Rural Officials Seek Medicare Reimbursement Adjustment
The federal government should adjust Medicare reimbursement rates to eliminate the payment disparity between hospitals in urban and rural settings, health and hospital officials from rural states said Monday at a meeting of the National Rural Health Association, Reuters/New York Times reports. Participants said the way labor costs are used to calculate reimbursement rates "shortchange[s]" rural hospitals. They added that this discrepancy threatens the existence of many rural hospitals, which "rely heavily on Medicare for their operating budgets." A study released Monday by the association found that Medicare's "labor index" pays rural hospitals an average of 18% less than urban hospitals for their labor costs, even when accounting for wage and cost differences between urban and rural hospitals. For example, Val Schott, director of Oklahoma's Office of Rural Health, said that hospitals in his state receive 78 cents for every dollar in labor costs, compared to $1.10 for many urban hospitals. Providers and officials from farming states are looking for help from the Senate Finance Committee -- which has jurisdiction over Medicare -- as the committee's chair, Charles Grassley (R-Iowa), and ranking Democrat, Max Baucus (Mont.), both hail from "heavily rural states." Speaking at the meeting, Baucus said that he and Grassley would work to overcome Congress' "historic failure to understand the special nature of rural health care." He added that the committee is waiting for a report on the effect of Medicare policy on rural health care due in June from the Medicare Payment Advisory Commission before moving ahead with legislation to adjust labor reimbursement rates (Reuters/New York Times, 2/7).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.