Press Releases
April 8, 2003
Health Care Access and Rural Equity Act of 2003
Statement for the Record
Health Care Access and Rural Equity Act of 2003
Senator Conrad
April 8, 2003
Mr. President. Today, Senator Thomas and I would like to introduce the Health Care Access and Rural Equity (H-CARE) Act of 2003.
This proposal is the result of a tripartisan and bicameral effort. We are proud to be joined by 24 Members who also support the bill, including -- Senators Harkin, Grassley, Roberts, Daschle, Dorgan, Smith, Johnson, Lincoln, Domenici, Rockefeller, Burns, Bingaman, Jeffords, Cochran, Levin, Talent, Edwards, Bond, Pryor, Dayton, Snowe, Cantwell and Murray. I would also like to thank our House companions, led by Representatives Moran (R-KS) and Pomeroy.
Working together, I believe we are taking important steps toward improving access to health care in our rural communities.
In addition, I would like to thank the National Rural Health Association, the Federation of American Hospitals, the American Hospital Association, Premier Hospital Alliance and the Coalition representing Sole Community Hospitals for their support of this effort.
As my colleagues may know, rural health care providers are often forced to operate with significantly less resources than larger, urban facilities. In my state of North Dakota, rural hospitals often receive only half the reimbursement of their urban counterparts – for treating the same patient. For example, a rural facility in ND receives approximately $4,200 for treating pneumonia, while a hospital in New York City can receive more than $8,500.This funding disparity is simply unfair and has placed many rural providers on shaky ground.
Continued funding shortfalls have resulted in rural providers having much tighter inpatient cost margins than their urban counterparts -- today, the average rural hospital operates with a slim 3.9 percent cost margin (compared to 11.3 percent for urban providers). This situation has resulted in more than 43 percent of rural hospitals operating in the red.
When you look at overall cost margins, the situation is even more bleak – rural providers are working with an average negative 2.9 percent Medicare margin (compared to 6.3 percent for urban hospitals). Our rural facilities cannot continue to provide high quality services if they lose nearly 3 percent on every Medicare patient they serve.To address these problems, the bill we are introducing today would take many important steps to improve the rural health care system.
First, it would provide a much-needed low-volume adjustment payment. Today, it is nearly impossible for rural hospitals to take advantage of economies of scale realized by facilities located in larger communities. This situation has resulted in the majority of small facilities losing money. To address this problem, our bill would provide a new, extra payment to hospitals serving less than 2,000 patients per year. This provision would provide up to 25 percent in additional funding to help rural providers cover inpatient hospital services.
Second, H-CARE would close the gap in payments hospitals receive for serving low-income patients. It would do this by allowing rural hospitals to receive the same level of special "Disproportionate Share – or DISH Payments" currently available to urban providers.Third, our legislation would take steps to permanently equalize the "base payment amount", which has been 1.6 times higher for urban facilities. The recent Omnibus bill temporarily fixed this problem – but only until the end of FY03. Our bill finishes the job.Fourth, this legislation would help hospitals better meet labor costs by making some needed improvements to the Medicare "wage index" calculation. Across the nation, rural hospitals have reported that the wage index does not accurately account for labor costs in their area. Our bill takes step to address this problem.
Fifth, our bill would ensure that rural hospitals continue to be paid fairly for outpatient services. It does this by extending a provision in current law that protects these hospitals against losses under the current Medicare payment system. It also includes measures to protect rural hospitals’ access to lab services.I am happy to say that this set of proposals would go a long way toward placing rural facilities on much sounder financial footing. Let me provide some examples.
Today, the average small hospital located in the Midwest receives $3,926 as an average payment for inpatient services. If all the changes laid out in our bill are enacted, this will improve payments to smaller rural hospitals by about 25 percent.
If you look at a more specific service – such as treating pneumonia – this same hospital would see payments increase from about $4,326 to $5,405. These increases are clearly big improvements, which will bring reimbursements for rural hospitals more in line with their costs.Before I close, I’d also like to mention that this bill would establish a new grant program to help rural hospitals repair crumbling buildings. Under this program, rural providers could apply for up to $5m in loan assistance. It is my hope these resources will help strengthen the infrastructure of our nation’s rural hospitals.Finally, our bill includes a set of provisions that will make small – but important – changes to the Critical Access Hospital (CAH) program. These include measures to ensure CAHs have 24-hour emergency on-call providers and to ensure they can afford to provide quality ambulance care.In total, the changes laid out in our bill, will bring more than $72 million in new resources to my state of North Dakota over the next ten years. The bill will provide similar benefits to other rural states.
Thank you again to my Senate and House colleagues, as well as the organizations who worked with us, for your cooperation in developing this important health care proposal. It is my hope that this legislation will help to strengthen and sustain our nation’s rural health care system.
