Health Reform and Rural Hospitals John Supplitt, Sr. Director American Hospital Association

1. Indiana Rural Health Policy Forum Health Reform and Rural Hospitals John Supplitt, Sr. Director American Hospital Association

2. Health Care Reform Bills Patient Protection & Affordable Care Act – H.R. 3590, will expand coverage to 31 million people (94 percent of all those legally residing in the U.S. or 92 percent of all those residing in the country) and cost $848 billion over the 10-year period (fiscal years (FY) 2010-2019). Affordable Health Care for America Act – H.R. 3962, will expand coverage to 36 million people (96 percent of all those legally residing in the U.S. or 94 percent of all those residing in the country) and cost $1.052 trillion over the 10-year period (fiscal years 2010-2019).

3. Medicare Extenders Extension of Floor on Medicare Work Geographic Adjustment- Under the physician fee schedule, extending by two years the provision increasing the work geographic index to 1.0 for localities in which the work geographic index is less than 1.0. Extension of Increased Payments for Ambulance Services under Medicare - Continuing the existing add-on payment for ground ambulance services – a 3 percent add-on for rural areas and a 2 percent add-on for urban areas – through December 31, 2011. Extension of section 508 hospital reclassifications - Extending section 508 wage index reclassifications for the inpatient PPS through September 30, 2011.

4. Medicare Extenders Extension of outpatient hold harmless provision – HR 3590 extends for only one year the hospital outpatient department hold harmless payments for small rural hospitals, but would also make all sole community hospitals eligible to receive these payments, regardless of their bed size. While, HR 3962 extends HOPD hold harmless payments for two additional years for certain hospitals in rural areas with 100 or fewer beds, it includes certain SCHs but with only 100 or fewer beds. Extension of payment for technical component of certain physician pathology services - Extending for two years the grandfathering provision that allows certain independent labs to receive direct payments for the technical component for physician pathology services that are furnished to certain hospital inpatients and outpatients.

5. 340 B Drug Discount Pricing HOUSE: Discount for Rural and Other Hospitals; 340B Program Integrity Sec. 2501. Expanded participation in 340B program. Sec. 2502. Extension of discounts to inpatient drugs. Sec. 2503. Effective date SENATE: More Affordable Medicines for Children and Underserved Communities Sec. 7101. Expanded participation in 340B program. Sec. 7102. Improvements to 340B program integrity. Sec. 7103. GAO study to make recommendations on improving the 340B program.

6. Medicare Extenders Senate Only (Section 3122) - The legislation reinstates reasonable cost reimbursement for clinical diagnostic lab services for qualifying rural hospitals with fewer than 50 beds for one year, from July 1, 2010 through July 1, 2011. (Section 3123) - The bill extends the RCH Demonstration Program for an additional year, through December 31, 2010, increases the maximum number of participating hospitals from 15 to 30 and expands the eligible sites to rural areas in all states. (Section 3124) - The bill extends the Medicare-dependent hospital program for one year, through September 30, 2012. The AHA urges the conferees to make this valuable program permanent.

7. More Rural Protections Senate Only Temporary improvements to the Medicare inpatient hospital payment adjustment for low-volume hospitals - The bill would improve the low-volume adjustment for FY 2011 and FY 2012 for hospitals more than 15 road miles from another comparable hospital and with up to 1,600 Medicare discharges. Technical correction related to CAH services - The bill ensures that CAHs are paid 101 percent of costs for all outpatient services they provide, regardless of the billing method elected. Extension of Medicare rural hospital FLEX program - The bill extends the Medicare FLEX Program through 2012.

8. More Rural Protections Senate Only Improvements to the demo project on community health integration models - The bill would revise the demonstration that allows eligible entities to develop and test new models for the delivery of health care services in certain rural counties. MedPAC study- The bill requires MedPAC to report to Congress on Medicare payment adequacy for health care providers serving in rural areas by January 1, 2011. Payment Adjustments for home health care - The bill provides a 3 percent add-on payment for episodes ending on April 1, 2010 through January 1, 2017 for rural home health patients.

9. More Rural Protections Senate Only • Equitable Treatment for Rural Safety-Net Providers - The Senate bill includes several special programs including: • prospective payment system for ambulatory care providers • grants for Family Nurse Practitioner Training Programs • community-based collaborative care networks • Early Detection of Certain Medical Conditions Related to Environmental Health Hazards, and • creation of a payment floor • Rural health clinics, FQHC look-alike clinics, and Indian health clinics also should be eligible for these programs.

10. More Rural Protections Senate Only • Wage Index - The Senate bill contains two hospital wage index provisions. • a provision to require the HHS Secretary to use, until FY 2014, the area wage index reclassification thresholds of the average hourly wage that were in effect prior to FY 2009 • a provision that would require the Secretary to apply budget neutrality on a national basis in the calculation of the Medicare hospital wage index floor for each all-urban and rural state. • The Manager’s Amendment introduced new protections for frontier states with a floor on the area wage index. For discharges occurring on or after October 1, 2010 the area wage index applicable to any hospital which is located in a frontier state may not be less than 1.00.

11. Patient Protection & Affordable Care Act – H.R. 3590 Sec. 5101. National health care workforce commission. Sec. 5501. Expanding access to primary care services and general surgery services. Sec. 5503. Distribution of additional residency positions. Sec. 5508. Increasing teaching capacity. Sec. 9007. Additional requirements for charitable Section 501(c)(3) hospitals

12. Patient Protection & Affordable Care Act – H.R. 3590 Select Major Provisions Sec. 3001. Hospital Value-Based purchasing program Sec. 3023. National Pilot Program on Payment Bundling – Study and report on application of pilot program to small or rural hospitals Sec. 3025. Hospital Readmissions Reduction Program – CAHs are exempt in Senate (but not House) Sec. 3403. Independent Medicare Advisory Board

13. AHA opposes attempts to expand Medicare and Medicaid eligibility as part of a public insurance option, attempts to expand the authority of an Independent Payment Advisory Board, and the hospital readmissions policy as proposed in either the House or Senate bills. Finally, the number of people who would receive coverage under the bill must be increased, or the hospital payment reductions be lowered if coverage targets do not meet or exceed the House level.

14. Next Steps • Congress Returns • House, January 12 • Senate, January 19 • Statue of the Union • President’s Day Recess, February 12 • Congressional Budget Office will need time to finalize projects on final agreement

15. Contact Information John Supplitt Senior Director AHA Section for Small or Rural Hospitals Chicago, IL 312-422-3306 jsupplitt@aha.org