May 8, 2019
By Seema Verma, Administrator, Centers for Medicare & Medicaid Services
Putting our Rethinking Rural Health Strategy into Action
Approximately 60 million Americans or roughly 1 in 5 live in rural areas, with nearly every state having a rural county. The Trump Administration recognizes the significant obstacles faced by patients and providers in rural areas. Among the five leading causes of death, rates are higher for rural communities, and for several conditions the gap between urban and rural communities has widened. Rural communities tend to have higher rates of poverty, higher rates of uninsurance or underinsurance, greater transportation difficulties in getting to a hospital or doctor’s office, and lack access to high-speed internet, which limits access to information. Rural areas face workforce shortage issues, where the patient-to- primary care physician ratio in rural areas is only 39.8 physicians per 100,000 people, compared to 53.3 physicians per 100,000 in urban areas. Since 2010, over 100 rural hospitals have closed and nearly 40% of rural hospitals currently running are operating with negative margins. This limits the ability for providers to compete based on high value care, and leads to fewer choices for beneficiaries in rural areas.
Those of you following the work of CMS over the past couple of years know that the Trump Administration has placed an unprecedented priority on improving the health of Americans living in rural areas. We furthered this commitment by introducing the first ever Rural Health Strategy as part of our Rethinking Rural Health Initiative to focus on ways we can strengthen the rural healthcare system and avoid unintended consequences of CMS policy and program implementation. Our Rural Health Strategy focuses on applying a rural lens to the vision and work of CMS, improving access to care through provider engagement and support, advancing telehealth, empowering patients in rural areas about making decisions on their healthcare and leveraging partnerships to improve rural health. Our goal at CMS is to develop programs and policies that ensure rural Americans have access to high quality care, support rural providers and not disadvantage them, address the unique economics of providing healthcare in rural America, and reduce unnecessary burdens in a stretched system to advance our commitment to improving health outcomes for Americans living in rural areas.
In the last year, we have taken several steps to improve rural health by leveraging technology to increase access for beneficiaries living in rural areas. Specifically, we have made historic changes to expand access to telehealth and other virtual services across the Medicare program. Medicare now pays for virtual check-ins that allow a patient to check in with their clinician by phone or other telecommunication system, and remote evaluations of recorded videos or images that a patient submits to their clinician, to help them decide together whether the patient needs to make a trip to be seen in-person. We also cover stand-alone telephone consultations with clinicians at Rural Health Clinics and Federally Qualified Health Centers, expanding access to care for patients in rural areas. We also expanded access to the services that can be delivered via telehealth, such as wellness visits that require additional time for complex patients and care for patients experiencing a stroke or with End Stage Renal Disease (ESRD). Last month, we announced that we are providing more flexibility to Medicare Advantage plans to offer innovative telehealth services as part of their basic benefit, expanding access to care for our beneficiaries. And we have expanded access to telehealth as part of our overhaul of the Medicare Shared Savings Program, in the Pathways to Success final rule. In our model for Medicare Advantage plans, known as the Value Based Insurance Design (VBID) model, we are testing how to account for telehealth services in determining whether a plan’s network or access to services is adequate.
As part of rethinking rural health, we’ve taken great care to apply a rural lens to all our programs and policies – for every policy we review, we consider the impact on rural providers. While there are many factors that contribute to rural hospital closures, we are doing our part to provide stability and predictability, and to ensure access to care for rural areas. I’m excited to highlight a groundbreaking proposal that would transform the way CMS pays certain rural hospitals and hospitals in other low wage areas. As we’ve said before, accurate and appropriate Medicare payment rates are essential to all hospitals, especially those serving rural areas. The wage index is an adjustment to hospital payments to account for differences in local labor costs. However, disparities exist between high wage index and low wage index hospitals. A hospital in rural Alabama could receive a Medicare payment of about $4000 for treating a beneficiary admitted for pneumonia while a hospital in a high wage area, like many urban communities, could receive a Medicare payment of nearly $6000 for the same case, all due to differences in their wage index.
Last year, we invited comments on how we could improve the Medicare wage index. Many responses reflected a common concern that the current wage index system perpetuates disparities in Medicare payment between high and low wage index hospitals across the country. Commenters stated that higher wage hospitals, by virtue of higher Medicare payments, can afford to pay higher wages that allow them to continue receive higher payments; whereas low wage index hospitals cannot afford to pay wages that would allow them to climb to a higher wage index and they continue to receive lower hospital payments. Commenters stated that over time, this has created a downward spiral that increases the disparity in payments between high wage index hospitals and low wage index hospitals. Further, under the law, the wage index adjustment must be made in a way that ensures that aggregate payments to hospitals are not affected by changes — that is, wage index adjustments must be “budget neutral” on a nation-wide basis. That means as payments for higher wage index hospitals increase, lower wage index hospitals get less.
The Inpatient Prospective Payment System (IPPS) proposed rule puts our Rural Health Strategy into action by proposing to change the way Medicare factors local labor costs into hospital payments. To address these Medicare payment disparities, CMS is proposing to increase the wage index of rural and other low wage index hospitals. This change would begin to bring payments to rural and other low wage index hospitals closer to urban neighbors, allowing them to improve quality, attract more talent, and improve patient access. We are considering several ways address these disparities. Each approach would have different levels of impact, and we are seeking input on the most appropriate way to address this issue.
In addition, CMS is proposing a change to the wage index “rural floor” calculation. Under the law, the IPPS wage index value for an urban hospital cannot be less than the wage index value for hospitals located in rural areas in the state. This is known as the “rural floor” provision. CMS is concerned that some hospitals may be using urban-to-rural reclassifications to inappropriately influence the rural floor wage index value. To address this concern, CMS proposes removing urban-to-rural hospital reclassifications from the calculation of the rural floor wage index value.
If finalized, these proposed policies would go into effect on October 1, 2019, benefiting certain rural and other low wage communities as early as this year. The proposed changes would create an opportunity to make sure that the current foundation of rural healthcare – hospitals – are in the best position possible to improve the quality and sustainability of care they are providing and that the approximately 60 million patients living in rural areas maintain access to critical services. I look forward to your input on these proposals, so we can ensure we are achieving our goals of better serving individuals in rural areas by empowering patients in rural communities and providing high quality accessible healthcare.
And this is just the beginning – our work on behalf of rural Americans is not done, as we are turning to how we can support local communities in their efforts to overhaul the current way of thinking for rural healthcare. We intend to test new approaches to policy in this area and leverage all of the agency’s authorities to improve the current system. We recently announced the CMS Primary Care First Initiative, a new set of payment models for primary care practices and other providers. One of the new payment models, the Direct Contracting model, includes an option for innovative organizations to take on financial risk in a defined region, which could be an option to support rural transformation of care. Driving accountability to a local level empowers communities to devise strategies to meet their unique health care needs. We are seeking public comment through a new Request for Information and welcome your insights on how to ensure the Geographic Option of Direct Contracting works for rural areas.
CMS is also developing another new innovative model specifically for rural communities that will come out later this year that will offer a pathway for stakeholder coalitions comprised of providers, purchasers, and payers to invest collectively in increasing access and improving rural healthcare delivery. The model will offer support and resources so that participating communities will be able to design a customized model that reflects the aligned priorities and needs of their own community. Ultimately, the goal is to improve the quality of care delivered in rural communities; enhance patient access to care; modernize the community’s delivery system, including expanding access to innovative technologies; and transition rural providers to value-based payment models that promote provider stability and financial sustainability.
Rethinking Rural Health is a vital part of CMS’s push to transform the healthcare delivery system to a model that delivers high quality, affordable, and accessible healthcare for every American. While we have undertaken a number of steps, we know there is much more work to be done– our beneficiaries residing in rural areas deserve nothing less.