Lawmakers seek to change Medicare payment requirements for rural hospitals

By Whitney Forman-Cook

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WASHINGTON, July 28, 2015 - A House Ways and Means subcommittee met Tuesday to discuss two Medicare payment requirements that the panel's Republicans called “bureaucratic red tape” for rural hospitals.

“Our constituents are seeing first hand the difficulties caused by overregulation and bureaucracy. And it is our rural neighbors who pay the price when it comes to access,” said Health Subcommittee Chairman Rep. Kevin Brady, R-Texas, in his opening statement.

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Two rules in particular were problematic for Brady: the 96-hour requirement, which is currently waived, but could be enforced if administrative action or legislation allows it; and a direct supervision requirement that had been previously waived by legislation in 2014.

Both rules affect Medicare reimbursements for Critical Access Hospitals (CAHs) that are often situated in areas with high rates of poverty and Medicare and Medicaid utilization. The CAH designation provides more than 1,300 small, rural facilities located in these low-access areas additional federal funding and higher Medicare reimbursement rates for health services. Several of the hearing witnesses who represented rural CAHs testified that they were struggling to make ends meet in part because of complicated Medicare requirements that have compliance costs.

The 96-hour rule, for instance, is both a condition of Medicare participation and payment for CAHs.

In order to receive Medicare payment for healthcare services, a CAH physician must certify that an admitted patient will be discharged or transferred within 96 hours. Shannon Sorensen, the CEO of Brown County CAH, said a number of patient maladies could result in a stay longer than four days, including pneumonia or a routine gall bladder removal. Lab results alone can take 72 hours, she added.

What's more, “the 96-hour rule is especially burdensome” as it “leaves no room in the care plan” for additional inpatient services, Sorensen told lawmakers. Ultimately, she said, the new policy of strict enforcement could mean patients get less care, or are sent to another hospital for care unnecessarily.

In the last Congress, Rep. Adrian Smith, R- Neb., and Sen. Pat Roberts, R-Kan., introduced identical bills that would remove the 96-hour rule condition of payment, leaving in place the condition of participation. The same bills (HR 169 and S 258) were reintroduced in this Congress by Rep. Adrian Smith, R-Neb., and Roberts respectively.

Both the House and the Senate have legislation pending that would continue a stay on a Medicare direct supervision requirement for outpatient therapy services received at CAHs and other rural hospitals. Under the existing supervision requirement, relatively simple outpatient procedures like applying a cast or splint to a finger, or administering pulmonary rehabilitation exercises or nebulizer treatments must be “directly supervised,” that is, a physician or non physician practitioner must be present on the same campus where the services are being furnished.

The American Hospital Association, the National Rural Health Association and the Kansas Hospital Association are all supporters of the House bill (HR 2878) sponsored by Reps. Lynn Jenkins, R-Kan., and Dave Loebsack, D-Iowa, because they say it would help CAHs and others provide outpatient services in a more cost-effective way. The Senate's companion legislation (S 1261) has advanced out of the Finance Committee.

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