Advocates for rural hospitals are warning that sweeping changes to Medicaid in the massive tax bill approved in July could threaten the existence of the facilities, which are vital both for the health of rural residents and their communities’ economies.
New limits on state-directed payments, which states use to increase payment rates for Medicaid providers, along with work requirements and other eligibility changes, could lead to millions of people losing Medicaid coverage, groups such as the National Rural Health Association and Kaiser Family Foundation predict.
The hospitals expect that a five-year, $50 billion Rural Health Transformation Fund also approved in the legislation will mitigate some of the impacts of the cuts, which a KFF analysis estimates at $155 billion over 10 years.
However, in many cases it may not be enough.
RHTF “will offset some Medicaid funding losses in some states, but it will not come close to replacing the stable nationwide coverage or long-term federal funding that [the] Republican megabill cuts,” the Center for Budget and Policy Priorities said in an analysis.
CBPP estimated that 7.5 million people will lose health coverage due to Medicaid cuts in the bill, and another 7.2 million will lose coverage due to cuts in the Affordable Care Act marketplace and the loss of enhanced tax credits to help cover the cost of plans obtained through health insurance exchanges.
Fund added at insistence of senators
The RHTF was included at the insistence of senators including Lisa Murkowski, R-Alaska, and Josh Hawley, R-Mo. Half of the $50 billion will be divided equally among the states, and half will be distributed based on a formula devised by the Centers for Medicare and Medicaid Services (CMS). States must submit Rural Health Transformation Program plans to CMS by early November. CMS then will approve or deny plans by the end of the year.
Sen. Lisa Murkowski (Agri-Pulse photo)“Many state health departments have been mobilizing over the past weeks,” the Association of State and Territorial Health Officials said in a recent summary of a discussion by experts. “Health officials are convening task forces, launching working groups and public hearings, and issuing Requests for Information and surveys to shape projects and spending plans.”
“The $50 billion fund is not only a lifeline but also a testing ground, and if implemented successfully, it could serve as a model to pave the way for future federal investments of this magnitude in rural health,” the summary said.
With the fund, “We've got an opportunity to mitigate a good amount of this for our rural communities,” said Mississippi Hospital Association President and CEO Richard Roberson.
But it depends on how the money is divvied up. It won’t all go to rural hospitals but can go to other health providers such as health clinics. Roberson said the Mississippi group has shared its priorities with the state health department.
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“We're focusing on things like payments to those rural hospitals to offset the loss of state-directed payments, but also just to pay for the emergency department services, because that tends to be the single biggest cost item for our rural hospitals,” he said.
“We've got an opportunity to mitigate a decent amount of those cuts if we choose to put it into the hospitals, but if we choose to spread it to other healthcare providers, then the hospitals will end up absorbing the bulk of those state directed payment cuts,” Roberson said.
“And then we're going to start seeing some pretty significant challenges for our rural hospitals as well as our urban hospitals that take care of rural patients,” he continued. “So we're waiting to see what the state does with the application on the rural health funds. That's the big wild card for us right now.”
The law does not mandate the RHTF money go to rural hospitals. In addition, the Medicaid cuts in the OBBBA are permanent, while the RHTF expires after five years.
Rural hospital reps on Capitol Hill
Tim Wolters, director of reimbursement for the Citizens Memorial Hospital system in Bolivar, Missouri, was in Washington on Tuesday with about 30 other rural hospital officials on a trip organized by the Missouri Hospital Association. The goal was “to try to express the concerns with what's going on here,” he said, adding that “there are other Medicare programs we're trying to fight for that also need to be extended.”
Tim Wolters (LinkedIn photo)“As Medicaid patients lose their eligibility, and as we get cut on what we get paid for treating Medicaid patients, all that combined just reduces our revenue. And so everyone's going to feel the impact of that,” Wolters said.
The National Rural Health Association is pleased with the RHTF but also noted that the program is time-limited. “NRHA emphasizes that the one-time funding, while significant, cannot by itself secure the long-term stability of rural providers,” the group said in a news release after the Notice of Funding Opportunity was published Sept. 15.
The association “is optimistic about this unprecedented investment in rural health care, while maintaining concern about the need for continued policies that support sustainable reimbursement for rural providers,” said Carrie Cochran-McClain, the group’s chief policy officer.
“The $50 billion has the potential to be an important infusion of funding in rural health care innovation,” she added. “However, the need still exists to support the larger rural health care ecosystem long-term through essential programs like Medicare and Medicaid.”
On its website, NRHA says Medicaid has a significant impact in rural areas. “Together with the Children’s Health Insurance Program, Medicaid has an outsized role in rural America, covering a larger share of children and adults in rural communities than in urban ones,” the group notes. “Nearly half of all children and one in five adults in small towns and rural areas rely on Medicaid or CHIP for their health insurance.”
Hawley himself has introduced legislation to double the fund from $50 billion over five years to $100 billion over 10 years. The bill also would repeal limits on the state-directed payments reducing reimbursement rates.
Wolters said the Missouri association backs Hawley's bill but thinks it will be difficult to pass. As of Tuesday, two months after introduction, the measure had no co-sponsors.
