Health reform includes a number of provisions directed at small and rural hospitals. The following provisions address Medicare payment, as well as workforce and graduate medical education opportunities. One of the biggest boosts for hospitals is the appropriation of $9.5 billion to create a Community Health Centers Fund to expand the capacity of rural health centers and clinics. The expansion is expected to allow community health centers to serve about 20 million new patients.

Rural Physician Payments

Medicare Bonus: Medicare will provide a 10 percent bonus payment to primary care practitioners for primary care services. The bonus will apply for five years beginning January 1. Qualifying practitioners providing care in a health professional shortage area will receive a 10 percent bonus on hospital visit codes that are typical of primary medicine. General surgeons providing care in shortage areas also will receive a 10 percent bonus on major procedures over the same period.

Protections for Rural Hospitals

Low-volume Hospitals: The law allots $300 million over 10 years in payment adjustments for low-volume hospitals. A low-volume hospital will be defined as one that is more than 15 road miles from another comparable hospital and has up to 1,600 Medicare discharges for FY 2011 and FY 2012. An add-on payment will be determined by the HHS secretary using a continuous linear scale ranging from 25 percent for low-volume hospitals with Medicare discharges below 200, to no adjustments for hospitals with more than 1,600 Medicare discharges.

Low-cost Counties: The law allots $200 million over two years for hospitals located in counties that rank in the lowest quartile of Medicare beneficiary spending adjusted by age, sex and race. For FY 2011 and FY 2012, each hospital will receive funding in an amount that is proportional to the Medicare inpatient hospital payments made to the individual hospital as a percentage of the Medicare inpatient hospital payments made to all hospitals receiving the funding.

Critical Access Hospital Payments: The law requires that CAHs are paid 101 percent of costs for all outpatient services they provide, regardless of the billing method elected and for providing qualifying ambulance services.

Home Health Payments: The law reinstates a 3 percent add-on payment for home health providers serving rural areas for episodes ending on April 1, 2010, and before January 1, 2016.

Laboratory-Service Payments: The law reinstates the reasonable cost payment for clinical diagnostic laboratory services for qualifying rural hospitals with 50 beds or fewer in certain states with low-density rural areas for cost-reporting periods beginning July 1, 2010, to June 30, 2011.

Workforce Initiatives

The law creates a National Health Workforce Commission to analyze the supply, distribution, diversity and skill needs of the workforce of the future.

Allopathic and Osteopathic Medicine: The law establishes a grant program through the Health Resources and Services Administration, providing $4 million for each of FYs 2010-2013 to assist schools of allopathic or osteopathic medicine in recruiting students most likely to practice medicine in underserved rural communities; providing rural-focused training and experience; and increasing the number of recent medical school graduates who practice in underserved rural communities.

Unused Residency Positions: Unused residency training positions will be redistributed to encourage increased training of primary care physicians and general surgeons. For cost-reporting periods beginning on or after July 1, 2011, hospitals will lose 65 percent of their unused or unfilled residency positions (based on the three most recent cost-reporting periods ending March 23, 2010), and qualifying hospitals will be able to request up to 75 new positions. Certain hospitals, including rural teaching hospitals with fewer than 250 beds, will be exempt from redistribution of any of their unused positions. Priority for the new positions will be distributed. Seventy percent of positions will be allocated to hospitals in states with resident-to-population ratios in the lowest quartile and 30 percent of positions will be allocated to hospitals located in rural areas and hospitals located in the top 10 states in terms of population living in a health professions shortage area relative to the general population.

Lee Ann Jarousse is senior editor for custom publications at Hospitals & Health Networks.

Source: American Hospital Association