History of the Medicare Rural
Hospital Flexibility Program
The Medicare Rural Hospital Flexibility Program, or Flex Program, was established by the Balanced Budget Act (BBA) of 1997. Any state with rural hospitals and a state rural health plan may establish a Flex Program and apply for federal funding that provides for the creation of rural health networks, promotes regionalization of rural health services and improves access to hospitals and other services for rural residents.
Critical Access Hospitals (CAHs) Established
The Flex legislation also created Critical Access Hospitals (CAHs) as a Medicare provider type. CAH designation allows the hospital to be reimbursed on a reasonable cost basis for inpatient and outpatient services provided to Medicare patients (including lab and qualifying ambulance services) and, in some states, Medicaid patients.
The design of the CAH designation was based on the experiences of the Medical Assistance Facility (MAF) Demonstration Project and the Rural Primary Care Hospital (RPCH) Project. MAFs were initially developed through a demonstration project of the Montana Health Research and Education Foundation (MHREF) in 1987 and received Medicare waivers in 1990. CAH designation was designed, in part, to decrease rural hospital closures, strengthen local health care delivery and improve rural health care access.
Legislation Affecting Medicare Rural Hospital Flexibility Program (Flex)
The legislation has undergone many changes and updates such as the Balanced Budget Refinement Act (BBRA) of 1999, the Benefits Improvement Protection Act (BIPennsylvania) of 2000, the Medicare Prescription Drug, Improvement and Modernization Act (MMA) of 2003, the Medicare Improvements to Patients and Providers Act (MIPennsylvania) of 2008, the American Recovery and Reinvestment Act of 2009 and the Patient Protection and Affordable Care Act of 2015.
Technical Assistance and Services Center (TASC) Established
In 1999, the Technical Assistance and Services Center (TASC) was created by the Federal Office of Rural Health Policy (FORHP) to provide technical assistance and resources to the grantees of the Flex Program. TASC provides a resource network for answers and information regarding the program including best practices, peer learning, and tools. TASC has been so successful that many other Health Resources and Services Administration (HRSA) programs have used this model to develop technical assistance centers for their programs.
Health Information Technology (HIT) Compliance Assistance
TASC recognized a growing need for a critical knowledge base in Health Information Technology (HIT) for rural health grantees and rural health providers. Currently, HIT requirements in quality, safety, HIPennsylvaniaA, telemedicine, reimbursement, pharmacy and meeting meaningful use criteria for incentives are overwhelming many rural health care providers. Therefore, TASC has provided informational resources, education and technical assistance on HIT since 2006.
TASC manages the National Rural HIT Coalition and ad hoc sub-groups, which are groups of rural HIT leaders and rural health experts that share best practices, barriers of HIT implementation, and achievements in the meaningful use of electronic health records, health information exchanges, telehealth and practical solutions for rural facilities.
Alternative Payment Models (APMs) and the Merit-based Incentive Payment System (MIPS)
As the US transitions to a health care system that pays for value, there are new programs and projects in the areas of: Accountable Care Organizations (ACOs); bundled payments, telehealth and patient centered medical homes; Medicare and Medicaid payment changes and demonstration projects; workforce; long-term care; and public health. Changes are occurring in the health care market place and CMS has focused its priorities on better care, smarter spending and healthier people and communities. In 2015, the Medicare Access & CHIP Reauthorization Act (MACRA) was passed, introducing the Quality Payment Program, which has two tracks: Advanced Alternative Payment Models (APMs) and the Merit-based Incentive Payment System (MIPS). In short, APMs provide an incentive payment based on a specific clinical condition, care episode or population where providers assume some of the risk related to their patients’ outcomes. MIPS provides a payment adjustment to health care providers based on evidence-based and practice-specific quality data demonstrating high quality, efficient care supported by technology such as the electronic health record.
Medicare and Medicaid Payment Changes
Changes in Medicare and Medicaid payment and delivery systems are anticipated to have the following impact:
- Increased pressure on operating margins caused by payment reductions, both federal and state
- Physician integration will be necessary to support ACOs and other shared savings models
- Capital will be required to implement physician alignment strategies
- Quality will drive reimbursement levels and will be a market differentiator
- Quality reporting will require a more sophisticated infrastructure
- Collaboration and effective alignment with the physician-provider community will be imperative as health care moves from a volume-based system to a value-based system
As CAHs seek to understand their future value, they will need to look at their economic value in a new world consisting of transitioned payments.
Rural Hospitals: Solving Challenges to Prepare for the Future
The challenges faced by rural hospitals are not insurmountable. To meet them head on will require a strong commitment to the communities served, as well as the desire to problem solve and work collaboratively. This commitment, desire, and collaboration are qualities that define rural hospitals and rural leaders. Because they are the lifelines for the residents they call neighbors, rural hospitals can lead the way in transforming the American health care system. They are smaller, less complex and, therefore, able to change quicker than their urban counterparts. Rural hospitals are also more closely connected to their local communities. Transformational change will be difficult and will take time and energy to implement. Rural hospitals must begin now to prepare for the future.
Medicare Beneficiary Quality Improvement Project (MBQIP)
Nationally, there is an important movement toward increased quality of care and patient health care experiences. FORHP created the Medicare Beneficiary Quality Improvement Project (MBQIP) as a Flex Program activity within the program area of quality improvement. The primary goal of this project is for CAHs to implement quality improvement initiatives to improve their patient care and operations. MBQIP will provide Flex funding to support CAHs with technical assistance and national benchmarks to improve health care outcomes. CAHs participating are requested to report a specific set of quality measures determined by FORHP and engage in quality improvement projects to benefit patient care.
Increasing Public Confidence in Rural Health Care: Putting Patients First
Increased usage of and understanding of publicly available quality and patient satisfaction data (from Hospital Compare and the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) survey) has contributed to the increased knowledge and understanding of hospital quality improvement. In the environment of MACRA, pay for performance, bundled payments and ACOs and use of data to improve care, CAHs may soon be compared with their urban counterparts to ensure public confidence in their quality of health services. The MBQIP initiative takes a proactive and visionary approach to ensure CAHs are well-equipped and prepared to meet potential future quality legislation. Additionally, MBQIP fulfills the Flex grant quality improvement objectives regarding Hospital Compare reporting and supporting participation in various multi-hospital quality improvement initiatives. The main emphasis of this project is putting patients first by focusing on improving health care services, processes, and administration. More information on can be found on the MBQIP webpage of the TASC website.
Preventing Hospital Closures and Improving Health Care Access
As of July 2017, there were 1,341 hospitals in the nation designated as CAHs. The majority of CAH designations in the country are now complete, due to support provided by the state Flex Programs. CAH designation is only one part of the Flex Program. The prevention of CAH closure or assisting CAHs to identify other viable models to serve the health care needs of their rural communities is an important role for state Flex Programs to play in this shifting health care environment. State Flex Programs also use their grant dollars to: improve networks, improve population health and integrate Emergency Medical Services (EMS); work on performance improvement, financial improvement and operational improvement; and address quality improvement issues, all in an effort to enhance and ensure health care access to rural Americans.