WASHINGTON, June 17, 2015 – Since 2010, 50 hospitals in rural areas have closed their doors, leaving many of the 47 million Americans who live in those areas with longer hauls to reach physicians and specialists, and in some cases, no access to healthcare at all. Experts and leaders within the healthcare community say there are significant changes that can be made to improve rural access to health providers, but only if Congress agrees to fund them.

A Senate Appropriations subcommittee recently heard testimony on the problems that plague the rural healthcare system, including lower rates of health insurance coverage and higher concentrations of older people. As a result, these areas experience higher rates of chronic disease, which leads to more demand for expensive procedures, and are populated with more Medicare enrollees, which puts more regulatory burdens on providers. Hospitals and health clinics are understaffed in 78 percent of rural counties too, lawmakers were told.

The way rural healthcare is run now “creates unnecessary disparities” and “costs taxpayers more in Medicare expenditures than if we provided access in a better way,” Sen. Roy Blunt, R-Mo., the chair of the health and human services subcommittee, said in his opening statement. “It is critically important that Washington recognize that healthcare access is essential to the survival and success of rural communities across the country.” 

One way of evening the playing field for rural healthcare providers is deploying more federal funding for telehealth infrastructure, several witnesses suggested. Through telehealth services, healthcare is made far more accessible – just a phone call away instead of hours of driving – and more cost-effective, which helps rural hospitals and other healthcare providers stay afloat.

Medicare enrollees can use a two-way audio or video connection to receive 75 different telehealth services, including psychoanalysis, family psychotherapy, annual wellness visits and prolonged care. Telehealth providers are reimbursed the same payment they would have received following a face-to-face visit. 

In Mississippi, telehealth services have filled a sorely needed gap in rural healthcare delivery. The University of Mississippi Medical Center’s Telehealth network was built with federal, state and private funds and connects an average of 8,000 Mississippi residents every month with emergency services. 

Kristin Henderson, the center’s chief telehealth and innovation officer, testified that “telehealth was born out of necessity” 10 years ago in her state, which leads the country in the worst overall health, obesity, heart disease, diabetes, infant mortality and preventable hospitalizations. Today, the statewide TelEmergency program “has resulted in a 25 percent reduction in rural emergency room staffing costs (and) a 20 percent reduction in unnecessary transfers.”

The center has expanded its program on an annual basis, and last fall, it started a telehealth pilot aimed at improving the health of diabetics. Six months into the program, all 93 patients enrolled had lost weight and reported their disease was under control, according to Henderson. Pilot participants had also, on average, reduced their hemoglobin A1C levels by 2 percent, and none had been admitted to the emergency room for their diabetes

Henderson said the pilot’s results are a testament to how powerful telehealth services can be at improving health outcomes and reducing healthcare costs in rural areas. However, she cautioned, telehealth requires more federal funding and a reliable broadband or telephone connection to effectively serve rural populations.

Securing reimbursement for telehealth services is also a substantial barrier to telemedicine adoption, according to the American Telemedicine Association. All 50 U.S. states have telehealth policies and all 50 of their plans are different, creating "a patchwork of arbitrary insurance requirements and disparate payment streams that do not allow (patients and healthcare providers) to fully take advantage of telemedicine,” the group said in a May 2015 report. 

Tim Wolters, the reimbursement director for one rural hospital in Missouri and a reimbursement specialist in another, explained why rural hospitals are finding it difficult to stay afloat. For starters, Wolters testified, they have low and inconsistent patient volumes, which complicates paying for fixed costs and managing a workforce that could find “more stable work hours and patient volumes, and frequently higher pay rates” at urban facilities.

Secondly, urban hospitals had a 30 percent Medicare utilization rate on average in 2013, while the rate for rural hospitals was 42.5 percent. Higher utilization rates are particularly problematic for rural facilities, he said, because the Affordable Care Act (ACA) and the 2013 sequestration made cuts to Medicare reimbursement rates – creating budget losses that often can’t be adequately subsidized due to low patient volumes – and increased the number of Medicare data and reporting requirements – forcing some rural hospitals to hire additional compliance staff.

This is where the Centers for Medicare and Medicaid Services (CMS) comes in. CMS is the next biggest federal player in rural healthcare policy, as it is the agency that administers Medicare and implements ACA. It received criticism at the hearing for Obama’s budget proposal to “cut” Medicare reimbursement rates to critical access hospitals (CAHs) –- more than 1,300 small rural facilities located in low-access areas -– from 101 percent of inpatient and outpatient costs to 100 percent. The administration’s budget also calls for removing CAH designations from those CAHs located within 10 miles of another CAH.

The benefits of CAH status include greater access to federal grants and higher Medicare reimbursement. CMS officials told lawmakers that losing CAH designation and/or 1 percent of Medicare reimbursements wouldn’t force hospitals to go out of business or significantly affect capacity, but George Stover, CEO of a CAH in Kansas, said it would.

These reductions “would effectively eliminate any opportunity for positive financial margin,” Stover said. In Kansas, he continued, rural hospitals have an average Medicare margin of minus 9.3 percent, or in other words, are paid less than 91 cents for every dollar they spend on care for Medicare patients. The current 101 percent CAH reimbursement rate helps hospitals close the gap, he argued, and without it, CAHs are in danger of folding.

CMS didn’t catch flak, however, for eliminating an existing mandate that required a supervising physician to be onsite while Medicare patients receive outpatient care at a CAH. Now, CAH hospitals may receive Medicare reimbursement for telehealth services.


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