Minimum-distance requirements could harm high-performing critical-access hospitals and rural communities

Health Aff (Millwood). 2015 Apr;34(4):627-35. doi: 10.1377/hlthaff.2014.0788.

Abstract

Since the inception of the Medicare Rural Hospital Flexibility Program in 1997, over 1,300 rural hospitals have converted to critical-access hospitals, which entitles them to Medicare cost-based reimbursement instead of reimbursement based on the hospital prospective payment system (PPS). Several changes to eligibility for critical-access status have recently been proposed. Most of the changes focus on mandating that hospitals be located a certain minimum distance from the nearest hospital. Our study found that critical-access hospitals located within fifteen miles of another hospital generally are larger, provide better quality, and are financially stronger compared to critical-access hospitals located farther from another hospital. Returning to the PPS would have considerable negative impacts on critical-access hospitals that are located near another hospital. We conclude that establishing a minimum-distance requirement would generate modest cost savings for Medicare but would likely be disruptive to the communities that depend on these hospitals for their health care.

Keywords: Access To Care; Financing Health Care; Hospitals; Quality Of Care; Rural Health Care.

Publication types

  • Research Support, U.S. Gov't, P.H.S.

MeSH terms

  • Cost Savings
  • Economics, Hospital*
  • Health Services Accessibility*
  • Hospitals, Rural / economics*
  • Humans
  • Medicare / economics*
  • Reimbursement Mechanisms* / economics
  • Rural Population
  • United States