A law that allows rural hospitals to bill Medicare for rehabilitation services for seniors at higher rates than nursing homes and other facilities has led to billions of dollars in extra government spending, federal investigators say.
Most patients could have been moved to a skilled-nursing facility within 35 miles of the hospital at about one-fourth the cost, the U.S. Department of Health and Human Services’ inspector general said in a report being released Monday. Hospitals juggling tough balance sheets have come to view such “swing-bed” patients as lucrative, fueling a steady rise in the number of people getting such care and costing Medicare an additional $4.1 billion over six years, the report said.
The authors wrote that the windfall helps to “support a hospital’s fixed costs and offset losses from other lines of business.”
Legislation passed by Congress in 1997 created the designation of “critical access hospitals” to help small facilities in remote areas survive. Rather than paying set rates for services as throughout the rest of the Medicare system, the federal government reimburses the hospitals for 101 percent of their costs. They also often receive state funding and grants.
In most U.S. hospitals, Medicare patients who break their hip, for example, would receive inpatient treatment until they are ready to return home or receive rehabilitative services at a nursing home or elsewhere. But critical access hospitals are allowed to provide those rehabilitation services in the very same bed as inpatient ones. They continue to bill for their full costs, rather than the far lower price of providing those services elsewhere.
Alan Morgan, CEO of the National Rural Health Association, did not dispute that Medicare could save money by modifying the system. But he said dozens of rural hospitals have closed in the past five years, and nearly 300 others are on the brink. The Obama administration has already proposed a reduction to all reimbursements made to critical access hospitals that Morgan said would further accelerate the closures if enacted.
“Medicare could save money in many ways. That’s not the question,” he said. “The question is what is right for our rural patients and their access to high-quality services designed to care for the frail, elderly patients in their home communities.”
HHS investigators examined a sampling of 1,200 critical access hospitals that submitted swing-bed claims between 2005 and 2010, estimating 90 percent of the patients could have been cared for elsewhere. The average swing-bed hospital reimbursement in 2010 was $1,261 daily, versus an average estimated cost of $273 daily if the patients had been moved. Medicare paid for 914,000 days of swing-bed care in 2010, up from 789,000 in 2005, the report found.
Some hospitals received critical access designation under old rules and were grandfathered in. A previous report from the inspector general’s office found the vast majority would not meet the requirements if forced to requalify.
In a written response, Centers for Medicare and Medicaid Services administrator Marilyn Tavenner agreed swing-bed usage has increased. But she said the report was stilted by using a sampling of hospitals that may not be representative; inflating savings by not taking into account the cost of transporting patients out of a hospital; and ignoring the fact that though an alternate facility may only be 35 miles from the hospital, it may be much farther from a patient’s family.
“The report does not take into account the burden on patients of being treated farther from home and family,” she wrote.
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Online: http://oig.hhs.gov/oas/reports/region5/51200046.pdf
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Follow Matt Sedensky on Twitter at http://twitter.com/sedensky .
Copyright 2015 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
This is definitely the kind of thing that needs to be looked at very carefully. Depending on just where you are, 35 miles as the crow flies may be an awfully long way to travel. (Same thing with the transport costs – moving a patients safely by ambulance can cost several thousand dollars, which would eat quite a bit of potential savings.) In some cases you could definitely save money and do better for patients by moving to a skilled nursing facility instead of a hospital. But one of the problems with trying to slice budgets is that you’re also getting rid of the caseworkers and managers who can take the time to make these decisions properly.
Another reason why healthcare policy is not easy.
Hopefully the coverage of this issue will be more nuanced than the typical gotcha! over the discovery of apparent over-spending for healthcare service.
Yes, there might be savings realized in having patients rehabilitated at non-hospital facilities at a lower rate. However, in isolated rural communities, there may be a relative lack of available facilities; for many of these small towns, it is the local hospital that provides the bulk of these services, and conditions might not exist to promote the development of additional facilities.
And in states that refused to expand Medicaid, safety-net hospitals already are facing enormous financial challenges.
The situation is similar for healthcare personnel. For many practitioners who might be interested in being a small-town country doctor, the sense of professional isolation, and a relative lack of a variety of modern and well-resourced practice settings and professional advancement opportunities, among other factors, outweigh the benefits of rural practice. For some, simply completing mandated continuing medical education courses entails shutting down your clinic and traveling to a hospital or medical school campus in a metropolitan area for several days.
And throwing money at the problem is not always enough. There have been programs implemented that provide partial tuition reimbursement to medical graduates that complete a few years of post-graduate service in medically underserved communities, but often, these young doctors leave soon after fulfilling their service requirements.
I don’t have any answer to this dilemma, but feel there is a role for the public sector to strengthen the safety net to support measures to recruit, train and retain healthcare providers in medically underserved rural and urban areas. Things like providing library resources and continuing medical education to isolated providers, exposing medical and other healthcare students to the challenges – as well as rewards – of rural practice, and promoting the affiliations and networking linkages between isolated primary care and rehabilitative centers and metropolitan county hospitals and government and non-profit agencies that coordinate care and referrals. Healthcare reform is already making some of this possible, but more needs to be done. For too many, the problem is simply obtaining access to care, not the level of quality of the care itself.
Government waste can’t just be viewed as x or y. There is a clear reason for the difference. The necessity of the rural hospital care is no different than that in a metropolitan area, it just isn’t as cost efficient. It is clear that all factors are also not being figured in.
OK, you can say that its cheaper if only the actual circumstances weren’t real but they are. So, in terms of government expense, this is 4 billion dollars over 6 years that goes to a real and important issue, that’s peanuts compared to military spending or really stupid shit like shutting down the government.
Instead of wasting money repealing Obamacare and inventing problems in order to damage it, we could build hospitals or design more efficient care in the rural hospitals that we already have.
This is a cost efficiency issue not a blatant waste issue. 60 useless, for show only, efforts to repeal Obamacare, that is 100% waste. The Iraq War, $4 trillion and counting, that is massive waste that has a giant negative feedback loop into our healthcare systems.
Lets prioritize!
So dozens of rural hospitals have closed in the past five years, and nearly 300 others are on the brink. And?
Welcome to what happens when people vote for Conservatives.
HHS needs to shut this fraud down and go after the money that was pissed away on said fraud.
If they whine, HHS needs to tell them: Next time vote for Democrats who support Single Payer if they want a real healthcare system.