NRHA statement on OIG swing bed report

NRHA CEO Alan Morgan released the following statement on the Department of Health and Human Services' Office of Inspector General Office of Inspector General report, Medicare Could Save Billions With Comparable Access for Enrollees if Critical Access Hospital Payments for Swing-Bed Services Were Similar to Those of the Fee-for-Service Prospective Payment System:

"The National Rural Health Association (NRHA) is concerned by the recent recommendations in the Department of Health and Human Services’ Office of Inspector General (HHS OIG) report on swing bed reimbursement at critical access hospitals (CAHs). NRHA wholly disagrees with OIG’s recommendation to pay for CAH swing bed services at the prospective payment system rate. OIG states that this change would save Medicare billions of dollars; however, NRHA maintains that this is a gross overestimate that does not account for the realities of cost-based reimbursement in CAHs. This change in reimbursement would only work to destabilize financial stability in CAHs, ultimately threatening closure and access to care for rural patients. Based on NRHA’s analysis, the OIG report has several critical flaws in methodology include:

• Disregard for the intent of Medicare’s Swing Bed program in rural areas: Swing beds were created to address rural bed shortages by allowing facilities to flexibly use beds for acute and post-acute care, allowing rural hospitals to meet unpredictable demands while sustaining financially.
• Gross overestimation of potential Medicare savings due to faulty methodology: By removing swing bed days from the reimbursement formula, a CAH’s fixed costs would be allocated between acute inpatient and observation days only and Medicare would pay the resulting higher per diem costs of inpatient and observation stays for Medicare patients. Further, this change would substantially increase the cost per day for acute care services at CAHs.
• Differences in severity of care: OIG analysis does not consider the case mix for patients at CAHs versus alternative facilities, and therefore does not consider differences in the type and intensity of services provided.
• Fails to consider that swing beds may be available and the best choice from a patient care and quality perspective. The OIG report assumed availability based on licensed beds at alternative providers based on Medicare cost reports, rather than staffed beds.

NRHA concurs with the Centers for Medicare and Medicaid Services’ response to the OIG report, which disagrees with OIG’s recommendation and notes that such a shift in payment would jeopardize CAH viability." 

For more information, see NRHA’s rebuttal letter to OIG. If you have any questions, please contact Alexa McKinley Abel.