Rural Health News is a weekly segment of Rural Health Today, a podcast by Hillsdale Hospital.
Welcome back to Rural Health News, the segment of Rural Health Today where we fill you in on the latest in rural health headlines. We’ll cover three headlines in today’s episode: what’s most urgent, a rural health damage report, and a success story to send us into the week.
Most Urgent
The Centers for Medicare & Medicaid recently proposed a new rule to make changes to state-directed payments that help hospitals across the nation maintain local access to care. State-directed payments are provider payment initiatives allowable by the federal government under Medicaid managed care contracts that allow states to supplement Medicaid reimbursement when it doesn’t properly cover the cost of care.
The new rule proposed by CMS would change how these payments are calculated and distributed, including adjustments to definitions and separating payment terms for rate calculations and reimbursement rates, limiting states in their ability to support hospitals.
- The proposed rule would place a one-size-fits-all funding cap on Medicaid reimbursement at the Medicare rate, which will disadvantage rural hospitals already struggling to operate on inadequate reimbursement models.
- The rule would change the policy on state-directed payments to extend beyond the new statutory requirements established by HR1, or the One Big Beautiful Bill. CMS estimated that the combination of this rule with the statutory changes could reduce Medicaid spending by $775 billion over the next 10 years. This estimation is significantly more than the Congressional Budget Office’s original projection of $149 billion under the One Big Beautiful Bill.
- The proposed rule would also extend to fee-for-service supplemental payments, capping them at 100% of the Medicare rate in expansion states, which includes Michigan.
- Payment methodologies such as uniform increases, meaning fixed percentage or dollar-based add-ons, would be phased out under this rule, though CMS also proposed states could choose to implement minimum or maximum fee schedules within payment limits.
- Oversight and administrative requirements of state-directed payments would be increased, placing greater burden on hospitals and states to comply.
- Lastly, long-standing mechanisms of hospital reimbursement would be reduced due to the Medicare-based caps.
Overall, this rule would mean further reductions in Medicaid reimbursement to hospitals, which would result in many closures of vital services across the country, especially psych and OB. This proposed rule would also exacerbate the rate of hospital closures across the nation, with 734 hospitals already at risk of closure, leaving many communities in care deserts, and putting additional capacity strain on surrounding systems. These changes put patients at risk and are extremely harmful to hospitals, especially rural hospitals like Hillsdale.
Damage Report
When a rural hospital closes, its community suffers. Just an hour down the road from Hillsdale Hospital, a community hospital shut its doors on Friday, June 19, signifying the impact of reimbursement reductions and the increased cost of providing care. The hospital in question cited ongoing financial challenges facing rural healthcare providers as the cause for their closure. What’s important for the public to know is these decisions are not made lightly. When a hospital closes, it’s only after every other possible avenue is explored.
Our closing neighbor hospital is one of many in the US losing a desperate battle to keep healthcare services available to rural communities.
Success Story
Despite over 40% of Arkansans living in rural areas, rural health clinics across the state often face barriers when accessing quality resources and information available to them. The University of Arkansas for Medical Sciences put together a website, called the UAMS Rural Health Hub, that features all of its rural services related to healthcare, education and social safety net programs. The site even includes interactive maps of rural health clinics and virtual visit options as well, helping patients avoid unnecessary trips to the emergency room. The goal of the website is to support rural clinics and streamline available information, serving as a more efficient resource than previous website models.
Stories like these showcase the value of technology in rural healthcare and how access to information is vital when providing quality care.
Sources
Thank you to our sources for this episode: the Association of American Medical Colleges, Health & Human Services, the Michigan Health & Hospital Association, Federal Register, the Centers for Medicare & Medicaid, Forvis Mazars, Sturgis Hospital and UAMS News.
Rural Health Today is a production of Hillsdale Hospital in Hillsdale, Michigan and a member of the Health Podcast Network. Our host is JJ Hodshire, our producer is Kyrsten Newlon, and our audio engineer is Kenji Ulmer. Special thanks to our special guests for sharing their expertise on the show, and also to the Hillsdale Hospital marketing team. If you want to submit a question for us to answer on the podcast or learn more about Rural Health Today, visit ruralhealthtoday.com.
