From the July 2022 issue of HealthCare Business News magazine

To ensure that Sole Community Hospitals (SCHs) and Medicare Dependent Hospitals (MDHs) remain financially viable, policymakers should update the base year that Medicare uses to calculate its reimbursements so that those payments for critical services more accurately reflect current costs.

To further strengthen rural facilities, the HHS secretary should make capital infrastructure grants or loans available for rural hospitals to use to modify their service lines or improve structural or patient safety. At the secretary’s discretion, the funding would go only to those facilities that otherwise do not qualify for funding under other federal rural health capital infrastructure programs.


In addition, policymakers should make permanent the Medicare reimbursement or rural designation that, for many rural hospital designations or programs, they currently must reauthorize every few years. That would give rural hospitals more financial stability and enable them to plan better.

More specifically, policymakers should make permanent the MDH designation and Medicare payment adjustments for rural hospitals that treat low volumes of patients — both of which are due to expire at the end of fiscal 2022. They also should enable SCHs permanently to receive additional payments for outpatient services because rural SCHs face substantially higher costs in delivering outpatient care.

For the longer term, policymakers should strengthen the Rural Emergency Hospital (REH) model, which they established for Medicare in late 2020, under which rural hospitals provide no in-patient service but, instead, provide 24-hour emergency services.

One way is to increase the additional facility payments (AFPs) that REHs can receive and allow them to use AFPs for a range of services, such as wellness and preventive care, as well as social supports, such as transportation. Policymakers also should test other payment pathways for REHs, to increase participation in the REH program and increase rural residents’ access to care. And they should monitor the REH program on an ongoing basis to ensure that it supports the transformation of rural hospitals.

The HHS secretary should determine whether REHs are eligible for Medicaid disproportionate share hospital (DSH) payments, which go to hospitals that serve high numbers of low-income patients, and whether the loss of access to these payments would pose a barrier for rural hospitals that are considering changing to an REH.

July 2022 Magazine

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