Critical Times for Small and Rural Hospitals

Although Critical Access Hospitals (CAHs) are protected from many of the disruptions of the Patient Protection and Affordable Care Act, their fates will differ greatly depending on their individual circumstances. Geography, the right mix of services, affiliation with larger partners, and, most critically, cuts of preferential reimbursements that CAHs currently receive but that are far from guaranteed in the future—all of these play a role.

Thanks to the decision of many states not to expand Medicaid, whether a small rural hospital or critical access hospital survives may depend on a host of variables over which leaders have little or no control. For instance, many organizations stand to benefit as more of the previously uninsured acquire health insurance, unless, of course, your state decided to not expand Medicaid. 

Read the article in HealthLeaders Media here.

340B Drug Discount Program Under Scrutiny

The 340B drug pricing program lets thousands of hospitals, community health centers and family planning clinics buy outpatient prescription medications from manufacturers at an estimated 25 to 50 percent discount. Participants can then charge higher rates to insured patients and keep the additional revenue.

To qualify for the program, hospitals and clinics must meet federal requirements, such as non-profit status, serving a certain percentage of low-income or uninsured patients or receiving federal grants. The Affordable Care Act broadened the type of facilities that can qualify for the 20-plus year program, including Critical Access Hospitals, the smallest rural hospital.

Growth in the program is raising alarms among drug makers and some members of Congress who say that some facilities should not be eligible and that the money they receive from the discounts is not always being plowed back into patient care. The Health Resources and Services Administration (HRSA) runs they program, and Administration officials have promised to propose clearer rules for the program. Proposed regulations had been expected as early as this month, but a recent federal district court ruling has put into question whether HRSA has that authority.

Despite the ruling, HRSA says they plan to move forward with the proposed regulation, and it has been expected to touch on several areas, including eligibility and contracting. 

• Eligible patients: Patients who have a “relationship” with a 340B hospital or clinic are eligible to receive the discounted 340b drugs. But exactly what constitutes such a relationship isn’t clearly defined. “There’s always been a discussion about who truly is a patient of a covered entity and who truly can receive a 340B drug,” said David Ivill, a 340B expert with the law firm McDermott Will & Emery.
• Eligible facilities: Currently if a clinic is included in an eligible hospital’s Medicare cost report it can qualify for 340B drug pricing. Analysts expect a new regulation would provide more clarity on which facilities qualify and which ones don’t. While one part of a qualifying 340B hospital might serve large number of poorer patients, an affiliated clinic could see mostly insured patients. Under current rules both qualify to receive the discounted drugs.
• Contract pharmacies: Some providers in the 340B program can contract with outside pharmacies, like Walgreens, to give patients the flexibility of filling their prescriptions at locations that may be more convenient than a hospital pharmacy. A report released in February by the HHS Inspector General found inconsistencies in how some contract pharmacies determine who is eligible for the discounts and in how they conduct the oversight activities that HRSA recommends. In a statement, a HRSA spokesman said the agency has followed up individually with pharmacies identified in the report “to determine necessary next steps.”

Read the full article in Kaiser Health News here.

SGR "Pay-fors" Still Up in the Air

If Congress doesn't take action, the current SGR patch is set to expire at the end of March enacting a 24% pay cut.  While ideas for "pay-fors" for the repeal seem to be scarce, provider groups agree on one thing - the time to repeal the SGR is now.  Discussion of a nine month delay until after the elections surfaced, but Congressional leaders and provider groups rejected that proposal.  The delay would have been the 17th temporary legislative patch delaying the cuts.  Read more in Modern Healthcare. 

As part of a discussion draft of pay-fors, the Senate Finance Committee looked at Critical Access Hospital (CAH) mileage and reimbursement.  While these are ideas and not endorsed options, CAHs are vulnerable.  It's important to continue to advocate.  Engage your mayor, Chamber of Commerce, and county commissioners - make your letters to your electeds patient-focused.  Critical Access Hospitals protect patient access, protect the rural economy and save taxpayer dollars.

Response to Study Finding CAHs Had a Slightly Worse Mortality Rate Than Major Medical Centers

A recent research report in the Journal of American Medicine stated that Critical Access Hospitals (CAHs) had a slightly worse mortality rate than major medical centers. Dr. Wayne Myers, a retired pediatrician and rural medical educator, responds in The Daily Yonder stating that the report gave the wrong reasons for the small difference in survival between the rural CAHs and larger regional hospitals. Read Dr. Myers's insightful response here.