at increasing the number of Accountable Care Organizations in rural areas. And the program would have given ACOs upfront payments of at least, I think, $200,000 per beneficiary and monthly prospective payments for two years, as long as they took part in the Medicare Shared Savings Program and this Rural Health Transformation Model. And the larger rural health demonstration that this was part of is still in effect. And that’s an alternative payment model in itself. CMS has given four organizations, I think, money to reform care delivery and make capitated payments to providers. But CMS cut the rural specific ACO program because it’s developing a broader ACO strategy. People in the ACO space have told me that that strategy will probably focus on broader health equity efforts rather than just geographic ones. And Alex, I know you’ve done some reporting on the rural emergency hospital model. So how would that work?
Alex Kacik: So this one would more tweak at the edges of fee-for-service medicine. This would allow the rural emergency hospital status would allow critical access in rural hospitals with fewer than 50 beds to convert. It’s taking aim at rural hospitals that have had trouble filling up their inpatient beds. We reported pretty extensively, you know, outside of the pandemic that volumes in terms of on the inpatient side for rural hospitals have been oftentimes below 50% in these smaller markets. Some of our reporting showed that the inpatient volumes hovered around 38%, and around there in 2016, and 2017. So in this model, they would stop offering all their inpatient care and instead offer outpatient services like around the clock, emergency care, observation, nursing facility services and ambulance services. So starting in 2023, those hospitals would receive a Medicare outpatient reimbursement rate that is 5% higher than what full service hospitals receive. In addition, the monthly facility payments.
But there was some concern from the rural policy experts that I talked with about eliminating all inpatient beds, especially you know, during the pandemic this dynamic has shifted some where they’ve really been a release valve for some of these academic medical centers that have been overwhelmed. But in general, like the one source told me that they were worried about losing swing beds in particular, because when volumes are lower, some of these beds can convert to skilled nursing and that has been a big help.
I wanted to touch base on the kind of refocus from CMS. You know, one of your sources mentioned that the next ACO proposals will likely focus on broader health equity. How does health equity factor into rural healthcare?
Maya Goldman: Rural health is absolutely a part of health equity. Rural communities tend to have less resources than their urban counterparts and that can in does lead to health disparities. Rural residents often have to travel further for medical care and there are simply less medical professionals in their communities. According to HHS data, there are almost twice as many primary care health professional shortage areas in rural areas as there are in non-rural ones. And other social determinants of health also intersect with rurality. Rural residents tend to be lower income than urban residents, and that comes with its own health impacts. So improving access to healthcare and health outcomes in rural areas in general is certainly a health equity issue.
Alex, you just covered some research that showed rural hospital closures disproportionately impacted people of color. Tell us what that data showed.
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Alex Kacik: So there was a new working paper that came out from the North Carolina Rural Health Research Program. I actually spearhead a lot of different efforts and look at hospital closures in like the University of North Carolina, for instance. But anyway, this one had found that rural counties lost their hospital between 1990 and 2020 had higher shares of Black and Hispanic residents compared with the median levels across all rural counties. So those same counties were also more likely to have higher levels of income inequality, lower per capita income and higher unemployment. That trend explains in part why Black and Latino Americans living in rural areas are more likely to die prematurely or experienced poverty, particularly among children. And that has, that’s some data from the Chartis Center for Rural Health that looked at mortality rates in these communities and rates of poverty as well.
Maya Goldman: One of the most recent rural hospital closures was in Pickens County in western Alabama. What did you find out when you talked with some of the locals there?
Alex Kacik: So weeks before everything shut down in 2020, due to the COVID 19 pandemic, a hospital in Carrollton, Alabama closed Pickens County Medical Center, and that had about 200 employees and I talked to a pharmacist in Carrollton he owns one there and one in a neighboring town. Carrollton only has about 1,000 people. This gentleman I talked with used to direct pharmacy operations for the local hospital. And you know, his pharmacy in town had a contract with the hospital to fill prescriptions for the facilities, some 200 employees. So as a result, they had to lay off staff and cut expenses, which is a common theme among area businesses where the hospital’s close people tend to move away or retire. And their broader economy contracts. There’s a paper that just came out about a week ago that looks at population sizes and economic output for these local communities. And they show that, you know, there’s significant enough contractions there in those metrics to warrant attention.
But outside of the financial end, you have to factor in access issues when folks have to travel further. I talked with Debra Sudduth, who works at the local auto repair shop in Carrollton, and her dad has [atrial fibrillation]. And the day before I talked with her this was last week, his pulse significantly dropped. But the closest hospital was, you know, 45 minutes away in Tuscaloosa, right across the border in Mississippi. And they were both overwhelmed. Luckily, they’re able to stabilize him at home and track his pulse.
But earlier last month, a complication arose from his ablation, which is common procedure for those with afib and his heart filled with blood and causing infection in an ambulance wasn’t available. So they had to drive 45 minutes to Tuscaloosa. And you know, it just goes to show how vulnerable some of these areas are when that safety net collapses.
Maya, I know you’ve done some reporting on the Direct Contracting model in the Medicare Shared Savings Program. What do you find out about providers willingness to experiment with alternative payment models? And could some of them work in both urban and rural markets potentially?
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Maya Goldman: Yeah, I would say participation in alternative payment models is definitely increasing across the country. But providers on the whole are sort of tentative still. There’s some evidence from past CMS demonstration projects that rural providers in particular are hesitant to take on downside risk, which is a key element of a lot of Alternative Payment Models. Experts say they sort of provide the incentive to actually innovate when you’ve got some skin in the game. But there are rural health centers participating in the Medicare Shared Savings Program for sure. And of course, there’s the chart model that I spoke about earlier that’s trying to incentivize healthcare transformation in rural communities.
I think there’s a case to be made that COVID will accelerate movement towards alternative payment models. Because providers that didn’t depend on patient visits to fund their practices, you know, providers that were already operating on these alternative payment models could pivot more easily when COVID shook everything up and patients weren’t coming in face to face. So I would predict that we’ll see some more movement. But Alternative Payment Model participation does pose unique challenges for rural providers. There’s a phenomenon in ACO program called the “rural glitch,” which effectively penalizes an ACO for reducing costs compared to its regional competitors. And this impacts all ACOs but it’s mostly felt by rural providers because they tend to care for a larger share of the patients in their region compared to other ACOs.
The reformed Direct Contracting program which you mentioned, which is now known as ACO REACH has more explicit health equity provisions than earlier alternative payment models from CMS. So there’s a health equity benchmark adjustment, for example, to support care delivery and underserved areas and that could help draw more rural providers into the program. And CMS has said overall that it’s interested in involving rural health clinics and other safety net providers in more APM. So that’s definitely something to keep an eye on.
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Alex Kacik: Outside of the payment models. I know there’s been focus on like tweaking the Medicare wage index, for instance, where some of the areas and communities that are on the lower end of that would get bumped up. And a lot of the, you know, Alabama was on the lower end of that pay scale. And, you know, they’re looking at, you know, state and federal regulators are looking at other ways to try to ensure that there’s more financial stabilization at these rural facilities.
I’m wondering when you’re looking at these, you know, different rule drops, as you look at inpatient rates and outpatient rates. Is there a lot typically dedicated to rural health? Or I imagine that’s a smaller subsection since, you know, it’s just a smaller number of facilities that fall under that range. But I’m just curious, just from a focus standpoint, you know, how much that comes into play when you’re reading through these rules?
Maya Goldman: Yeah, I would say that, especially during the Biden administration, they’re moving away from sort of the geographic specific policies and into broader health equity because there’s a belief in the administration that, you know, all these things intersect, which I think there’s a great body of evidence to support, you know, like I mentioned, where you live intersects with how much money you make, and other social determinants of health. So I would expect to see more focus on health equity broadly, and less focus on, you know, this is what we’re doing to help rural providers specifically. But I do think that there needs to be some acknowledgement. And I expect that there will be some kind of acknowledgment that the situation’s; the circumstances that rural providers face are different than what providers in inner cities face, you know, even if they’re both considered underserved areas. So I expect we’ll see more on that.
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Alex Kacik: Well Maya thank you so much for sharing your time and your reporting and expertise with us.
Maya Goldman: Thank you so much for having me.
Alex Kacik: All right. And thank you all for listening. If you’d like to subscribe and support our work, there’s a link in the show notes. You can subscribe to Beyond the Byline on Spotify, Apple podcasts or wherever you listen to your podcasts. You can stay connected with our work by following Maya and I at Modern Healthcare on Twitter and LinkedIn. We appreciate your support.
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