Lifeline on the way for struggling hospitals in rural areas
WASHINGTON (NEXSTAR) — Struggling rural hospitals around the country are getting a lifeline from the federal government.
The Centers for Medicare and Medicaid Services (CMS) has approved a plan to provide billions of dollars in additional reimbursements to the facilities, and lawmakers and federal Medicare officials hope the changes will stop the epidemic of hospital closures in rural areas.
“This issue of an inequity in reimbursement between rural and urban hospitals has been going on for years and really led to hospitals shutting down,” CMS Administrator Seema Verma said.
In the last decade, more than 100 hospitals in rural areas have closed their doors.
Verma blames a flaw in the formula Medicare uses to pay hospitals.
“It is based on wages. Wages in urban areas tend to be higher, so every year the higher-wage hospitals were getting more and more, and it was just creating a larger and larger disparity,” Verma said.
Verma said, for example, hospitals caring for patients with pneumonia in urban areas get $6,000 from Medicare compared to only $4,000 in rural ones.
A new CMS rule taking effect Oct. 1 will change the formula to increase payments to rural hospitals, something Verma said translates to billions of dollars for these facilities.
“The president is very committed to making sure all Americans are healthier no matter where they live,” Verma said.
National hospital groups support the rule’s intent but worry it will end up punishing facilities in urban areas.
However, lawmakers who represent rural areas, like Alabama’s congressional delegation, are working with Verma to see this through, arguing it’s a crucial step to make sure patients can get help all across the country.
Hospitals should notice the difference in their reimbursement rates as soon as the new rule takes effect in October.
The change was one of the top recommendations from the Office of Inspector General for the Department of Health and Human Services to cut waste, fraud and abuse in the health care system.