Critical access hospitals: Worth subsidizing to help save rural America

If you live in a sparsely populated area, you may find it difficult to obtain medical care because doctors and hospitals are far away. The issue of geographic isolation is independent of insurance status; it is a problem that plagues Canada, where everyone has health insurance through its single payer system (coincidentally called “Medicare”), but most of the people are concentrated within a short distance of the US border, and there are vast stretches of empty (or, more to the point in this case, almost empty) land. The situation is exacerbated further by the fact that many people living in rural areas work in jobs that have a higher risk of injury which might need care (e.g., farming, ranching, logging), and by the fact that a greater percentage of people living in rural areas are older, and thus more likely to have chronic disease. However, hospitals serving rural areas are small, and may not bring in enough revenue to support their fixed costs, so hundreds of rural hospitals closed in the 1980s and 1990s.

In response, Congress created the Critical Access Hospitals (CAH) designation in 1997, allowing hospitals that meet certain criteria (initially being greater than 35 miles apart) to receive increased reimbursement from Medicare at 101% of their costs. This was very successful, not only permitting the survival of many existing rural hospitals, but the creation of new ones, particularly when states were allowed to add other criteria to the designation, creating “Necessary Provider” Critical Access Hospitals, NP-CAH. The existence of these hospitals has been seen as a top priority for many rural communities, and for the states that they are located in. However, a recent report (OEI-05-12-00080) by the Department of Health and Human Services’ Office of the Inspector General (HHS-OIG) suggests that a stricter application of the distance criterion (even 15 miles, not 35) would mean that many of these hospitals would no longer receive 101% of their costs, and that this would result in the saving of $449 million to Medicare. They provide us with a sample map of Missouri, showing which hospitals would be affected.

As reported by Mike Shields of the Kansas Health Institute (KHI) in “Inspector general’s report has rural hospitals worried”, this has the National Rural Health Association raising the alarm. It is of special interest in the middle of the country. Kansas, where former governor and current HHS Secretary Kathleen Sebelius certified 31 additional hospitals under the NP-CAH criteria, leads the nation with 83 CAHs; Iowa is second with 82. According to the OIG, “There are more than 1,300 CAHs in the United States. CAHs are located in every State except Connecticut, Delaware, Maryland, New Jersey, and Rhode Island. CAHs provided care for approximately 2.3 million beneficiaries in 2011. Medicare and beneficiaries paid approximately $8.5 billion for this care.” So it is not surprising that these hospitals, their trade association, and the states in which they are located, are very concerned; many of them would likely close if they didn’t receive the excess payments from Medicare. The question is: would it be a good idea?

Essentially, the key part of that question is not whether it would save money for Medicare; clearly it would. The question is “would it harm the access of rural people to necessary medical care”? I don’t know the answer to that; or, rather, I know the answer is that it would but I don’t know how much. Could people drive 15 miles farther to the next hospital? Probably. Many of them are already driving a number of miles. Would this be inconvenient? Probably. After all, a large percentage of the users of these hospitals (most of which are also the locations of the doctors’ or other health providers’ practices) are older, thus Medicare’s interest in them. Would people be less likely to get necessary preventive and treatment care for none emergencies? Possibly. Distance is a big issue, especially if you have to be picked up and driven by someone else. Would there be disparities in which rural residents see decreased access? Almost certainly. Many rural people with high incomes often go to larger facilities in bigger cities, or to “destination” centers, like the Mayo Clinic, for their regular care. Obviously, the poor will have less access.

But would it save sufficient money to justify this? What is the cost/benefit to saving $449 million to Medicare against the – what? Lives? Convenience? of a bunch of rural Americans? Very hard to measure, although I again (see “Why poor people choose ERs: we need a system designed to meet everyone’s needs”, August 4, 2013) call attention to the fact that “convenience” is a loaded word that does not convey the full impact of time, transportation, and competing demands that affect the lives of the most needy. It is probably a matter of priorities, and of course, who you are. Are you the majority of people, including Medicare recipients, who live in major metropolitan areas, and for whom the sheer distance to a hospital is not among the many problems that you have accessing care (although transportation might well be) or the 20% or so who live in these rural areas?

One additional point that can be brought up on either side of the argument is that CAHs are often critical in other ways, such as their economic impact on their communities. Many are among the largest employers in their towns. They are a sense of civic pride. One I know about is Kiowa County Hospital in Greensburg, Kansas, a town of 1500 in the southwestern part of the state. On May 4, 2007, most of Greensburg was leveled by a tornado. Because I drive through it a few times a year, I have watched its rebuilding and taken pictures of it. For several years, the hospital was located in Quonset huts on the north side of US Highway 54. In rebuilding the town, Greensburg, with the support of many organizations, sought to make it in many ways a model of what a small town could be, including in ways that encouraged health, such as having schools and public buildings in downtown, walkable, rather than on cheaper land on the outskirts requiring a car. And they rebuilt the hospital, which is now “the first LEED Platinum Certified Critical Access Hospital in the United States.”

So what? I mean, it’s nice that Greensburg rebuilt in an environmentally positive and health-oriented way, and that Kiowa County Hospital is LEED platinum. Yes, it’s nice that rural communities take pride in their local hospitals, and that they provide jobs for the people who live there. It’s nice that the folks who live in these parts of the country don’t have to drive quite so far to get medical care. But is that a reason for Medicare to spend all that money to subsidize them, to keep them open?

I think so. I think that, from a health point of view, minimizing the already-long distances many rural Americans have to travel to access care is a good thing. I think that having institutions that provide jobs and stabilize communities and possibly even keep towns alive is a good thing. You can say “only 20% of Americans live in rural areas”, but that is 20% of Americans. My concern is not nostalgia for a pastoral way of life I have never known, but rather a concern for these communities and the people who live there as needing support as much as poor and middle-class people in cities and suburbs. I note the irony that Kansas’ two Republican senators are very strong advocates for rural hospitals while supporting their party’s policies on cutting services for the needy, and that its Republican governor (and former senator) is a leading advocate for “let’s do whatever we can to help the Koch brothers by cutting taxes on fossil fuel producers”. But we have spent, and continue to spend, billions upon billions of dollars on subsidizing bankers, financiers, and the wealthiest American individuals, companies and businesses.

Spending a little bit on keeping rural hospitals alive seems like a whole lot better thing to do.