Medicare Payment Advisory Committee Executive Director Mark Miller made several recommendations in recent testimony before the House Ways and Means Committee's Health Subcommittee, including calling for changes to the special payment adjustments that Medicare provides some rural hospitals.
"Payment adjusters should be targeted to providers that are necessary to preserve beneficiaries' access to care," said Mr. Miller. "Generally this means that Medicare's special supports should go to providers who are located in low population density areas and are distant enough from other providers to serve as a vital source of care."
Mr. Miller's recommendation deviates from the current system used for rural add-on payments that allows hospitals within a close proximity to another facility to receive the additional support. According to Mr. Miller, 16 percent of critical access hospitals and 9 percent of sole community hospitals are located within 15 miles of another hospital.
The issues with the add-on payments begin with Medicare's definition of "rural," said Mr. Miller. Medicare defines rural as all areas outside of metropolitan statistical areas. Areas with many competing providers as well as areas with a single provider both fall under the definition.
As for rural hospitals that have low patient volumes due to being located close to a competitor, Mr. Miller said they are not necessary for access and it may be inappropriate to give them a low-volume adjustment.
"By focusing low-volume adjustments on isolated providers, rather than making the adjustment available to all providers with low volumes, Medicare can best use its limited resources to serve Medicare beneficiaries," said Mr. Miller. "Such a policy may also encourage two nearby hospitals to merge, increasing patient volumes."
In addition, Mr. Miller said patient volume should be measured as "total patient volume" and not solely based on Medicare volume.
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