Quality Through Collaboration The Future of Rural Health (2005) / Chapter Skim
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5 Finance
5 Finance
Pages 119-146
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From page 119... ...
In addition, major shortages of mental health and substance abuse professionals were documented earlier in this report. On the basis of these shortages, the committee concluded that a major assessment of the funding of mental health and substance abuse services in rural areas is required.
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. The second section reviews the various mechanisms used to fund rural health care services generally, while the third focuses on the special case of the funding of rural mental health and substance abuse services.
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Rewarding Results A national initiative of The Robert Wood Johnson Foundation and the California HealthCare Foundation, Rewarding Results aims to invent, prove, 1Bridges to Excellence participants include large employers and health plans plus other organizations (including the Centers for Medicare and Medicaid Services, the National Committee for Quality Assurance, the Joint Commission on Accreditation of Healthcare Organizations, and the National Quality Forum) responsible for selecting, collecting, and reporting the measures.
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of the Medicare Modernization Act of 2003 mandates that a hospital not submitting performance data for the 10 measures receive a 0.4 percent lower increase in prices for fiscal year 2005 than a hospital submitting such data. Premier Hospital Quality Incentive Demonstration Project Hospitals participating in the joint Premier, Inc.-CMS demonstration project will be eligible for increased Medicare payments if they are among the top performers in one of five clinical areas -- heart attack, coronary artery bypass graft, heart failure, community-acquired pneumonia, and hip and knee replacement.
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. Pay-for-Performance Program Mandated in the Medicare Modernization Act of 2003 Section 649 of the Medicare Modernization Act of 2003 mandates that the Secretary of Health and Human Services establish a pay-for-performance demonstration program incorporating health information technology and evidence-based outcome measures.
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Eventually, those demonstrations might be expanded even further to reward improvements in community health status, thus encouraging health care leaders to work collaboratively with other community leaders from educational institutions, social service agencies, and places of employment to achieve such improvement. In sum, then, pay-for-performance incentives should seek to improve the quality of care delivered to individual patients and ultimately to raise the overall health status of the community.
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that serve primarily urban areas. The committee believes that there should be much greater pay-for-performance experimentation in rural areas than is currently planned and that there should be five pay-for-performance demonstration projects in rural communities -- significantly more than the maximum of two mandated by the Medicare Modernization Act of 2003.
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, and nursing home and home health care (9.0 percent) 2 (Levit et al., 2004)
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Notwithstanding these adjustments, throughout the 1990s inpatient Medicare margins for rural hospitals were substantially below urban margins. In the early 1990s, Medicare inpatient aggregate margins3 were negative for both urban and rural hospitals.
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. By 1998, when some Balanced Budget Act payment policies went into effect, the overall Medicare margin for rural hospitals had dropped 6 percentage points to 2.1 percent.
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Rural hospitals 3.9 2.3 Urban hospitals 2.6 1.3 NOTE: The table includes data from all hospitals covered by Medicare's inpatient Prospective Payment System, except those hospitals converted to critical access hos pital status by fall 2003 (about 850)
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The impact of the geographic variation in this element was further weakened by the Medicare Modernization Act of 2003, which called for a study by the General Accountability Office (GAO) (formerly the General Accounting Office)
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The impact of this legislation on the aggregate financial status of rural health clinics is not yet known. Since their inception, community health centers have been heavily reliant on a patchwork of sources of public funds.
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Medicaid and Medicare Support for Nursing Homes and Home Health Services The largest single source of payment for skilled nursing care is Medicaid. Two of three nursing home residents have their care covered at least in part by Medicaid (GAO, 2003c)
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A 2000 survey carried out at the University of Minnesota examined the impact of closures of skilled nursing facilities and home health agencies attached to rural hospitals. The Balanced Budget Act of 1997 mandated use of the Prospective Payment System for skilled nursing care and home health services.
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In addition, emergency medical services receive financial support mainly from transport fees and income from state and local taxes. A survey of 300 emergency medical services providers affiliated with critical access hospitals (83 percent response rate)
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. The report recommends that CMS better target the Medicare rural payment adjustment for trips provided in rural counties with low population densities by adjusting base rates rather than the mileage rate (GAO, 2003a)
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between the least and most densely populated quarter of rural counties. The GAO report recommends that the Centers for Medicare and Medicaid Services better target the Medicare rural payment adjustment for trips provided in rural coun ties with low population densities by adjusting base rates rather than the mileage rate.
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Likewise, a more recent survey, undertaken by the Rural Health Research Center, University of Minnesota, indicated that a significant proportion of critical access hospitals has difficulty raising capital. Of the critical access hospitals surveyed (95 percent response rate)
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. Implementation of the Medicare Modernization Act of 2003 can be expected to improve the operating margins of some rural hospitals.
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THE FUNDING OF RURAL MENTAL HEALTH AND SUBSTANCE ABUSE SERVICES In 1997, $85 billion, or 8 percent of total health care expenditures, was spent on mental health and substance abuse services. Of this amount, 86 percent ($73 billion)
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. Recently, the Bureau of Primary Health Care expanded the role of federally qualified health centers in providing mental health and substance abuse services for underserved populations (Lambert and Agger, 1995)
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Rural health care delivery systems must be financially stable if they are to finance investments in human resource networks and information and communications technology and to implement pay-for-performance initiatives. The committee concludes that an assessment is needed of the aggregate impact of changes in the Medicare program, state Medicaid programs, private health plans, and insurance coverage on the financial stability of rural health care providers, and that the Agency for Healthcare Research and Quality is well positioned to coordinate this assessment.
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The Health Resources and Services Administra tion and the Substance Abuse and Mental Health Services Adminis tration should conduct a comprehensive assessment of the availability and quality of mental health and substance abuse services in rural areas. This assessment should cover services provided in both pri mary care and specialty settings, and should include the following: · A review of (1)
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2000. National Estimates of Expenditures for Mental Health and Substance Abuse Treatment.
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2002. Access to Emergency Medical Services in Rural Areas: The Supporting Role of State EMS Agencies, Minneapolis, MN: Rural Health Research Center, University of Minnesota.
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2001. Rural Hospitals' Ability to Finance Inpatient, Skilled Nursing and Home Health Care.
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2002. Capital Needs of Small Rural Hospitals: Final Report for the Office of Rural Health Policy.
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