Rural Health Care

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January 12, 2012

OBJECTIVE

Protect Critical Access Hospitals and preserve access to essential health services in Washington State’s rural communities.

BACKGROUND

Critical Access Hospitals are an essential component of the state’s health care delivery system.  They are the hub for local service in their community, delivering primary and preventive care, key diagnostic and laboratory services, emergency services, and recuperative care.  They employ many of the physicians in their local communities.  They are an essential bridge to specialty treatment in urban hospitals by connecting patients to health care beyond the local hospital’s capability.

State policy makers have recognized the critical role played by small, rural hospitals for nearly 40 years.  The state has created special payment systems and regulatory structures to ensure access to essential services in rural communities.  In 2001, the state legislature made Washington one of 28 states that pay Critical Access Hospitals based on the costs of treating Medicaid patients.  This mirrors federal payment policy for Medicare patients.
Thirty-eight hospitals in Washington State are designated Critical Access Hospitals.  By law, they have no more than 25 inpatient beds, serve rural areas, and must meet requirements for distance from other hospitals.  Combined, the 38 hospitals serve nearly three-quarters of the state’s territory.  The communities they serve are older and poorer than the state as a whole, so these hospitals treat more Medicaid and Medicare clients and have fewer privately insured patients than hospitals located in urban areas.  Critical Access Hospitals are essential community institutions, providing excellent jobs and attracting business and economic development.

The Governor has proposed eliminating cost-based payment for Critical Access Hospitals and cutting payments by $27 million.  This cut applies to Medicaid fee-for-service enrollees.  Adding in Medicaid managed care and the loss of federal matching funds brings the total payment cut to a staggering $85 million – almost half the payments for Medicaid clients.

WSHA'S POSITION

Washington State should preserve Medicaid cost-based payment for Critical Access Hospitals.  Eliminating cost-based payment will endanger the health and lives of vulnerable, rural residents.  The $85 million cut would also threaten the economic viability of rural Washington and cause significant damage to the health care delivery system in the state.