Rural Health Care and a Lame Duck Congress

[imgbelt img=cahmap.gif]The lame duck session of Congress could harm rural hospitals and doctors. As budgets are cut, rural hospitals could lose the federal payments that have kept them solvent.


A message from the Rural Assembly

Fitting Rural Hospitals Into Medicare

A long list of arcane, special funding arrangements has accumulated to try to fit small rural hospitals into a Medicare payment system designed for large city hospitals. These programs give extra money to hospitals that take care of poor people, to big hospitals in small towns that serve as regional medical centers, to hospitals whose Medicare patients can’t pay their required shares. The list is long.  

The largest of these programs is the “Disproportionate Share Program,” generally referred to as DISH. It distributes $15 billion per year to the states to be handed on to hospitals that take care of lots of poor and uninsured people.  

DISH is being phased out between 2014 and 2020.  Several others of these programs are ending with the savings to be used in health care reform, officially known as the Patient Protection and Affordable Care Act. 

Hardest hit by the loss of these programs will be hospitals in states whose governors are refusing federal funding to expand Medicaid insurance coverage to poor people. Hospitals in those states will lose the old help and gain fewer newly insured patients than anticipated.  

Rural hospital beneficiaries of these vanishing programs will be trying to get them renewed. I think they will hear from a Democratic Senate, “Sorry, we’ve committed that money.  Go talk to your governor.” 

The legislative issue is immediate but the hospital distress will be spread over the next few years.

And Then There’s the ‘Doc Fix’

Perhaps the noisiest issue will be “The doc fix.”

Fifteen years ago the Congress legislated that each year Medicare could increase total payments to doctors by no more than by what the economy was expected to grow.  That was called the “sustainable growth rate.”  

If the number of physicians grew faster than the economy, pay per doc would shrink.  If the amount of care provided by docs increased faster than the economy grew, pay per unit of care would shrink.  

Since 1997 has Congress has never obeyed its own law.  

The problem is that under “pay as you go” (“paygo”) rules adopted by Congress, legislators have had to find the money to make up the difference between what the sustainable growth law calls for, projecting from 1997, and what accumulated medical inflation has demanded over the years. The difference has now grown to a 26% gap as each year more doctors get paid more for each thing they do, and they do more things.  

It costs a bit over $20 billion to “fix” this problem for 2013. Congress would like to buy a permanent fix a decade into the future by repealing the law, but that would cost more “paygo dollars” than Congress can possibly find.  

This annually recurring fiasco has to be dealt with before the end of this calendar year or in 2013 docs will get enough from Medicare to pay their rent and their staffs but have little left for themselves. The House will probably try to raid the Affordable Care Act’s “Prevention and Public Health Fund,” disregarding the fact that preventing a dollar’s worth of disease treatment costs about eighteen cents. 

It’s just another expensive way to kick the proverbial can down the road.   

Over The Fiscal Cliff

Finally, the sequestration requirement — which would hold back money that would ordinarily be spent — will be triggered unless Congress reaches an agreement to reduce our deficit before the end of the year.  

If no deal is made during this lame duck, there will be a mandatory two percent reduction in all health care spending, including Medicare. That doesn’t sound like much, but a lot of rural hospitals, which are supporting most rural docs, have very narrow margins.

It’s all on the table, this week in Congress.

Dr. Myers is a retired medical educator who has been involved with rural hospitals most of the last forty years.  He directed the Federal Office of Rural Health Policy in the late 1990s and was president of the National Rural Health Association in 2003.  He also writes for the Rural Monitor. He and his wife, JoAnn, raise endangered breeds of livestock in Waldoboro, Maine. 

A message from the Rural Assembly