South Dakota hates it when the federal government pays for health care.
Wait: no we don't!
Twenty-six rural hospitals in South Dakota are threatened by a federal agency's proposal that could take away the extra payments they get for service to Medicare patients, a move that might even force some hospitals to close, a state official said.
State Health Secretary Doneen Hollingsworth said the proposal is a long way from being approved, but state officials plan to fight the proposed change in the way rural facilities designated as critical access hospitals are reimbursed for care provided to Medicare patients ["Federal Report Threatens 26 SD Hospitals," AP via Mitchell Daily Republic, 2013.08.29].
The feds are talking—just talking—about re-examining an exception they already grant to South Dakota and other states to designate hospitals within the usual 35-mile limit as "critical access hospitals," which Medicare reimburses at 101% of cost. According to the AP report, the Obama Administration's proposal could kick hospitals in Custer, Winner, Madison, Milbank, and elsewhere out of the critical access category, lowering their reimbursements to Medicare's standard rates. Hospitals keeping critical access status would see their reimbursement drop to 100%.
The Daugaard Administration is ready to fight to keep government hands on Medicare at South Dakota's smaller hospitals, even though the proposed cuts would save Medicare $4 billion. Budget hawkery ends where local politics begins.
Read more:
- Retired pediatrician Wayne Myers provides an excellent background on the critical access hospital program in this July 30, 2013 Daily Yonder article.
- Our Minnesota neighbors are alarmed by the proposed cuts as well.
this is what's going to happen if the Tea Party has their way. And that's only the tip of the iceberg.
The Republicans candidates (especially the ones with the Tea Party) have to be asked if they support cuts like this? They keep talking about cutting big government but nothing specific. Is this a cut they would support?
I have never heard the Tea Party expound upon their vision of what our country would look like. Is it something like what the US looked like after we threw the tea in the harbor? It is really hard to get the toothpaste back in the tube, no matter how much yelling one does.
So just asking a question, how would these cuts to Medicare affect Madison's new hospital and clinic construction, would these unforeseen changes in budgeting put them in a position where they would be more likely to accept or pursue a Sanford or Avera take-over?
That's a good question, Chris. The answer depends on a lot of factors. The Madison hospital serves a larger community than most of the critical-access hospitals that might lose that status. Madison thus has more patients onto whom to shift costs.
The articles above say the government spends around $860K per year on each critical-access hospital. The new Madison hospital is supposed to cost $37 million, and most of that money is coming from elsewhere. So conceivably, $860K less per year could make a big difference on the hospital's ability to make payments on the remaining amount of whatever they borrow to build. Then again, their total revenue, plus whatever increase they'll get from being able to attract and serve more customers with the new facility, may offset that loss.
I may have this mixed up, but I think newspaper article indicated hospitals must be 35 miles apart to qualify for this spending. Winner and Gregory are 25 miles or so apart, so they BOTH show up as to close to another hospital. Effectively shutting Gregory off would mean the Winner and Burke hospitals might both qualify as critical care and get the funding.
But, it seems to me that some consideration of the furthest distance from a hospital to another hospital also should be considered in these calculations ..also what happens to distances if any of the "too close" hospitals is cut off from funding.
Rural hospitals tend to be on straight line highways. That means they can be physically close together, but distance perpendicular to highway to a hospital might be 40 to 100 miles.
It does not seem to me that closest distance to another hospital should be the only relevant factor.
Does Burke actually have a hospital, or just a clinic?
The challenge is ALL hospitals within 35 miles of another hospital will lose their Critical Access Hospital designation, so both Gregory and Winner will be kicked out of the club. Both would then be forced to go a year before re-applying for CAH status. They in all likelihood would be stuffed into a prospective payment hospital system, where CMS essentially pays 70% of Medicare/Medicaid costs (so a 31% loss of revenue)... running a hospital where the lionshare of your patients are above 65 or qualify for Medicaid and you take a 31% pay cut is asking quite a bit.
The danger is these hospitals will close up shop and our communities will lose a huge investment and economic engine. A better approach would be to find a better designation that fits the needs of communities, protects the assets created in these facilities, but runs leaner.
70%—that's the number I was looking for! Thanks, Wayne!
Doug, I imagine the difference in travel distances for patients is part of the reason the original CAH (freaking me out to write those initials!) legislation gave governors the authority to designate exceptions.
I'm thinking about what Wayne's saying and what I read in the Daily Yonder article... maybe we're trying to solve the rural hospital problem with the wrong tool. Basically, through CAH designation, we're trying to use Medicare to solve a problem that goes beyond Medicare: providing affordable, reliable care for rural populations. They aren't just old people! Maybe Medicare should drop back to reimbursing every hospital at the same rate, and we should create a separate program to subsidize rural health care.
Or we could just go single-payer, Medicare for Everyone, and calculate per-patient small-hospital and sparsity factors for each patient the same way we do for schools in South Dakota. Then, instead of the current system in which a rural hospital has to shift costs from its old rural patients to its young rural patients, we shift costs within a much broader nationwide pool better able to absorb such burdens.
I don't think this would be happening if we had a strong rural presence coming from our state....Yes....we replaced Tom Daschle with John Thune.
Douglas, it may help to clarify that hospitals without another hospital within 35 miles of it can qualify for Critical Access Hospital designation. For a while, governors were allowed to add hospitals closer to another hospital because they were "necessary providers" of healthcare. That is what allowed hospitals like Gregory & Winner to exist as CAHs closer than the 35 mile limit.
We definitely need more tools to ensure access to quality, affordable healthcare for rural (and urban) communities. The CAH model is a blunt tool which has benefits, but is also a poor fit for many communities. Of course, when the question is a binary "Do you get this designation or not?" which could spell the closure of hundreds of hospitals across the nation, then clinging to the cumbersome status quo looks better.
Forcing rural facilities (which according to the Institute of Medicine are more cost-effective healthcare delivery systems) to sink or swim is a poor choice. Finding a better alternative is the more logical solution (counter plan, anyone?).
Ironic that our governments apparently think it more important to have neighborhood pre-registration and voting than to have accessible health care available within an hour. Loosing or closing hospitals also likely means loosing doctors. I guess I will have to plug the locations onto a map and see how they relate to maximum distances to care otherwise.
Statistics show that the longer a hospital maintains its CAH status the more inefficient it becomes - i.e. uses more money for the same service. No doubt this is related to the cost-plus reimbursement by CMS and possibly gaining experience to game this system. I agree that we need to provide rural areas with access to life-saving health care - but perhaps there are better models than the present CAHs.