Alliance Composition
Our Alliance is comprised of hospitals with Rural Referral Center (RRC), Sole Community Hospital (SCH) and Medicare Dependent Hospital (MDH) status.
In 2022, the Alliance is more than 50 hospitals strong. More hospitals means more resources, diversity and strength. It also means enhanced geographic coverage, which enables us to connect with more Representatives and Senators through constituent relationships.
Alliance Composition
Our Alliance is comprised of hospitals with Rural Referral Center (RRC), Sole Community Hospital (SCH) and Medicare Dependent Hospital (MDH) status.
In 2022, the Alliance is more than 50 hospitals strong. More hospitals means more resources, diversity and strength. It also means enhanced geographic coverage, which enables us to connect with more Representatives and Senators through constituent relationships.
Please reach out for more information on joining the Alliance for Rural Hospital Access
Erica Stocker
202.756.8334
estocker@mcdermottplus.com
About Our Hospitals
The Rural Referral Center (RRC) program was established by Congress to support high-volume rural hospitals that treat a large number of complicated cases and function as regional referral centers. Generally, to be classified as an RRC, a hospital has to be physically located outside a Metropolitan Statistical Area (indicating an urban area) and either have at least 275 beds or meet certain case-mix or discharge criteria.
RRCs are the rural health care providers that provide rural populations with local access to a wide range of health care services. In so doing, RRCs localize care, minimize the need for further referrals and travel to urban areas, and provide services at costs lower than would be incurred in urban areas. These hospitals also commonly establish satellite sites and outreach clinics to provide primary and emergency care services to surrounding underserved communities, a function which is becoming increasingly important as economic factors force many small rural hospitals to close.
RRCs also are vital to their local economies, as they are typically large employers, generating significant cash outflow into the local economy, boosting the area tax base, and attracting other employers to the area.
Approximately 781 hospitals across 46 states have RRC status.
For these and other reasons, Congress has long appreciated the special role of RRCs in the rural health care community and the need to afford RRCs special recognition and protections to ensure their continued viability and role in the rural health care network.
Special benefits of RRCs
Historically, RRC status carried with it several important financial benefits, including a higher standardized amount payment rate than ordinary rural hospitals. Today, RRCs receive special treatment under geographic reclassification and the Medicare disproportionate share hospital (DSH) program. With respect to geographic reclassification, hospitals with RRC status are exempt from proximity and certain other requirements. With respect to DSH, RRCs are not subject to the 12% payment adjustment cap that applies to certain other rural hospitals. RRCs are also eligible to participate in the 340B program at a lower DSH threshold.
The Sole Community Hospital (SCH) program was created to maintain access to needed health services for Medicare beneficiaries in isolated communities. The SCH program ensures the viability of hospitals that are geographically isolated and thus play a critical role in providing access to care. Hospitals qualify for SCH status by demonstrating that because of distance or geographic boundaries between hospitals they are the sole source of hospital services available in a wide geographic area. There are a variety of ways in which hospitals can qualify for SCH status, but the majority qualify by being more than 35 miles from another provider.
Approximately 465 hospitals across 47 states have SCH status.
SCHs provide rural populations with local access to a wide range of health care services. In so doing, SCHs localize care, minimize the need for referrals and travel to urban areas, and provide services at costs lower than would be incurred in urban areas. These hospitals also commonly establish satellite sites and outreach clinics to provide primary and emergency care services to surrounding underserved communities, a function which is becoming increasingly important as economic factors force many small rural hospitals to close.
Additionally, SCHs are vital to their local economies. These hospitals typically are significant employers, generating considerable cash outflow into the area economy and boosting the area tax base.
For these and other reasons, Congress has long appreciated the special role of SCHs in the rural health care community. Congress also has recognized that SCHs have above-average costs for the mix of patients they serve. Congress has sought to buttress SCHs, and ensure their continued viability by establishing special Medicare payment provisions.
Special benefits of SCHs
SCHs are reimbursed by Medicare for operating costs associated with inpatient services provided to program beneficiaries on the greater of the federal payment rate applicable to the hospital (i.e., the payment that the hospital would otherwise receive under the inpatient service prospective payment system (“PPS”)) or a cost-based payment, which is determined based on the hospital’s costs in a base year: 1982, 1987, 1996 or 2006 trended forward, whichever is highest). A hospital that qualifies for SCH status will continue to be reimbursed under the PPS for as long as reimbursement under the PPS is more than reimbursement on a cost-basis; the hospital will be paid on a cost-basis if cost-based reimbursement is greater than reimbursement under the PPS.
A hospital with SCH status also is eligible for an upwards payment adjustment for any cost reporting period during which the hospital experiences a more than 5 percent decrease in its total inpatient discharges as compared to its immediately preceding cost reporting period due to experiences beyond its control. The adjustment is determined based on a variety of considerations, but can be as high as the difference between the hospital’s operating costs and the federal payment rate applicable to the hospital for the year in question.
Additionally, SCHs are eligible for “special access” rules for purposes of Medicare geographic reclassification, which means that a hospital with SCH status applying for reclassification from an urban area does not have to be within 15 miles of the area to which it seeks reclassification, and may apply to the nearest MSA.
SCHs are also eligible to participate in the 340B program at a lower DSH threshold. In addition, rural SCHs also are exempt from the 22.5 percent reduction in Medicare payment for covered outpatient drugs purchased through the 340B program implemented by CMS in 2018.
CHAMPUS/TRICARE and some state Medicaid programs and private payors also specially treat hospitals with the SCH designation.
Hospitals with Sole Community Hospital status receive a 7.1 percent adjustment to OPPS payments.
The Medicare-Dependent, Small Rural Hospital (MDH) program was established by Congress in 1990 with the intent of supporting small rural hospitals for which Medicare patients make up a significant percentage of inpatient days or discharges. To qualify as a MDH, a hospital must be (1) located in a rural area, (2) have no more than 100 beds, and (3) demonstrate that Medicare patients constitute at least 60 percent of its inpatient days or discharges.
Because they primarily serve Medicare beneficiaries, MDHs rely heavily on Medicare payment to sustain hospital operations. These hospitals are believed to be more vulnerable to inadequate Medicare payments than other rural hospitals because they are less able to cross-subsidize inadequate Medicare payments with more generous payments from private payers. As such, Congress acknowledged the importance of Medicare reimbursement to MDHs and established special payment provisions to buttress these hospitals. Congress recognized that if these hospitals were not financially viable and failed, Medicare beneficiaries would lose an important point of access to hospital services.
A recent National Center for Health Statistics (NCHS) data brief on rural hospitals demonstrates the importance of the MDH program. Read our analysis here.
Today, more than 171 hospitals across 31 states have MDH status.
Special benefits of MDHs
The primary benefit of MDH status is eligibility for payments based on hospital-specific payment rates. Under Medicare’s Inpatient Prospective Payment System (IPPS), hospitals with MDH status receive payments based on the federal rate or hospital-specific rate, whichever is greater. If the hospital-specific rate is greater, the MDH is paid the federal rate plus 75 percent of the difference between the hospital-specific rate and federal rate.
Hospitals with MDH status are also exempt from the 12 percent disproportionate share hospital (DSH) payment adjustment cap applicable to most other rural hospitals.