NRHA reacts to HHS report on costs for rural patients

By: Alan Morgan | 10/08/14

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The Office of the Inspector General (OIG) of Health and Human Services released a report today on the calculation of patient coinsurance amounts between critical access hospitals (CAH) and PPS hospitals. First, some background: CAHs receive cost-based reimbursement for inpatient acute, swing-bed and outpatient services delivered to Medicare beneficiaries. Medicare patients at CAHs owe coinsurance on outpatient services on the basis of 20 percent of applicable Part B charges. Under the outpatient prospective payment system (OPPS), the coinsurance is based on 20 percent of the OPPS price under the fee schedule for ambulatory patient classification (APC) units. Because the fee schedule is generally much lower than charges, an unintended consequence of cost-based reimbursement is that beneficiaries receiving care at a CAH have a higher coinsurance burden than those going to PPS hospitals. The National Rural Health Association’s response is:

1. CAHs are billing Medicare and beneficiaries according to Medicare rules and regulations, any deviance from these guidelines would result in fines and penalties resulting from non-compliant billing.
2. Medicare can correct this policy very simply by holding harmless beneficiaries on coinsurance calculations between CAH and PPS hospitals. This change would increase Medicare payments to CAHs in order ensure that CAHs receive 101 percent of cost.
3. NRHA disagrees with OIG’s assertion that CAH participation in a possible fix be contingent upon re-certifying their CAH status. All CAHs were designated according to rules and regulations in place at varying points in time historically. The Necessary Provider program allowed for a state’s right to designate hospitals it deemed essential according to an overall rural health plan. These rural health plans were approved, in turn, by CMS. All CAHs should be fully reimbursed at 101 percent of their cost if a coinsurance change is implemented.
4. NRHA believes that the current CMS policy unfairly penalizes rural patients, which is not the intent of Congress. We ask Congress to direct CMS to not shift the burden to providers or to patients.

This problem was created by Congress and Medicare and can be fixed by them with ease. As the OIG report documents the problem, it’s time to fix this inequity.