In the struggle to survive, rural hospitals are battling the odds
While times are tough for hospitals no matter where they are located, rural hospitals fight more of an uphill battle than their urban counterparts.
Two skirmishes are highly visible and reflect the flaws hospitals face every day. Outside the city, the scramble for reimbursement dollars yields less than inside the municipal limits. And the work force has made it obvious it would rather be in the city.
Supporters of the Rural Health Care Improvement Act, which was introduced to Congress in June, have high hopes that the federal legislation can help even the playing field.
"Traditionally, rural hospitals have been reimbursed at a lower rate for Medicare. The thinking is that they have different costs than urban hospitals," Alan Morgan, vice president of government affairs and policy for the National Rural Health Association in Kansas City, MO, tells State Health Watch. "People can drive 30 to 50 miles into the city to work for higher wages. If you look at individual rural hospitals, no two are alike, though some are doing OK, but by and large, that’s not the case."
The Improvement Act’s highlights include:
• removing the cap for rural hospitals that receive disproportionate share hospital payments, which would funnel more money to the countryside and bring more parity with city hospitals;
• closing the gap between urban and rural standardized inpatient payment levels;
• streamlining wage index reclassification for all hospital services, not just inpatient and outpatient;
• providing loans and grants to help rural facilities with capital improvements and high-tech acquisitions.
"You have a situation where, nationally, rurals are losing money or just getting by," Mr. Morgan says. "But at the same time, you have medical safety concerns. Hospitals must update their technology. There are also new regulations on privacy; there’s HIPAA [the Health Insurance Portability and Accountability Act of 1996]. Hospitals across the country must revamp how they do things to address these regulations. Plus, many were built 20 to 30 years ago and must improve their infrastructure."
The balancing act also must include not just federal action, but cooperation from the states too, Mr. Morgan says, mostly in the search for capital.
James Lewis was involved in starting HomeTown Health in Cumming, GA, a coalition of 20 rural Georgia hospitals, in 1997, and he says he doesn’t see much cooperation coming from his state or the federal government. Appealing to the state for money is a constant process for him and his organization, which has seen its membership dwindle by eight hospitals in the past few years.
"I believe there is a consensus at a high level of the federal government that goes back to the states that says, We don’t need these rural hospitals and we’re going to let many of them close,’" Mr. Lewis tells State Health Watch. "There may be in the state of Georgia, in the next two or three years, as many as 15-plus hospitals that will close."
HomeTown Health has gotten the state to come through with some money, but Mr. Lewis says that it is not enough.
"In terms of big bucks coming back to the rurals, it has not occurred," he says. "[Government] listens real good, gins a nice song, but [it’s] distracted by the patient’s bill of rights and prescription drugs for the elderly."
Money is a hot button with Mr. Lewis and every hospital he deals with; reimbursement is the shiny red paint on that button. He says there are a handful of good state legislators in Georgia’s capitol building that understand the needs of rural people and the hospitals that serve them. But there aren’t enough of them to have the impact that needs to be made, he says.
The business offices of rural hospitals are incapable of handling the complex reimbursement issues they face, Mr. Lewis says, and that is a guaranteed loss of revenue.
"There are tremendous denials," he says. "They have jerked the reimbursement problem around so drastically that coders are probably the poorest trained people in the hospital. So the business office and the coders — the gatekeepers — get it wrong going in."
When the access information is miscoded, Mr. Lewis adds, there is little chance of getting the revenue the hospital should have collected. Even under the best of circumstances, this is a hospital’s Achilles’ Heel, and for rural hospitals, it’s probably worse than it is for urban hospitals, he adds.
"Nursing is a huge problem. Personnel stress is a common problem and fixing it is not just a money issue," Thomas Ricketts, a researcher with of the Rural Policy Research Institute’s Hospital Flexibility Program Tracking Project for Region B in Chapel Hill, NC, tells SHW. "Some places have a hard time keeping open. Reimbursement levels will slowly erode a place over time."
He says states have a strong role to play in keeping rural hospitals and health care alive and vital. The Tracking Project keeps tabs on rural hospitals that are designated as critical access hospitals (CAH). The CAH program, according to the Rural Policy Research Institute, requires participating states to support and implement community-level outreach and technical assistance. Very small rural hospitals, those with only 15 beds, often are involved in this program that includes participation from the feds, the state, the local community, and the hospital administration. The combination of heads at the table is one of the program’s strengths, Mr. Ricketts says.
"Some states see this as a federal program, and it has a federal stamp, but it is meant to develop state resources," he says. "Here is money from the federal government to allow states to do what they want to do in rural health care. It’s an opportunity for states to take money from the feds and handle it as they feel is appropriate. It takes a political commitment on the part of states to help these rural hospitals."
With 50 states to consider, Mr. Ricketts adds, there are 50 levels of strength and sophistication when it comes to managing and funding CAHs, with the best states serving as brokers to ease the way in overcoming deficits. The fed has committed $25 million annually to support the CAH flex program, with $775,000 as the upper-level grant. Some hospitals use the money for recruitment and retention, others for their emergency medical services, and others for upgrading data and tracking for modern quality assurance. The amount issued varies to the degree that the individual state can spend.
"Nebraska is a strong state," Mr. Ricketts asserts. "They basically have agencies within state government that are not antagonistic about turf and who is responsible for what. The licensing agency can do its job, keep the Medicaid agency involved, keep support mechanisms involved.
"The state removes barriers to bureaucratic programs. It can bring people together to make hospitals work better. A sharing, caring environment makes things work. . . . We are aware of places where there is conflict between agencies, that Medicaid takes a hands-off view, the licensing agencies take a strict view. I don’t know any magic formula for it, but political considerations can keep programs in limbo as conflict between government offices increases," Mr. Ricketts says.
Dave Palm, administrator for the state of Nebraska’s Office of Public Health in Lincoln, has seen three rural hospital closings since 1998, and one has since reopened as a CAH. He says 53 of the state’s 58 rural hospitals are likely to convert to rural access, meaning they cannot have more than 15 acute care patients at any one time.
"That’s made a big difference for us in terms of financial viability," Mr. Palm tells SHW. "We will see some closures because of low volume. This is not a panacea and will not prop up rural hospitals, but it has made a big difference."
He acknowledges the same concerns that vex rural hospitals across the country — personnel retention and reimbursement. The Nebraska Hospital Association does its best to train rural staff about the labyrinthine complexities of coding, but it’s not always enough.
"With corporate compliance and HIPAA, things are getting more and more complex rather than moving in the other direction," Mr. Palm says.
What’s needed, he explains, is more capital for expansion and updating of hospital facilities. "A lot of facilities were built in the 1940s and ’50s and are getting old. There isn’t money to upgrade them," he says. "We have to be concerned about that. It’s not like we’re pumping millions of dollars out for this."
Most states still in the planning phase for Olmstead implementation, ADA compliance
It’s been two years since the U.S. Supreme Court decision in the landmark Olmstead case, and 11 years since the passage of the Americans with Disabilities Act (ADA). Most states are in the midst of planning how to implement the court’s order that they provide community-based services for people with disabilities in the following scenarios:
• Treatment professionals determine that such placement is appropriate.
• The affected individuals do not object to such placement.
• The state has the available resources to provide community-based services.
While expressing appreciation for the manner in which states are conducting their planning process, including involving those who are disabled, advocates are concerned about the slow pace of progress but seem inclined to give a bit more time before mounting full-scale legal or public policy objections.
The National Conference of State Legislatures (NCSL) in Washington, DC, recently conducted a 50-state survey to determine initial state responses to the June 1999 Olmstead decision. NCSL’s Wendy Fox-Grage, one of the survey report’s authors, tells State Health Watch that there were a number of reasons why states are moving slowly. "A major reason is that 37 of the states have formed a task force or commission to handle the planning process. Usually, they are very open and have included all the major players. That inclusiveness has affected the pace of the process. We expect a lot to happen over the summer and will be analyzing all the state plans later this year."
Ms. Fox-Grage says four states — Missouri, North Carolina, Ohio, and Texas — have issued final comprehensive plans that appear to meet recommendations that were laid out by the Health Care Financing Administration, which is now the Centers for Medicare and Medicaid Services (CMS). None of the plans have been implemented yet, she says, because they were published only recently and full implementation is contingent upon new state appropriations. In addition, six states have issued "significant papers, many of which contain thoughtful recommendations that are not intended to be comprehensive."
Governors and legislatures have been significantly involved in the process in many states. Governors in 17 states created the planning commissions, and several appointed commission members. In 10 states, governors actually issued executive orders to create a planning commission. Because of this involvement, the commissions will issue their reports to the governors and, in many cases, to the legislatures as well. In California, Hawaii, Illinois, and Kentucky, legislation was adopted to form their commissions. Legislators and legislative staff sit on the commissions in Missouri, Utah, and Wisconsin. NCSL says legislatures will play their most significant role in their next legislative session when most of the commissions will have developed their plans, and agencies will be submitting budget requests to implement those plans.
Although Olmstead specifically involved two women with mental illness and developmental disabilities, NCSL says the federal government has made it clear that the Supreme Court decision applies to all disabled people, regardless of their age. Thus, it says, "most states are assessing their systems of care for people with developmental disabilities, people with physical disabilities, people with mental illness as well as older people with disabilities. In addition, plans include many subgroups, including (1) institutional residents whose needs can be appropriately met in the community; (2) residents in community-based settings who require institutional care, and/or (3) people who reside in the community and are at risk for institutionalization because of the absence of care."
Complexities identified by many of the commissions include how to:
• assess people who are at risk for institutionalization;
• define institutionalization and review and measure placement activities in institutions;
• develop the service infrastructure within the constraints of the personal care attendant and nursing aide shortage;
• find accessible, affordable community-based housing;
• access transportation;
• identify sources of funding within state budgets.
Jennifer Mathis, staff attorney with the Bazelon Center for Mental Health Law in Washington, DC, tells State Health Watch that advocates wonder why states are taking so long, when the ADA has been in effect since 1990 and there is a very clear integration mandate in Title II and a number of court decisions favoring those with disabilities since the early ’90s. "States have been on notice for a while, although Olmstead was the first case through the Supreme Court. The fact that 11 years after the law was passed, we’re just beginning to plan to plan is surprising."
While advocates recognize that implementing integration of disabled people into community-based services is a complex process, Ms. Mathis says, they think there’s no good reason why it shouldn’t have been started before now. "It’s heartening to see that the states are beginning the process, but the slowness of the pace is disappointing."
Although some lawsuits are under way, Ms. Mathis says the general consensus in the disability community is to try to work through policy channels before resorting to wholesale litigation. One thing that has slowed advocacy efforts has been the need to defend the constitutionality of the ADA. "In one sense, we’ve been backtracking because advocates have been forced to defend the constitutional underpinnings of the law, and that has taken energy away from implementation."
Elizabeth Priaulx, an attorney with the National Association of Protection and Advocacy Systems (NAPAS), also in Washington, DC, says advocates she works with are concerned because states are only in the planning process. "Individuals who have already been found appropriate for community services may not be moving into those services as quickly as possible. We want to be sure that states don’t use the planning process as a delay to moving people, claiming that their plan must be done first."
Ms. Priaulx says she is pleased that states are involving consumers and the disabled in the planning process. She expresses hope that once the plans are done the states will consider them a "living document" to be referred to, funded, and evaluated each year, rather than being put on a shelf and ignored. NAPAS member organizations will be involved in quality assurance and monitoring to ensure the plans are used, she adds.
While the principles being enunciated in state plans seem good, Ms. Priaulx says, they lack specific time frames to move people to community-based services, and that can be a problem. "There’s a serious lack of numbers in many of the plans. They have recommendations that aren’t tied to funding streams or deadlines."
Another concern, Ms. Priaulx says, is that in some states, there are several agencies maintaining independent planning tracks with no apparent plan to integrate them. "Olmstead calls for a comprehensive plan to overcome the bureaucratic hurdles."
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[Contact Ms. Fox-Grage at (202) 624-3572, Ms. Mathis at (202) 467-5730, ext. 22, and Ms. Priaulx at (202) 408-9514.]
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