AHA: Payment Reform Needed to Improve Access to Rural Healthcare

December 12, 2019 - The low-volume payment adjustment, new rural hospital designations, alternative payment model demonstrations, and other payment reforms are key to improving access to rural healthcare, the American Hospital Association (AHA) recently stressed to policymakers.

In a letter dated Dec. 6, the association called on House Representatives to consider a dozen policies to address the barriers that continue to challenge access to rural healthcare, as well as availability and acceptability of care in sparsely populated and underserved communities. Chief among the policy suggestions was maintaining and creating special payment designations for rural hospitals.

Specifically, the AHA advised policymakers to maintain the Low-volume Hospital Adjustment (LVA) program, which was established in 2003 to support hospitals with low volumes of patients by providing an additional payment for the higher costs of treating a low number of discharges. However, the program has faced retrenched over the years.

The AHA believes this program is effective and urges that the LVA program should be maintained to support low-volume providers in rural areas and preserve local access to care.

In order to further this access to care, the AHA advised Congress to re-open the provider critical access hospitals (CAH) program, which pays qualifying hospitals based on costs. Government officials have deemed this program as “the most effective HHS payment policy and program to support rural hospitals’ financial viability and rural residents’ access to hospital services.”

“Providing such opportunity for rural hospitals to become CAHs will offer crucial financial support to keep services available locally,” the AHA stated.

In addition to supporting existing designations, the AHA called on policymakers to create a new one that would allow rural hospitals to provide emergency and observations services without the provision of inpatient services. These hospitals would be known as Rural Emergency Hospitals (REHs).

“As a new designation under the Medicare program for rural hospitals, the REH model would allow existing facilities to meet a community’s need for emergency and outpatient services without having to provide inpatient services, which are often associated with high fixed costs and low patient volume in these areas,” the AHA stated.

Beyond special payment designations, the AHA called for an alternative payment model that would support rural hospital costs and ensure access to rural healthcare.

“New payment models, such as global budgets, that offer financial certainty and are less vulnerable to volume shifts, should continue to be tested on a voluntary basis for providers in rural and other underserved communities,” the AHA stated.

The association pointed to the success of the Pennsylvania Rural Health model, which tested global budget payments.

“These global budget models provide a predictable funding stream and incentives that contain cost growth and improve quality. Such payment structures also can provide flexibility for hospitals in vulnerable communities to provide care in a manner that best fits their communities’ needs,” the AHA explained.

In addition to payment reform, the association also identified other areas that need attention, such as telehealth and behavioral health services.

Telehealth is vital to expand access to services that may not be sustained locally otherwise. AHA believes that Medicare should cover telehealth delivery for all services, eliminate geographic and setting requirements, and expand the technology that is being used. The association also supports behavioral health programs that facilitate remote communication between providers and patients, including through telehealth encounters and crisis hotlines staffed by workers with training in mental health. The AHA supports legislation that would strengthen coverage requirements for behavioral health in rural communities.

In addition, because rural communities face coverage gaps and must develop strategic plans to improve staff recruitment and retention, the AHA supports legislation that would fill care gaps in the behavioral health workforce and increase access for individuals.

Repayment is crucial for physicians serving in underserved and rural areas. Therefore, new legislation for Rural America Health Corps has been proposed to provide a loan repayment program for these physicians, which the AHA believes should be expanded.

 “As the committee considers potential new-quality policies for hospitals serving rural and underserved communities, we urge it to be especially attentive to a level playing field of measurement programs, voluntary participation in quality reporting and value programs for rural and low-volume providers, and expediting standards guidance,” the report also stressed.