Health & Wealth
3:01 pm
Mon October 3, 2011

Rural Hospitals Face Medicare Cuts

Two weeks ago, President Obama told the nation, “Washington has to live within its means.” As Democrats and Republicans continue to scour the federal budget for over a trillion dollars in possible cuts, one group very likely to be affected is rural hospitals in the Midwest and across the nation.

President Obama’s deficit reduction plan would save some $6 billion over ten years from rural hospital funding. To do this, Obama would “better align Medicare payments with the cost of care.” In other words – rural hospitals are getting paid too much – $6 billion too much. Rural providers, of course, would beg to differ.

“He’s proposing a one percent cut, so that means about $85 thousand dollars from our bottom line,” said Bill Sexton, CEO of a tiny rural hospital in Prairie du Chien, Wisconsin. He was in Kansas City for a rural health conference, where proposed cuts were THE topic of conversation. Currently, Medicare pays many rural hospitals 101 percent of costs for treating elderly patients. 101 percent sounds like too much, right?

Maggie Elehwany is a lobbyist for the National Rural Health Association, which hosted last week’s conference. “But what I don’t think what the White House understands is that so many of these small rural hospitals are just barely able to keep their doors open,” she said. Currently, she said, four out of ten critical access rural hospitals are operating at a loss — a one percent cut could push some out of business.

But Timothy McBride, a public health professor at Washington University in St. Louis, said not all rural hospitals are the same – some may not be hurt by Medicare cuts. “Maybe this extra payment may not be necessary in some places. You know, it is a time when we do need to cut the budget.”

Obama’s proposal isn’t the only one out there. Some lawmakers have endorsed a plan with much deeper cuts for rural hospitals, cutting some 62 billion dollars, by ending all extra Medicare payments to rural providers.

Bill Sexton, from Prairie du Chien, says either way he’s looking at laying off staff. “That means that I’ll have to cut people who are serving our residents in our community who are older, sicker and poorer than most other Americans and urban counterparts,” he said.

Congress initially created these extra payments to rural hospitals to offset the added cost of treating that older, sicker and poorer population.

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