[Senate Hearing 110-821]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 110-821
 
    AGING IN RURAL AMERICA: PRESERVING SENIORS' ACCESS TO HEALTHCARE

=======================================================================

                                HEARING

                               before the

                       SPECIAL COMMITTEE ON AGING
                          UNITED STATES SENATE

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                             WASHINGTON, DC

                               __________

                             JULY 31, 2008

                               __________

                           Serial No. 110-34

         Printed for the use of the Special Committee on Aging



  Available via the World Wide Web: http://www.gpoaccess.gov/congress/
                               index.html



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                       SPECIAL COMMITTEE ON AGING

                     HERB KOHL, Wisconsin, Chairman
RON WYDEN, Oregon                    GORDON H. SMITH, Oregon
BLANCHE L. LINCOLN, Arkansas         RICHARD SHELBY, Alabama
EVAN BAYH, Indiana                   SUSAN COLLINS, Maine
THOMAS R. CARPER, Delaware           MEL MARTINEZ, Florida
BILL NELSON, Florida                 LARRY E. CRAIG, Idaho
HILLARY RODHAM CLINTON, New York     ELIZABETH DOLE, North Carolina
KEN SALAZAR, Colorado                NORM COLEMAN, Minnesota
ROBERT P. CASEY, Jr., Pennsylvania   DAVID VITTER, Louisiana
CLAIRE McCASKILL, Missouri           BOB CORKER, Tennessee
SHELDON WHITEHOUSE, Rhode Island     ARLEN SPECTER, Pennsylvania
                 Debra Whitman, Majority Staff Director
            Catherine Finley, Ranking Member Staff Director

                                  (ii)

  
?

                            C O N T E N T S

                              ----------                              
                                                                   Page
Opening Statement of Senator Gordon H. Smith.....................     1
Opening Statement of Senator Elizabeth Dole......................     2
Opening Statement of Senator Ron Wyden...........................    27

                                Panel I

Statement of John Hammarlund, Regional Administrator, Region X, 
  Centers for Medicare and Medicaid Services, U.S. Department of 
  Health and Human Services, Seattle, WA.........................     4
Statement of Tom Morris, Acting Associate Administrator, Office 
  of Rural Health, Health Resources and Services Administration, 
  U.S. Department of Health and Human Services, Washington, DC...    16

                                Panel II

Statement of Margaret Davidson, Board Member, National 
  Association of Area Agencies on Aging, LaGrande, OR............    34
Statement of Bill Finerfrock, Executive Director, National 
  Association of Rural Health Clinics, Washington, DC............    49
Statement of Scott Ekblad, Director, Oregon Office of Rural 
  Health, Oregon Health and Science University, Portland, OR.....    60
Statement of Dennis Burke, President and CEO, Good Shepherd 
  Medical Center, Hermiston, OR..................................    69
Statement of Tim Size, Executive Director, Rural Wisconsin Health 
  Cooperative, Sauk City, WI.....................................    78

                                APPENDIX

Prepared Statement of Senator Robert P. Casey, Jr................    99
Testimony of the American Academy of Physician Assistants........   100

                                 (iii)

  


    AGING IN RURAL AMERICA: PRESERVING SENIORS' ACCESS TO HEALTHCARE

                              ----------                              --



                        THURSDAY, JULY 31, 2008

                                        U.S. Senate
                                 Special Committee on Aging
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:37 a.m. in 
room SD-106, Dirksen Senate Office Building (Hon. Gordon H. 
Smith) presiding.
    Present: Senators Smith [presiding], Wyden, and Dole.

          OPENING STATEMENT OF SENATOR GORDON H. SMITH

    Senator Smith. Good morning, ladies and gentlemen. We thank 
you all for being here today for this very important hearing as 
it relates to healthcare for elder Americans who live in rural 
places.
    I particularly want to thank Margaret Davidson, Scott 
Ekblad, and Dennis Burke for flying across the country from 
Oregon to be with us today. Each of them has invaluable 
knowledge to share with us about caring for some of the 60 
million Americans living in rural areas of the country.
    As each of our witnesses can attest, access to healthcare 
and support services in rural areas remains a great challenge 
for our Nation. Today's hearing will examine many of the 
programs that are vital to our seniors' ability to remain 
healthy and independent in their rural communities. Along with 
examining these programs, we will also highlight some of the 
new and innovative approaches used to increase accessibility to 
meet rural healthcare needs.
    As some of you know, I am from a rural place as well. I am 
from the community of Pendleton, OR. I personally understand 
the difficulties that can arise when one lives in a remote 
region. Large geographic areas, small numbers of patients, and 
difficulties in recruiting, training, and retaining healthcare 
providers are just some of the problems that lead to reduced 
healthcare access.
    Often, rural healthcare clinics or small rural hospitals 
are a community's only resource for healthcare services. 
Further, individuals living in rural areas disproportionately 
rely on Medicare, Medicaid, and the State Children's Health 
Insurance Program for coverage.
    In my home State of Oregon, the Critical Access Hospital 
Network ensures that hospital care is available in small 
communities. To support these hospitals, I have introduced a 
bill with my colleague, Senator Wyden, that would give critical 
access hospitals a layer of flexibility by allowing them to 
serve patients in times of high need without losing essential 
Medicare funding. When the flu seasons strikes a community, we 
should not force our rural hospitals to divert their patients 
for fear of losing their critical access hospital status.
    Further, Oregon is home to over 50 rural health clinics 
whose sole mission is to provide care for Medicaid and Medicare 
patients living in rural communities. Several weeks ago, my 
State's primary care office notified me of a proposed rule that 
could adversely affect many rural health clinics located in 
rural places throughout the country.
    To that end, Senator Wyden and I introduced legislation 
that would ensure Federal health programs use consistent 
standards in determining rural health clinic status. The change 
will protect these clinics from funding losses.
    Additionally, the recent and dramatic increase in gas and 
food prices has placed a huge burden on local programs that 
support seniors through the 650 area agencies on aging. These 
agencies provide vital home-delivered meals, support senior 
centers, provide in-home help to the daily activities, and 
support family caregivers. They work to ensure that seniors can 
live in their homes safely and help alert the community when 
there is a problem.
    I look forward to continuing to work closely with my 
colleague, Senator Lincoln of Arkansas, to ensure that our 
senior network has the funding it needs. Every time I return to 
Oregon, I hear about these issues and how the loss of our 
county timber payments exacerbates these problems.
    Many Oregon counties are economically landlocked by Federal 
land. Their county budgets heavily rely on Federal timber 
receipts. As timber harvests dropped and the safety net 
expired, county funded healthcare programs have been put in 
peril. I continue to work to extend these payments to prevent 
entire communities from closing their doors to those in need.
    As we discuss the challenges facing rural communities, it 
is important to keep in mind that by 2030 the number of older 
adults in the United States will nearly double. This happens to 
be as 78 million members of the baby boom generation begin 
turning 65 in the year 2011.
    Our help and support systems, especially for those living 
in rural America, are lagging behind where we should be at this 
point in time. I hope that today's hearing will shine a light 
on the unique healthcare needs of those living in rural areas 
and on the innovative programs that strengthen and buildupon 
our rural healthcare delivery system.
    Again, I thank all of our witnesses for coming today. We 
proceed with the blessing of Chairman Kohl, who is in a 
Judiciary Committee markup and will be in and out of this 
hearing, we expect.
    With that, I turn to my colleague, Senator Dole of North 
Carolina.

          OPENING STATEMENT OF SENATOR ELIZABETH DOLE

    Senator Dole. Thank you so much, Senator Smith, for holding 
this morning's hearing to discuss seniors' access to healthcare 
and support services in rural America. I would also like to 
thank today's panelists for joining us.
    My home State of North Carolina has so many beautiful and 
desirable places to live, from our mountains to our coast, and 
for that reason, a growing number of people are retiring to all 
parts of our State, including rural areas. At the same time, 
millions of North Carolina seniors have spent their entire 
lives in rural communities, many of whom are poor and medically 
underserved, with above-average rates of health problems such 
as cardiovascular disease, diabetes, and obesity. This is a 
real problem in North Carolina.
    Access to high-quality healthcare and services is critical 
to our senior population, and we must ensure that rural 
communities have access to quality services. According to Jeff 
Spade, the Executive Director of the North Carolina Rural 
Health Center and Vice President of the North Carolina Hospital 
Association, there are 110 acute care hospitals in the State, 
60 of which are rural hospitals serving 2.8 million residents 
in 61 of our 100 counties. This means that nearly one third of 
North Carolinians rely on rural healthcare providers.
    Mr. Spade, in recent testimony, laid out key issues facing 
North Carolina rural hospitals. These include, one, financial 
instability, mostly due to dependence on Government payers and 
a lack of commercially insured residents; second, the inability 
to access critically needed investment capital for medical 
technology; third, the increasing burden of chronic disease and 
the rising number of uninsured patients; fourth, the withering 
effects and expenses of substantial and chronic workforce 
shortages, both physicians and allied health; and fifth, the 
absolutely vital need for consultation and assistance to 
continually improve the quality, efficiency, and performance of 
our rural hospitals and healthcare organizations.
    Many of North Carolina's rural residents rely on Medicare 
for their health coverage. With physicians' practices and 
hospitals struggling to keep their doors open, thanks in part 
to the inadequacy of Medicare reimbursements, this contributes 
to accessibility challenges.
    Furthermore, it is very difficult to attract young 
physicians and other allied healthcare professionals to live 
and serve in these already medically underserved areas. I am 
pleased that Congress recently passed, with my strong support, 
the Medicare Improvements for Patients and Providers Act, which 
included and extended provisions important for rural hospitals 
and Medicare providers.
    Perhaps most important is that this bill delayed a 10.6 
percent cut in Medicare reimbursements to physicians. The 
proposed payment cuts would have severely limited access to 
care for seniors, especially in rural communities.
    Recently, Congress also acted to extend the moratorium on a 
CMS regulation that would have narrowed the definition of 
public hospital. In fact, I think in North Carolina it would 
have narrowed our hospitals from 45 to 4 in that particular 
designation.
    I was proud to work with a bipartisan coalition of Senators 
to delay these cuts, which would have cost North Carolina 
hospitals more than $330 million annually, costs that would 
have resulted in cuts to services and jobs and further limited 
healthcare access.
    Let me add that with skyrocketing gas and food prices, 
seniors, particularly those in rural areas, are dealing with 
greater hardships. In fact, earlier this year, this Committee 
held a hearing examining the struggles of hunger-stricken 
seniors and the difficulties that programs like Meals On Wheels 
face when their volunteers, who use their own vehicles, can no 
longer afford to help deliver a meal.
    The ripple effects of high gas and food prices are 
particularly hard on the Medicare population since many are on 
fixed incomes. The challenges of ensuring affordable, 
accessible healthcare to seniors living in rural America are 
complex and multifaceted, we know. As a Senator from a rural 
State with a rapidly growing senior population and as a member 
of the Rural Health Caucus, I very much look forward to hearing 
from the witnesses today.
    Again, thank you, Senator Smith, for this hearing today.
    Senator Smith. Thank you, Senator Dole.
    Our first panel will consist of John Hammarlund and Tom 
Morris. John Hammarlund is the Regional Administrator of 
Regions V and X for CMS, and he is located in Seattle, WA. He 
will discuss Medicare and Medicaid reimbursement policies for 
rural providers intended to improve access for beneficiaries.
    Tom Morris is the Acting Associate Administrator of the 
Office of Rural Health in Health Resources Services 
Administration, known as HRSA. He will describe HRSA's rural 
health programs that help meet the needs of rural populations.
    So, John, why don't we start with you?

STATEMENT OF JOHN HAMMARLUND, REGIONAL ADMINISTRATOR, REGION X, 
CENTERS FOR MEDICARE AND MEDICAID SERVICES, U.S. DEPARTMENT OF 
             HEALTH AND HUMAN SERVICES, SEATTLE, WA

    Mr. Hammarlund. Thank you. Good morning, Senator Smith.
    Senator Smith. You may want to turn on your mike there.
    Mr. Hammarlund. Thanks a lot. Good morning, Senator Smith. 
Good morning, Senator Dole, and distinguished members of the 
Committee.
    Thank you so much for the opportunity to testify today 
regarding the role of CMS in issues impacting seniors in rural 
America. I am John Hammarlund, Regional Administrator of the 
Seattle and Chicago offices of CMS. As Senator Smith noted, I 
am based out of Seattle.
    My focus is local outreach and education about CMS programs 
to our stakeholders in 10 States in the Midwest and Pacific 
Northwest. I am also the national lead for rural health issues 
on behalf of all of CMS's regional offices, which offers me an 
opportunity to coordinate messaging with my other regional 
colleagues.
    Thank you so much for bringing attention to this important 
topic and to the needs of seniors in rural America. The 
Medicare program, as you know, provides coverage to 
approximately 9 million beneficiaries in rural and frontier 
areas of this country. We are the primary payer of healthcare 
services in geographically rural areas. We understand and take 
seriously our obligation to ensure the quality of and access to 
healthcare in these areas.
    As someone who implements our agency's programs at a local 
level, I can assure you that we strive to ensure that rural 
beneficiaries are informed about their healthcare choices and 
the quality of healthcare services available to them. Likewise, 
we do our best to keep rural providers informed about our 
policies and help them understand and comply with them. All of 
this is to ensure access to quality healthcare.
    While Medicare's benefit design and statutory payment 
systems generally follow a uniform nationwide approach, we 
recognize the special needs of rural beneficiaries and 
providers. In early 2008, we formed the Rural Health Council, 
an internal CMS council designed to more effectively respond to 
legislation that affects rural beneficiaries and address issues 
of concern from rural health practitioners.
    This new cross-cutting council creates an opportunity, for 
example, for environmental scanning--information gathered at 
the local level--to inform our policies and policymaking. CMS 
regularly exchanges information with national and State rural 
health associations, the State Offices of Rural Health, and 
other such organizations to ensure that we understand the 
environment where rural healthcare providers and beneficiaries 
are working and living.
    We also work quite closely with HRSA's Office of Rural 
Health Policy, represented here today by my colleague Tom 
Morris, to ensure that healthcare providers in rural America 
can function to the best of their ability within the boundaries 
of our statutory and regulatory frameworks. Clearly, both the 
Congress and CMS are mindful of the special nature of rural 
areas. Congress has established and CMS has implemented a 
number of key rural payment programs and incentives for fee-
for-service providers to ensure quality and access.
    An example of this is the critical access hospital 
designation, where certain small hospitals can receive 101 
percent of cost as reimbursement for treatment of Medicare 
beneficiaries. CMS also makes bonus payments to physicians 
furnishing services in health professional shortage areas, or 
HPSAs. It is vitally important to rural communities that they 
can attract and retain physicians, especially primary care 
doctors, and we hope the HPSA bonuses can have a positive 
impact.
    We also strive to ensure that rural beneficiaries, like all 
beneficiaries, have choices in health plan coverage. Medicare 
Advantage enrollment in rural areas has grown significantly. Up 
until 2006, plan options were concentrated in largely urban 
areas, and now plans are available in every region of the 
country, including rural areas, and virtually all beneficiaries 
have access to at least one Medicare Advantage plan option.
    CMS also recognizes the utility and necessity of telehealth 
in the delivery of certain healthcare services. Since 2001, 
Medicare has paid for professional consultations, office 
visits, psychotherapy, and other services delivered via 
telecommunications systems. We provide a process whereby 
providers can recommend new services to be included for 
telemedicine reimbursement to ensure that we maximize the 
opportunity that this technology provides.
    With the passage of the new MIPPA law, more types of health 
facilities will be added to the list of covered telehealth 
facilities, such as hospital-based renal dialysis facilities, 
skilled nursing facilities, and community mental health 
centers. Telemedicine obviously holds a lot of promise to 
increase access to care in rural areas, and we look forward to 
the opportunities to expand its reach.
    Finally, Medicare recognizes the unique challenges facing 
rural ambulance providers. The Medicare fee schedule takes into 
account these challenges through bonus payments for certain 
kinds of ambulance trips.
    Thank you again for the opportunity to testify today. CMS 
appreciates the Committee's ongoing interest in this important 
issue. We believe that by continuing to support the unique 
needs of healthcare providers in rural areas through the 
initiatives described today, we will ensure seniors and 
disabled persons with Medicare will maintain access to quality 
services.
    We are continually considering initiatives to improve 
access and quality within Medicare, such as value-based 
purchasing, electronic health records, and e-prescribing, and 
look forward to continued work with the Committee and our 
partners represented here today to further strengthen our 
stewardship of Medicare.
    I look forward to any questions you may have.
    [The prepared statement of Mr. Hammarlund follows:]

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    Senator Smith. Thank you, John.
    Tom Morris.

STATEMENT OF TOM MORRIS, ACTING ASSOCIATE ADMINISTRATOR, OFFICE 
OF RURAL HEALTH, HEALTH RESOURCES AND SERVICES ADMINISTRATION, 
  U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, WASHINGTON, DC

    Mr. Morris. Mr. Chairman, Senator Dole, members of the 
Committee, thank you for the opportunity to meet with you today 
to discuss rural access issues and the challenges individuals 
face as they age.
    We appreciate your interest and support of rural 
healthcare. I am here today representing the Health Resources 
and Services Administration, commonly known as HRSA.
    HRSA helps the most vulnerable Americans receive quality 
medical care, regardless of their ability to pay. We work to 
expand healthcare to millions of uninsured Americans, mothers 
and children, those with HIV/AIDS, and residents of rural 
areas.
    HRSA to recognize the needs of the elderly population in 
rural areas and continues to focus and evolve its programs to 
best meet those needs. We take seriously our obligation to 
implement enacted legislation. We help train future nurses, 
doctors, and other clinicians, and we try to place them in the 
greatest areas of need.
    Our efforts stress cost-cutting alliances within the agency 
and across the department to deliver quality services. The 
agency also collaborates at the Federal, State, and local level 
with community-based organizations to seek solutions to rural 
healthcare problems. My testimony will describe several HRSA 
activities that touch millions of people in rural America, 
particularly the elderly.
    HRSA's Office of Rural Health Policy (ORHP) is the leading 
proponent of better healthcare services for the 55 million 
Americans who live in rural areas. Housed in HRSA, ORHP has a 
department-wide responsibility to analyze the impact of 
healthcare policy on rural communities. In that role, we inform 
and advise the Secretary, and work to ensure that rural 
considerations are taken into account through the policymaking 
process.
    Some of our efforts include the administration of the 
Medicare Rural Hospital Flexibility Grant Program, the Rural 
Healthcare Services Outreach Program, and the State Offices of 
Rural Health Grant Program. We also fund the Rural Health 
Research Center Grant Program, which is the only HHS program 
specifically devoted to rural health services research. We also 
support the Rural Recruitment and Retention Network, which 
links providers to rural communities in need.
    We collaborate with CMS on a number of levels, as John 
mentioned, including trying to emphasize the use of the Program 
of All-inclusive Care for the Elderly (PACE) in rural areas. 
This program is important because it takes duly eligible 
Medicare and Medicaid beneficiaries and keeps them out of 
nursing homes so they can receive their care in a home-based 
setting.
    The Health Center Program is a major component of America's 
safety net. Due to the efforts of the health centers and the 
generous support of Congress, we recently completed a 
Presidential initiative that created over 1,200 new or expanded 
health center sites.
    Health centers served 16 million patients in 2007, and as 
part of a renewed focus on high-poverty areas last year, 80 new 
health center sites serving 300,000 people were created. As you 
know, poverty is higher in rural areas than it is in urban.
    In the past year, rural health centers served 654,000 
elderly patients. Today, find that over half of the health 
centers serve rural populations.
    Since its inception in 1970, the National Health Service 
Corps has placed more than 28,000 health professionals, 
committed to providing improved access to primary care, oral 
healthcare, and mental health services in underserved areas. 
The NHSC is a service program, and its clinicians go wherever 
the need is great. Approximately 60 percent of NHSC placements 
are in rural areas.
    HRSA also responds to the growing needs of the elderly in 
rural areas with.
    Comprehensive Geriatric Education Grant, which supports 
nursing personnel by preparing nurses and faculty to care for 
the elderly.
    In an era of high gasoline prices, travel costs have become 
an even greater barrier to rural patients, especially the 
elderly. In 2007, HRSA provided 140,000 telehealth visits for 
46 different specialty services to patients in rural 
communities, meaning they did not have to travel to a distant 
medical center to receive specialized care. We estimate that 
this has saved 14 million miles in travel or approximately $7 
million in travel-related costs.
    In conclusion, HRSA takes great pride in the work we do to 
provide quality healthcare for rural Americans. We thank you 
for the opportunity to discuss the agency's programs, and we 
are happy to answer any questions you might have.
    [The prepared statement of Mr. Morris follows:]

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    Senator Smith. Thank you very much, Tom.
    We have been joined by my colleague from Oregon, Senator 
Wyden. We have already done our opening statements, Senator. If 
you have one, we would be happy to receive it now.

             OPENING STATEMENT OF SENATOR RON WYDEN

    Senator Wyden. Mr. Chairman, I apologize for the bad 
manners. I was prosecuting the Healthy Americans Act cause in 
the Finance Committee, and I would just make a couple of very 
quick comments because I know both of you want to go to your 
questions.
    First, I want to commend you, Mr. Chairman, for holding 
this hearing, and Senator Dole and I have talked also often 
about healthcare.
    I think, for Oregonians, we all remember the account 
recently about one of our physicians traveling 5 hours recently 
to Elgin, OR, twice a week to keep the Elgin Family Clinic 
open. If the clinic closes, Elgin residents--and as we both 
know, lots of those folks are seniors--would then be driving to 
La Grande, another big trek for medical care.
    So on the November ballot, the mayor and the residents of 
Elgin are considering creating a health district so that they 
can, in effect, impose yet another tax on themselves to keep 
this small clinic open. We both remember that 30 years ago in 
Condon, that is what they had to do.
    It seems to be that we can do better by our folks in rural 
communities. The three of us are committed to that. Under the 
Healthy Americans Act, for example, we would make it possible 
for all those folks in rural communities, tiny communities to 
be part of larger groups when they purchase their healthcare.
    So they would be in a position to get more for their 
healthcare dollar. They would be protected if they had a pre-
existing condition. Because we make changes in the tax code, 
there is money for low-income folks in these rural areas to get 
subsidies.
    So I am interested in working with both of you on that 
legislation. Senator Dole knows, she--her husband and I have 
talked often about these causes, and I think it is very 
constructive this morning, Mr. Chairman, that you are looking 
at a number of other issues that are causing great hardships 
for the rural health clinics. I commend you for your efforts, 
look forward to working closely with you and Senator Dole on 
it.
    I want to apologize to the Oregon witnesses. I am going to 
be running in and out because the Finance Committee continues 
its hearing. But to commend you for this effort, and to have 
the opportunity to work with both of you is something I 
appreciate.
    Senator Smith. Thank you very much, Senator Wyden.
    John, as you probably know, I am a strong supporter of 
ensuring critical access hospitals have the ability to serve 
rural populations. I think you probably know that the 
designation and its requirements are not perfect. You have got 
to draw the line somewhere, but I am very concerned with the 
lack of flexibility in drawing that line.
    Dennis Burke is a good friend of mine from Hermiston. At 
his hospital, Good Shepherd in Hermiston, they have recently 
had to transfer 17 patients since they became a critical access 
hospital due to the daily 25-bed limit rule. That adds up to a 
cost of about $1,200 per person, per patient to move them 
around.
    That just seems irrational to me, and I wonder if you have 
a rationale for not allowing a more flexible approach to the 
bed limit cap so that hospitals can avoid these kinds of 
expenses and inconveniences to patients?
    Mr. Hammarlund. Senator Smith, I want to let you know, 
first, that one of the duties I take very seriously in my role 
as a regional administrator is to get out of Seattle and to 
meet with hospital administrators and clinic administrators in 
rural areas. In fact, every year, I take a van of experts from 
my office, and we get out into rural areas of Washington and 
Oregon and Idaho.
    In fact, we were in Pendleton just about a year and a half 
ago, listening to the concerns of administrators such as 
critical access hospital administrators. I am and I know CMS is 
very much aware of and understand the issue of the 25-bed 
limit. At this time, that limit is set by statute.
    I understand that you and Senator Wyden have offered a 
legislative fix to address that issue. At the moment, the 
administration doesn't have a position on that bill.
    Senator Smith. You are not opposed to Senator Wyden and my 
bill to add some flexibility to the standard?
    Mr. Hammarlund. Well, we are always interested in 
entertaining comments from the Congress, obviously. I 
understand that our staff had been providing some technical 
assistance to your staff and Senator Wyden's staff to look at 
the bill. The administration just simply doesn't have a 
position at this moment.
    But I do understand the pressures on critical access 
hospitals. As you know, in certain very limited circumstances, 
such as the flooding that we had recently in the Midwest, the 
Secretary does, under limited circumstances, have authority to 
waive that limit.
    Senator Smith. Was it done in the Midwest? Was it waived?
    Mr. Hammarlund. It was.
    Senator Smith. Well, as Senator Wyden points out the 
example, of Elgin, OR. Now that refers to a health clinic, but 
look, I know it is hard to draft rules that fit every 
circumstance. It is hard to write statutes that do. But I think 
we desperately need to have more flexibility in this because if 
you have a rural community, you have a flu outbreak, or you 
have a flood. You have an earthquake or a volcano going off, it 
just seems irrational that this is not more flexible.
    So, I would certainly plead with CMS to support our bill 
and support its hasty enactment because it is, literally, life 
and death to some small communities when they have to shuttle 
patients around or lose critical access designation.
    Mr. Hammarlund. Well, I understand, Senator, and I know 
that CMS staff are very happy to come and work with your staff 
and Senator Wyden's staff on the bill to provide technical 
assistance.
    Senator Smith. Now as it relates to proposed changes in 
rural health clinics rules and regulations, the new rule, as I 
understand it, would apply this standard--let me see here. You 
are going to update the shortage area designation every 4 
years. Is that correct?
    Mr. Hammarlund. We actually use the definition of a 
shortage area as defined by HRSA. But in our particular rule, 
we require a 3-year look-back time period. That is correct.
    Senator Smith. In the past, you have only applied this to 
new applicants, but now you are going back and applying it to 
existing rural communities. Is that correct?
    Mr. Hammarlund. At its core, the proposed rural health 
clinic rule requires that all rural health clinics be located 
in non-urbanized areas and requires that all of them be located 
in an area that has been designated or certified by the 
Secretary within the past 3 years as having an insufficient 
number of needed healthcare practitioners.
    So it is our interest to ensure that the rural health 
clinics that receive a special payment are, indeed, meeting the 
definition and the policy goal of rural because we want to make 
sure that the beneficiaries in those rural areas are getting 
the best care they can and that the rural clinics serving them 
are doing so appropriately under the law. We want to make sure 
that we don't risk treating some rural health clinics 
differently than other rural health clinics.
    Senator Smith. Tom, I understand HRSA has withdrawn a 
proposed rule on the methodology dictating health professional 
shortage area designation, and I applaud you for withdrawing 
that. But I wonder if you can tell me what the HRSA's timeframe 
is for addressing the shortage designation methodology?
    Mr. Morris. Yes, sir, Mr. Chairman.
    We have got over 600 comments on this rule, and so it is 
going to take us a while to go through all of those comments 
and figure out how we might respond to them. Then factor that 
into writing a new proposed rule that takes into account some 
of the issues that have been raised.
    I don't have a specific timeframe for you because the next 
few months will just be spent going through those comments. But 
it is our expectation that eventually we would move to a new 
proposed rule that I think would use all these comments as 
technical assistance for us to make sure that we come out with 
something that balances the needs a little bit better.
    Senator Smith. Well, I appreciate that, and I just note, 
before I turn the questions over to Senator Dole and then 
Senator Wyden, you know, our population is aging. We need to 
get ahead of this curve and not just be reacting to a shortage 
all the time. We are sure prepared to do our part here in 
Congress, and we hope that the rules that you all propound will 
be reflective of that.
    Senator Dole.
    Senator Dole. Thank you.
    Mr. Hammarlund, rural hospitals, of course, are very 
dependent on Medicare and Medicaid reimbursement to stay 
operational, and some rural hospitals in my State depend on the 
Federal Government for up to 70 percent of their revenue. Rural 
hospitals also have a significant uncompensated care burden. As 
a result of this burden, the average North Carolina rural 
hospital received 2.2 percent less revenue than it actually 
costs to provide their valuable services.
    This dire financial situation is simply not sustainable, of 
course, in the long run. In fact, two of our North Carolina 
rural hospitals closed their doors recently, and two have 
declared bankruptcy. Well, I can't speak for the rest of the 
country, but I assume there are similar problems happening 
across America.
    Would you review any recommendations regarding what 
policies could be put in place to ensure that hospitals serving 
high numbers of Medicare patients don't have to close their 
doors?
    Mr. Hammarlund. Well, thank you very much, Senator Dole, 
for that question.
    We certainly want to protect the access to care of the 
beneficiaries in rural and frontier America like we do 
throughout the country. CMS is ever vigilant in trying to 
understand the nature of challenges of the providers such as 
the ones you have in your State.
    I know, from the perspective of somebody who works in a 
regional office, we are on the phone an awful lot talking to 
the constituents in your State and others, trying to help them 
cope, if you will, with the environmental challenges, the 
economic challenges, as well as to understand our laws and to 
comply with them.
    Medicare does have in place, thanks to Congress, a variety 
of special payment mechanisms for certain rural providers, and 
those are in place, of course, because we recognize the special 
needs of the rural communities. We recognize the special 
economic challenges of rural providers, and so we have 
designations such as critical access hospitals or Medicare-
dependent hospitals or sole community hospitals or rural 
referral centers. These are all programs designed specifically 
for rural areas to help keep them functioning within the law.
    We always, of course, are interested in entertaining other 
proposals that the Congress might have, and of course, I can 
always assure you that we will do the very best to deal with 
specific problems that we might have in your State by talking 
to providers and understanding their concerns.
    I don't have any new proposals today, but I am very much 
aware that the Congress and our agency does pay special 
attention to the needs of rural providers through these special 
payment mechanisms.
    Senator Dole. Could you tell me a little bit about a new 
concept that is being promoted called the medical home, which 
has shown, I think, early signs of success in North Carolina? 
The recently passed Medicare bill included increased funding 
for the medical home demonstration program, and I would be very 
interested in hearing how you see that working into existing 
programs.
    Mr. Hammarlund. Thank you, Senator.
    I will confess to you I don't know an awful lot about the 
current demonstration. I am aware of its existence, and I know 
that some of my other colleagues in other parts of the country 
are supporting that more directly than I am out in Region X.
    I do think that it holds a lot of promise, and I am glad to 
know that the MIPPA law expanded its reach. We have not yet 
done all of the analysis of the new MIPPA law and its impacts, 
so I can't really speak to how it may change the demonstration 
program. I would be happy to get you a detailed answer to your 
question about the medical home demonstration for the record 
and for your information.
    [Information submitted by Mr. Hammarlund:]

    CMS is currently designing the Medical Home Demonstration. 
The demonstration was mandated by Section 204 of the Tax Relief 
and Health Care Act of 2006 (TRHCA) in up to eight states to 
provide targeted, accessible, continuous and coordinated family 
centered care to Medicare beneficiaries who are deemed to be 
high need (that is, with multiple chronic or prolonged 
illnesses that require medical monitoring, advising or 
treatment).
    The recently enacted Medicare Improvements for Patients and 
Providers Act of 2008 (MIPPA) increased the funding available 
to conduct the medical home demonstration to $100 million in 
excess of the amount that we would otherwise have had available 
to spend under TRHCA. The TRHCA did not specify a dollar amount 
for the demonstration, but did provide language that presumed 
savings would accrue and be shared with medical home practices. 
We read the MIPPA language to permit us to spend up to $100 
million in excess of project savings, that is, the 
demonstration can go $100 million over budget neutrality.
    MIPPA also gave the Secretary discretion to expand the 
duration and scope of the demonstration, if the Secretary 
determines that the expansion would improve the quality of 
patient care or reduce Medicare spending. Site selection will 
be followed by a solicitation of practices to participate in 
the demonstration. We expect to announce site selection in 
December.

    Senator Dole. Great. Thank you.
    Mr. Morris, like many other States, North Carolina is 
facing that growing shortage of physicians in rural places, and 
this includes general surgeons as well as primary care 
physicians. I am concerned about what this will mean for access 
to care. Are Title VII and Title VIII program funding enough to 
address the workforce shortage, and how can we help get more 
trained professionals into rural areas?
    Mr. Morris. Yes, ma'am. The Title VII, Title VIII, in 
particular the nursing education--basic nursing education 
practice grants we think are an important tool in addressing 
workforce shortages. Also the National Service Corps, where 
more than half of the placements go into rural areas, and they 
can be both primary care, and that would be in family medicine, 
internal medicine. We think that is probably our most effective 
tool at addressing long-standing workforce challenges.
    In addition to those programs, I mentioned briefly in my 
testimony the Rural Recruitment and Retention Network is a 
network of 46 States, rural recruitment and retention 
specialists at the State level who work together to link 
providers who are looking to practice in a rural area with 
rural areas that are trying to recruit a provider.
    Over the last 4 years, that service has placed 2,900 
clinicians into rural areas. If you consider that it costs 
about $20,000 to recruit a physician, that has generated, I 
think, a substantial savings for the rural communities that use 
this.
    In addition, Congress, about a year and a half ago, 
expanded the Conrad 20 program to the Conrad 30 program, which 
allows J1 visa physicians to practice in underserved areas, and 
the great majority of these folks end up in rural areas.
    So, I think those are the tools we have available to 
address the workforce challenges.
    Senator Dole. Great. Thank you very much.
    Thank you, Mr. Chairman.
    Senator Wyden. Mr. Chairman, thank you, and I share many of 
the concerns you and Senator Dole have brought up.
    I would say to Senator Dole, I think you are very much onto 
a key issue in terms of the medical home. In fact, one of the 
policies we advocate in the Healthy Americans Act we call the 
``health home'' so that you can, in effect, get more 
practitioners--and they are especially important in rural 
areas--like the nurses and physician assistants into the 
coordination of care. That seems to have been well received by 
both doctors and nurses and PAs. But I share your view that it 
is an extraordinarily important part of the healthcare future.
    Question for you, Mr. Hammarlund. I understand that you all 
are civil servants, and some of these judgments we are asking 
about are largely political kinds of questions. I share Senator 
Smith's view about the critical access hospitals and getting 
the flexibility. We want to work with you until we can get that 
right. But it is an urgently, urgently, urgently needed piece 
of legislation.
    I think that what you are hearing from us is that, to some 
extent, if you don't get rural healthcare right, you turn rural 
communities into sacrifice zones. They can't survive without 
healthcare. On our watch, the three of us are just saying that 
is unacceptable. So that is what is behind it, and let us 
expedite the process of negotiating the critical access 
hospitals legislation that we have been talking about, S. 1595.
    One technical question that I wanted to ask you, Mr. 
Hammarlund, something I think you can do something about, and 
that is that with respect to the processes you use for 
calculating reasonable cost, what our providers tell us is that 
you are always light-years behind their real costs. For 
example, it seems that the Oregon Office of Rural Health 
indicates that for the average cost of a Medicare visit in 
Oregon, it is $105, about $106, and your reimbursement rate is 
capped at just over $70.
    So, essentially, these hard-hit communities are falling 
behind every single time a rural resident walks in the doors, 
and we just can't stand by and let that go unaddressed. So what 
is being done specifically at your level to keep the Medicare 
payments in line with the realities of what these rural health 
clinics have to spend in terms of caring--giving high-quality 
care to a rural resident?
    Mr. Hammarlund. Thanks for that question, Senator Wyden.
    I may ask that I will provide a more expert and detailed 
explanation for the record that would be more helpful to you. 
But let me take a crack at it.
    As you know, reasonable costs are one mechanism by which 
Medicare can reimburse providers. In fact, in the olden days, 
we were reimbursing most providers by reasonable costs. But in 
the case of many provider categories now, we now pay a 
prospective payment rate rather than reasonable costs.
    So there are a few providers still that are paid under a 
reasonable cost basis. You are absolutely right, they are based 
on historical costs, which we then attempt to trend forward to 
bring them to a currency that would be allowed for appropriate 
coverage of cost for the providers. So that is to say, payments 
are built on a historical cost base that is trended forward to 
try to keep up with current costs.
    I imagine you are correct in that providers will tell us 
that reasonable cost-based payments aren't quite as current as 
need be, and that is certainly something that I am happy to 
take back to the agency's experts and policymakers to see what 
we could possibly do.
    Senator Wyden. First of all, this is the agency's language. 
This is not something that we have concocted because we have 
got a handful of problems. Because if we were somehow seeing a 
more modern system that met the needs of these clinics, we 
wouldn't be asking any questions. But in the June 27th proposed 
rule, the rule that you all have been talking about, the agency 
uses the term ``reasonable cost.'' That is the agency's 
characterization of what is going on.
    What Senator Smith and I find when we go home, these 
clinics are getting clobbered every time they have a visit 
because they are not keeping up. So why don't you get back to 
us for the record? Can you do that within 10 days?
    Mr. Hammarlund. Be happy to.
    Senator Wyden. OK. So get back to us within 10 days with 
respect to, first, how reasonable costs are being calculated, 
and then I would like to know how you would address this 
shortfall and particularly whether you can address it 
administratively? Because this goes right to the heart of how 
rural clinics keep their doors open. Can't keep the doors open 
if they get shellacked in terms of meeting their expenses every 
time somebody comes in the door.
    Mr. Hammarlund. I understand.
    Senator Wyden. OK. Mr. Chairman, thank you.
    Senator Smith. Thank you, Senator Wyden.
    I want to clarify one of the problems that we have in these 
rural clinics. As I understand it, when it comes to 
recertifying, CMS operates on a 4-year timetable and HRSA 
operates on a 3-year timetable. What we need to do is have you 
on the same timetable, and that is what our bill does. Is there 
any reason you all wouldn't support that?
    Mr. Hammarlund. Well, I will start with an answer, Senator. 
We have those different time periods because of different 
statutory frameworks, and my understanding is that you and 
Senator Wyden do have a bill moving forward and that we have 
staff who have been providing some technical assistance to your 
staff on that bill.
    At the moment, my understanding is that the administration 
has not taken a position on that legislation.
    Senator Smith. Well, we hope to pass it in an expedited 
way, and we look forward to your support of it because I think 
that is very important to be on the same page between your 
agencies.
    Do you have any further questions?
    Well, thank you very much. We appreciate you very much, 
John and Tom, for your time here and your service to our 
country.
    Mr. Hammarlund. Thank you, Mr. Chairman.
    Senator Smith. We will now call up our second panel. It 
consists of Margaret Davidson. Ms. Davidson is a board member 
for the National Association of Area Agencies on Aging, as well 
as the Executive Director of Community Connections of Northeast 
Oregon in La Grande, OR. She will discuss the important 
assistance that the Older Americans Act programs and agencies 
on aging provide to seniors living in rural areas to help them 
remain in their homes. Welcome, Margaret.
    We will also hear from Mr. Bill Finerfrock. Did I pronounce 
that right, Bill? All right. He is the Executive Director for 
the National Association of Rural Health Clinics. He will 
discuss services that rural clinics provide to individuals 
living in rural parts of the country. He will also discuss 
challenges encountered by the States and providers when they 
develop creative healthcare delivery models in rural areas.
    Mr. Scott Ekblad will follow him. Mr. Ekblad is the 
Director of the Oregon Office of Rural Health at the Oregon 
Health and Science University. He will discuss the role of the 
State Offices of Rural Health and their work to increase the 
availability of healthcare professionals and quality of care to 
rural residents.
    Mr. Dennis Burke is the President and CEO of Good Shepherd 
Medical Center in Hermiston, OR, my neighbor. He will discuss 
the role of critical access hospitals in rural areas.
    Finally, Mr. Tim Size. Mr. Size is the Executive Director 
of Rural Wisconsin Health Cooperative. He will discuss how 
healthcare reform must include rural perspective and address 
future healthcare workforce needs.
    Thank you, all. Margaret, why don't we start with you?

    STATEMENT OF MARGARET DAVIDSON, BOARD MEMBER, NATIONAL 
      ASSOCIATION OF AREA AGENCIES ON AGING, LA GRANDE, OR

    Ms. Davidson. Thank you, Senator Smith. It is an honor to 
be here.
    My name is Margaret Davidson, and as you said, I am the 
Director of Community Connection of Northeast Oregon in La 
Grande, OR, and I serve as a board member of the National 
Association of Area Agencies on Aging, N4A.
    Thank you for inviting me. It is, like I said, an honor to 
be here representing N4A and the 650 area agencies on aging and 
240 Title VI Native American aging programs that have 
successfully delivered aging services across the country for 
the last 30 years, serving more than 8 million older adults 
with Older Americans Act funding.
    My organization is a private nonprofit corporation that was 
formed in 1969, and in addition to being an AAA, we are also a 
community action program. We have 13,000 seniors in my rural 
area, spread across the vast area of 13,000 square miles. As 
you know, this is a mountainous area, and winter travel 
conditions persist from November through April.
    Much has been written about the aging demographics that our 
country faces, but not as well known is what the rural areas 
face. In my area, the younger generations leave our areas to go 
to college and find family wage jobs while the boomers and 
others move in for the quality of life. As a result, the 23 
percent senior citizens in my area generally have less income. 
In fact, the poverty rate for seniors in my area is 38 percent 
higher than the State average.
    I can relate to the issues around rural health clinics. One 
of my staff people is the mayor of Elgin and has been very 
involved in addressing the health clinic issue in the city of 
Elgin that Senator Wyden mentioned. So she is very involved in 
that.
    I think the best way to articulate the challenges that 
rural area agencies face is to tell you about a typical client. 
Our Mrs. Jones, she is 77, widow of a World War II veteran who 
worked the family farm and at the local mill.
    She never worked outside the home, but she was a community 
volunteer with the PTA, the church bazaar, and just an integral 
member of the community. She lives on $900 a month of Social 
Security. While she can do most things for herself, she knows 
that taking care of her yard and her house is getting to be too 
much for her. While she is proud and doesn't want to ask for 
help, she knows that the time is coming.
    As her budget gets tighter, costs continue to escalate. She 
is being pinched more and more. Last year, she heated only two 
rooms of her home, and still the energy bills were too much for 
her. She often has to choose between food and medicine when it 
comes to stretching her monthly budget, and it is not uncommon 
for her to eat cold cereal for both breakfast and lunch.
    This is where the area agencies on aging come in offering 
information and assistance and direct services to their clients 
like Mrs. Jones. I believe that we are the best-kept secrets 
across the country. Many people know that senior meals are our 
flagship programs, but what we really do is lend a 
knowledgeable ear and provide support and find solutions to the 
common and not-so-common problems that we each will face as we 
age. As my grandmother liked to say, we find a way or make one.
    Through our meals program and transportation, we continue 
to stretch the dollars further and further. Costs are 
escalating. Our meals costs alone--cost to prepare the meals 
has increased 18 percent in the last year. Fuel surcharges from 
our food distributors have doubled.
    As Senator Dole said, our Meals On Wheels volunteer drivers 
are, for the first time, asking for a gas subsidy, and we have 
had to increase the suggested donation at our meal site for the 
first time in 3 years just to help forestall any service 
cutbacks. Our transportation fuel costs have increased by 25 
percent over the last 6 months.
    So I am very supportive of the action that we see Congress 
taking in the supplemental appropriations bills. We would 
encourage you to add supplemental funding for the area agencies 
to address the food and energy costs that we are facing and our 
clients are facing through the Older Americans Act and LIHEAP 
program. Also would encourage you to fulfill the promise made 
last year in the 2006 Older Americans Act reauthorization by 
actually funding those enhanced community-based care 
provisions.
    Also, the importance of the surface transportation bill 
cannot be overstated and encourage that to be fully funded 
again.
    Thank you.
    [The prepared statement of Ms. Davidson follows:]

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    Senator Smith. Thank you, Margaret.
    I think your testimony just points out how difficult a 
place we find these vital programs to seniors. I mean, the 
funding has been stagnant for a decade now, but your costs and 
the population you serve and the miles you cover have not been 
diminishing. We are doing everything we can to move these 
programs to higher levels of funding so that you can 
accommodate these terrible increases that all Americans are 
facing, but particularly vulnerable seniors in rural places 
bear the brunt of this.
    So thank you for being here.
    Ms. Davidson. I appreciate that. I appreciate being here.
    Senator Smith. Bill, take it over.

  STATEMENT OF BILL FINERFROCK, EXECUTIVE DIRECTOR, NATIONAL 
      ASSOCIATION OF RURAL HEALTH CLINICS, WASHINGTON, DC

    Mr. Finerfrock. Thank you, Senator.
    Senator Smith. Hit your mike, too.
    Mr. Finerfrock. Sorry. On behalf of the National 
Association of Rural Health Clinics and the more than 3,000 
federally certified rural health clinics in the United States, 
I want to thank you for the opportunity to talk with you today.
    The Rural Health Clinic Program is one of the largest and 
oldest programs to try and improve access to healthcare, 
primary healthcare in rural underserved areas. It was 
established in 1977 by an act of Congress and provides enhanced 
payments to practices that get certified as RHCs through a 
cost-based reimbursement methodology and mandates the 
utilization of physician assistants and nurse practitioners in 
the delivery of care.
    It has been a very successful program, but we have a number 
of challenges that confront us. As far back as the mid 1970's, 
we recognized that traditional fee-for-service payments weren't 
adequate to sustain rural providers. You have heard from a 
number of folks, the previous witnesses indicating, and as you 
know, Medicare and Medicaid payments are considerably more 
significant in rural communities than they are at other 
locations. So, having adequate payments from those programs is 
critical to the survival of those clinics.
    But it is not even often enough. I think a good example, 
and you have heard it referenced here today, is Gilliam County, 
OR. Back in 1980, they had had a succession of providers 
through the National Health Service Corps, none of whom were 
able to stay in the community, and they decided upon the idea 
of establishing a rural health clinic and staffing it with two 
physician assistants because one of the problems that you have 
in rural communities is the burnout factor, where providers are 
there 24 hours a day, 7 days a week and simply cannot sustain 
that level of work.
    So, they created the rural health clinic, staffed it with 
two PAs. But they determined that there wasn't sufficient 
revenue, and they came up with a very creative idea, which was 
referenced during Senator Wyden's comments about Elgin. They 
created a tax district where, in essence, similar to a property 
tax--well, it is a property tax that they levy on themselves. 
But instead of going to schools, the more traditional concept, 
it goes to support healthcare.
    This past year, that property tax covered 22 percent of the 
budget for the Gilliam County medical center. That meant that 
the Medicare and Medicaid payments fell that far short that 
they, in essence, had to tax themselves in order to generate 
sufficient revenue. But it has worked. I am pleased to be able 
to tell you that that clinic, the PAs and physician who started 
that clinic in 1980, David Jones and Dennis Bruneau and Dr. 
Carlson, are still working with that clinic 30 years later.
    So something that went through a succession of changes is a 
successful model, but it can't continue to work. You made 
reference before to reasonable cost. Their average cost per 
visit in that clinic is $89 a visit, but they only get paid 
$75.63 by Medicare. If Medicare were to pay adequately for that 
clinic, the community wouldn't have to subsidize it to the 
extent that they do. But because Medicare doesn't pay, they at 
least have that tax subsidy. But that is just not right. It 
can't continue.
    Senator Smith. Bill, does Medicare Advantage play into this 
at all? Is it helping?
    Mr. Finerfrock. I don't know whether Medicare Advantage was 
in that particular part of Oregon. It was interesting. We did 
see a number of Medicare Advantage plans that were actually 
paying rural health clinics more than what Medicare was paying 
them. They came in and said we will pay you 101--in one case, 
we will pay you 105 percent of what Medicare paid you. Now part 
of that was because they were getting paid more by Medicare as 
an incentive to go into those markets.
    One of the ironic issues with regard to Medicare Advantage 
is it is great to put the plans out there, but if you don't 
have providers who can deliver the care, what is the good to 
have the card that says I have a card that gives me access to 
all these great benefits if I don't have a provider who can 
deliver it?
    Senator Smith. That is a point I am sure many here 
recognize. I just simply emphasize that Senator Wyden has 
authored the Healthy Americans Act, and I am a co-sponsor of 
that. We are just looking for every way that we can to get 
people insured.
    I am not sure there is a perfect plan out there, but we 
want all Americans to have healthcare. But there is another 
side to that coin, and that is simply if everybody has a 
healthcare policy, but there are no providers--
    Mr. Finerfrock. That is right.
    Senator Smith [continuing]. We have got a problem.
    Mr. Finerfrock. That is right.
    Senator Smith. We have a problem.
    Mr. Finerfrock. I have a piece of paper that is worthless. 
I have a card that looks great, but I don't have anybody. I 
don't have a hospital. I don't have a clinic. I don't have a 
provider. So you are not doing me any good.
    Senator Smith. Exactly right.
    Mr. Finerfrock. What we are saying is we need to focus as 
much attention on ensuring that there is a provider in that 
community to make that card valuable as we have on making sure 
that they have the card. That is where we have fallen short.
    Our frustration on a provider side is that there has not 
been a recognition--I know, with all due respect to the 
previous panel, there was discussion about Medicare does this 
or Medicare--very often a critical access hospital was not 
created by CMS. It was created by Congress.
    Senator Smith. Right.
    Mr. Finerfrock. The Rural Health Clinic Program was created 
by Congress. The health professional shortage area payments 
were created by Congress because the agency itself does nothing 
proactively to try and recognize its own problems. It takes an 
act of Congress to do it.
    States have historically come up--they are considered the 
incubator of great ideas out there. They come up with creative 
and innovative ways of trying to deliver healthcare in their 
States and in their communities. But yet we get to the Federal 
level, and the Federal Government says, well, we are not going 
to pay for that.
    Senator Smith. So they are killing good ideas.
    Mr. Finerfrock. I think that that is--they are not killing 
it. They are dying by neglect. Now because every time somebody 
comes up with a new idea, they have to come to Congress. The 
flip side of that, and this is the irony, and you mentioned 
before the rural health clinics role, in this proposed rule, 
they proposed a dramatic change in the way they want to 
calculate rural health clinic payments.
    Now the statute for rural health clinics and how those are 
to be calculated is the same today as it was in 1977 when it 
was passed by Congress. We have been getting paid the same way 
for the last 30 years. But now in this proposed rule, they say, 
``well, we are going to make a technical change in the way that 
we are going to pay rural health clinics'' and, ``oh, by the 
way, it is going to reduce the amount that you get paid,'' but 
this is the way we now interpret the law.
    Well, if they can interpret the law after 30 years of doing 
it one way, essentially overturn 30 years of interpretation and 
you go and you ask them, ``well, we have got this problem with 
the critical access hospitals'' and their response is, ``oh, 
well, you have to change the law.''
    Senator Smith. We are going to change it, give them 
something else to do.
    Mr. Finerfrock. But why is it that they have the ability to 
do a technical correction to change the payment methodology 
that they have done for one way, but when we bring other 
problems to the attention that for whatever reason they choose 
they don't want to deal with it? Oh, you have to go and change 
the law.
    To me, they have the same flexibility to address your 
problem if they feel that they can change our payment 
methodology after 30 years.
    Senator Smith. I couldn't agree more, and I am sure you all 
recognize that part of the value of having congressional 
hearings and having these good civil servants come here is to 
put light and heat on them and let them know we are watching 
them. Frankly, we are moving. We are going to change some 
things here because this is not working for rural Oregon. So, 
your presence here is valuable, and it is part of our 
strategy--
    Mr. Finerfrock. Well, I want to thank you for all of your 
work, both on this proposed rule, the health professional 
shortage area proposed rule, Senator Wyden's work on both of 
those issues. You have been really excellent advocates, and we 
appreciate it.
    We want to go forward to address these problems. We want to 
work with the Congress. We want to work with CMS to try and get 
these. In my office, I have--it has been there for many years, 
and it says--I cut it out of a newspaper, and it says, ``Worry 
about the patients.'' That has got to be our daily reminder.
    This isn't about rural health clinics. It is not about 
critical access hospitals as institutions. It is about people, 
and those institutions provide healthcare. They make it 
available in those communities. To the extent that we make it 
harder for critical access hospitals, rural health clinics, 
rural physicians to provide care, it is the beneficiaries who 
ultimately lose.
    [The prepared statement of Mr. Finerfrock follows:]

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    Senator Smith. Thank you very much, Bill.
    Mr. Finerfrock. Thank you.
    Senator Smith. Scott, take it away.

  STATEMENT OF SCOTT EKBLAD, DIRECTOR, OREGON OFFICE OF RURAL 
   HEALTH, OREGON HEALTH AND SCIENCE UNIVERSITY, PORTLAND, OR

    Mr. Ekbald. Thank you very much.
    For the record, my name is Scott Ekblad. I am the Director 
of the Oregon Office of Rural Health, and I really appreciate 
being invited to talk here today.
    Senator Smith. Thanks for coming.
    Mr. Ekbald. I am going to start by talking about the State 
Offices of Rural Health. As Tom Morris from the Office of Rural 
Health Policy stated, it is a nationwide program. Some may 
wonder why there is a need for something as specific as an 
Office of Rural Health. The answer is really simple. Rural 
people are generally older, sicker, poorer, more likely to be 
under or uninsured than their urban counterparts.
    Healthcare services are relatively few and far between for 
rural people, and many are accessible only in distant urban 
communities. There are far fewer physicians in rural 
communities, and most of them are overwhelmed. In Oregon, there 
is a physician for every 327 urban dwellers, and 1 for every 
819 rural Oregonians.
    Rural physicians, clinics, and hospitals must survive 
financially with small population bases in an environment in 
which too many of their patients can't pay for their healthcare 
and when Government programs such as Medicare pay less than the 
cost of delivering a service. That is why there are State 
Offices of Rural Health. We help rural providers stay in 
business and meet the needs of their patients.
    There is a State Office of Rural Health in each of the 50 
States. Most are located within State government. About a dozen 
are located at universities, like the one in Oregon, and there 
are even a few private, nonprofit Offices of Rural Health.
    But we all share certain core functions, and one is a State 
clearinghouse for information about rural health. Another is to 
coordinate the activities in the State that relate to rural 
healthcare. A third is to facilitate participation of rural 
healthcare entities in Federal, State, and local programs, 
assist in the recruitment and retention of healthcare 
professionals, and strengthen State, local, and Federal 
partnerships. Those are all fairly broad mandates, but we are 
very creative in doing in each State what is needed.
    Oregon's Office of Rural Health was created by State 
statute in 1979 and actually pre-dated the national program. So 
the Oregon Office of Rural Health is one of the oldest in the 
country. We were part of the State government until 1989, when 
it was relocated to Oregon Health and Science University.
    The synergy that results from being located at a health 
science university--the State's only school of medicine, its 
only school of dentistry, as well as a nursing school and a 
pharmacy school--helps us accomplish our mission, which is to 
improve the quality and availability of healthcare for rural 
Oregonians.
    The Oregon Office of Rural Health is involved in many 
activities to achieve our mission, including preparation of 
rural healthcare workforce, advocacy for rural providers, and 
access to oral and mental health services. But I will focus 
today on the services we provide that are of particular benefit 
to Oregon's rural seniors.
    The first program I want to talk about is the Medicare 
Rural Hospital Flexibility Program. The Flex Program ensures 
the viability of small rural hospitals by ensuring cost-based 
Medicare reimbursement for those that qualify to become CAHs. 
In Oregon, the State legislature also guarantees cost-based 
reimbursement for Medicaid services.
    Dennis Burke, the CEO of one of the finest rural hospitals 
in Oregon, will speak to you about the role of a CAH in a rural 
community. But I want to talk a little bit about what the 
office does with the Flex Program. The Flex Program does much 
more than enable enhanced reimbursement.
    It also grants funds to each participating State to provide 
technical assistance and other services to these hospitals and 
the communities in which they operate.
    These activities help rural hospitals match services to the 
needs of their communities, and I want to give a few examples 
of what the State of Oregon has done with their annual State 
Flex grant. For example, we provide monthly Webcast seminars on 
topics such as preventing surgical infections, effective 
provider recruitment and retention strategies, and updates on 
CMS regulations.
    We provide innovation grants to communities to foster 
appropriate solutions for local problems. We provide training 
for local emergency medical technicians, the hospitals that 
they refer to, and the community clinicians to facilitate a 
collaborative high-quality system of care from pickup by the 
ambulance to transfer to the hospital.
    Senator Smith. Scott, can I ask you on this, the whole 
approach of innovation, is telemedicine a piece of that? Are 
you familiar with what the VA is doing in terms of telemedicine 
and--
    Mr. Ekbald. I am familiar with it. Frankly, I think that in 
Oregon at least, telemedicine has really not quite hit its 
stride as far as applicability to rural communities. The State 
of Oregon or an entity within Oregon, the Oregon Healthcare 
Network received $20 million in funds from the FCC, and it is 
called ``the Last Mile'' funds. That is to lay the cable, 
literally, to the very most remote clinics and hospitals.
    So, once that is in place, I think that we will be able to 
utilize telemedicine quite a bit more. The problem still 
exists--
    Senator Smith. Is it going to be one of our answers, or 
what other problems are related to telemedicine?
    Mr. Ekbald. Well, there are a few more steps before I would 
call it a solution, and one of them is accessing the capital 
that would be required to utilize telemedicine. There needs to 
be a hub where services are provided. So far, that doesn't 
really exist in one central location.
    Senator Smith. Would that be healthcare clinics?
    Mr. Ekbald. Well, and the healthcare clinics also need to 
purchase the equipment that is necessary, but I think that it 
could really be tremendously helpful in providing services that 
are just never going to be cost effective to deliver in a very 
small community.
    Senator Smith. As you think of innovation and how to keep 
rural Oregon connected, I think watching what the VA has been 
doing is just groundbreaking and very impressive. The quality 
of care may not be the same as if you are sitting in the 
doctor's office, but I have watched it, and it is pretty darned 
good. It is better than not having it.
    Mr. Ekbald. I also understand that it is particularly 
useful for younger folks. The younger people are the more 
comfortable interacting in that medium.
    Senator Smith. Yes, I guess that rules me out.
    Mr. Ekbald. You and me both, Senator. [Laughter.]
    Oregon began its State Flex Program in 2000, and we had 
lost roughly 10 hospitals in the preceding decade due to 
financial difficulties. I am happy to say that since the advent 
of the Flex Program, we have not lost one single rural 
hospital. So that alone is a testament to the value of the 
program.
    Senator Smith. How important is Medicare Advantage, in your 
view, to rural health?
    Mr. Ekbald. Well, I am not familiar with any examples, such 
as Mr. Finerfrock stated, of a Medicare Advantage program 
coming in and offering more than what they would--the clinic 
would ordinarily get. So the examples I hear about are ones 
where the Medicare Advantage plans, and we do have a fairly 
large penetration of Medicare Advantage plans in rural Oregon, 
are really putting hospitals in particular in a bind because of 
the payment.
    I want to talk also a little bit about rural health 
outreach and network development grants. They are very 
important. These are grants that go directly to the 
communities. They don't come to the State Office of Rural 
Health, but I did want to mention a couple examples.
    There is one entity in southern Oregon that has received an 
outreach grant in order to integrate behavioral healthcare with 
primary healthcare. A lot of primary care visits, they come to 
the family practices, for example, and really what they have is 
an underlying mental health or behavioral health issue.
    This one rural health outreach grant enabled this 
organization to place a behaviorist in a primary care practice 
so that when the primary care physician identifies an 
underlying behavioral health problem, they can call the 
behaviorist and consult with the patient right on the spot. 
There is no losing people by having them come back for another 
visit. So that is one example of how an outreach grant has been 
used.
    In closing, I want to talk a bit about provider incentives. 
The State Office of Rural Health in Oregon is also proud to 
implement State-based incentive programs for providers, such as 
the State income tax credit program for all rural physicians 
and other providers in our State. We also have a malpractice 
subsidy program in Oregon for rural providers that is 
implemented by our office.
    Also tax credits for volunteer EMTs--
    Senator Smith. Scott, tell me about the malpractice piece. 
Do you help them be able to access and afford insurance?
    Mr. Ekbald. We literally help them pay their premiums.
    Senator Smith. You pay their premiums.
    Mr. Ekbald. As I am sure you know, malpractice premiums in 
Oregon are particularly high, and we were at risk of losing 
literally all obstetrical services in rural Oregon.
    Senator Smith. When the cap was taken off--did they explode 
then?
    Mr. Ekbald. Actually, they were quite high before that, and 
now the situation is even worse.
    Senator Smith. But because of the program, your physicians 
are able to get insurance because you help them pay for it?
    Mr. Ekbald. Yes. Yes, that is true. However, it is a finite 
pot of money, so to speak. It is not a funding stream, and so 
we are due to run out of those funds sometime in 2010 or 2011. 
So we are working with the legislature to see how we might be 
able to continue that program.
    Senator Smith. Very good.
    Mr. Ekbald. So, in closing, please allow me to thank you 
and your colleagues for inviting us here today and for your 
support of House Resolution 6331. The provisions that were 
mentioned earlier are very important to Oregon and to many 
other States.
    I hope that we can also count on your support for the 
funding that comes along with the Labor-HHS-Education bill 
because even though, for example, the Flex Program was 
reauthorized under H.R. 6331, the funding comes through Labor-
HHS-Education bill. For the reasons that I have just mentioned, 
they are so important to our State.
    So thank you very much.
    [The prepared statement of Mr. Ekblad follows:]

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    Senator Smith. Thank you very much, Scott.
    Dennis, my friend, tell us about critical access.

  STATEMENT OF DENNIS BURKE, PRESIDENT AND CEO, GOOD SHEPHERD 
                 MEDICAL CENTER, HERMISTON, OR

    Mr. Burke. Senator Smith, it is nice to be here. My name is 
Dennis Burke.
    You are very familiar with our community, but for those in 
the room who aren't, I will just go over a little bit of 
details about us. I am President of Good Shepherd Healthcare 
System in Hermiston, OR, where I have had the pleasure of 
serving for the past 20 years.
    Hermiston is a rural community with approximately 17,000 
residents located in north-central Oregon near the Columbia 
River. We enjoy a mild desert climate and have a lot of 
recreational opportunities. Good Shepherd Healthcare System 
serves a population of about 50,000, and part of our mission is 
to improve access to healthcare services.
    We offer a broad array of general medical, surgical, and 
obstetrical services. We have a busy 24-7 emergency room that 
is designated as a Level 3 trauma center. Our emergency room 
also serves as a major primary care safety net for the region. 
We provide home health and hospice care and a transportation 
service to assist people in getting to their medical 
appointments, which, by the way, is highly utilized by seniors.
    Our community has seen a significant growth in the number 
of seniors targeting Hermiston and the vicinity for retirement. 
In fact, the city of Hermiston now actively promotes Hermiston 
as a designation retirement community. We appreciate the 
supportive programs that have come through our Government that 
have strengthened America's smallest hospitals that serve its 
most vulnerable communities. The Critical Access Hospital 
Program is a prime example of this support.
    Following Good Shepherd Healthcare System's enrollment in 
the critical access program 2\1/2\ years ago, I am pleased to 
say that Good Shepherd Healthcare System is now on solid 
financial footing, following several years of financial losses.
    While much is good, there are opportunities for improving 
healthcare and access in rural America, and I would like to 
focus on our two top priorities in Hermiston. Recruitment and 
retention of professional and technical personnel is our 
biggest challenge. Unless there are system changes, this 
problem is only projected to get worse.
    In our experience, like that of many rural communities, our 
shortages are not for a lack of applicants. We have many 
interested and qualified students that cannot get into 
healthcare programs due to a lack of capacity within the 
educational system. Our local community college has three 
qualified applicants for every available position in their 
nursing program. We rely heavily on the college for quality 
nurses.
    Several years ago, we formed a partnership with our sister 
hospital in Pendleton to fund an additional instructor 
position. This has provided an additional six to seven new 
nursing graduates per year, which has been very favorable for 
both our facilities.
    As scarcity of professionals has increased, market 
pressures have pushed their compensation higher, making it 
difficult for colleges to offer the competitive salaries 
necessary to entice qualified professionals back into teaching. 
Much more needs to be done across our country to increase 
access and availability for qualified students who wish to 
pursue healthcare careers.
    Second, I would like to speak to the Critical Access 
Hospital Program 25-bed cap. Good Shepherd Healthcare System 
runs an average census of approximately 17 patients per day. 
But that census has varied this past year from a low of 10 to a 
truncated high of 25, the point at which in order to be 
compliant we must transfer patients to other hospitals.
    Good Shepherd Healthcare System's large obstetrical program 
compounds the problem. Over the past year, our OB daily census 
has ranged from 0 to 11 patients. Obstetrical patients count 
toward the critical access hospital 25-bed cap. This means that 
beds available for other acute care patients in our community 
can vary from the full 25 beds down to 14, depending on the 
daily OB census.
    While OB services generally have little to do with Medicare 
patients, they certainly have an impact on our seniors' access 
to care depending on the luck of the draw when they present for 
acute care services. Not only is a transfer due to the 25-bed 
limitation disruptive and inconvenient for patients and their 
families, it also involves a degree of unnecessary risk to the 
patient and adds significantly to the cost of care.
    We doubt that any of the transfers that we have made have 
resulted in significant cost savings at another facility, 
especially when considering the additional $1,200, at minimum, 
of expenses that the transport adds.
    I want to thank you, Senator Smith and Senator Wyden, for 
your understanding of the problem that the 25-bed cap has 
caused and your collective efforts in developing the Critical 
Access Hospital Flexibility Act. This bill provides for use of 
an annual average daily census rather than a cap as a 
determinant for critical access hospital eligibility. Use of an 
annual average census standard would free critical access 
hospitals from the difficult choice of transferring patients 
and risking goodwill or keeping the patient and risking 
essential reimbursement.
    We believe this would be a far better delimiter, and we 
encourage the Subcommittee to support this legislation. This 
modification of the critical access program will strengthen 
America's smallest hospitals and enable them to fulfill their 
mission, enhancing access in their communities, which we are 
prepared to do.
    I appreciate the opportunity to be here and would be open 
to questions.
    [The prepared statement of Mr. Burke follows:]

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    Senator Smith. Well, thank you, Dennis.
    Look, I guess I wouldn't be in this business if I wasn't an 
optimist. But we really do need to get this changed, and we do 
have a good bill that will force the change. I am very hopeful 
that we will get this done sooner than later because I do 
understand, in a very personal way, why you have to have that 
flexibility or else a lot of rural hospitals just simply won't 
be there when people need them.
    Mr. Burke. That is right.
    Senator Smith. Tim Size, thank you for being here from 
Wisconsin.

  STATEMENT OF TIM SIZE, EXECUTIVE DIRECTOR, RURAL WISCONSIN 
               HEALTH COOPERATIVE, SAUK CITY, WI

    Mr. Size. Good morning, sir. It is a pleasure.
    I am Tim Size. I am Executive Director of the Rural 
Wisconsin Health Coop. A little background, the coop is a 
collaborative of 34 rural hospitals. Twenty-eight are critical 
access, so six are PPS.
    Before I get into my prepared remarks, I would really like 
to support what Dennis just said. It is exactly what we are 
seeing in Wisconsin. I actually got a call from one of the 
hospitals last winter. ``What am I supposed to do? I have 25 
people in-house, and I have a mother coming to the hospital 
ready to deliver?''
    I mean, basically, we are forced to go out of compliance or 
do very inappropriate patient care.
    Senator Smith. What do you do, Tim? Do you shove them off 
to a clinic somewhere?
    Mr. Size. I think in that situation, we just--you do the 
right thing for the patient.
    Senator Smith. Yes.
    Mr. Size. We also had a flu epidemic in some of our 
communities last--exactly what you were talking about was 
exactly the problem. Earlier, under the current law, somehow 
our regional offices were able to be flexible. But then we got 
the word this year pretty much if it is not like on 
international TV--it is a flood--don't expect any relief. So I 
am very, very thankful for the bill that you have introduced.
    Senator Smith. Well, hopefully, it doesn't take another 
flood to get it passed.
    Mr. Size. The flood is all right because it is on TV, and 
so then we get the waiver. It is flu that is not as obvious.
    Anyway, I would like to get to my prepared remarks. I would 
like to address three issues today that I believe, as well as 
the hospitals with whom I work, must have significantly greater 
attention here in the Nation's capital, but also back in our 
States.
    We need to make health workforce a priority. I think a 
number--it is a thread through a lot of us who have spoken this 
morning. We need to see that Medicare Advantage plans are held 
accountable, and my written testimony goes into some detail. 
But I will just highlight a bit in a second. We also need to 
invest in healthy communities.
    I actually testified in this room, I think, about 20 years 
ago to the same committee, and I can tell you today, being a 
baby boomer and about 62, I guess, I am taking it a lot more 
personally than I did 20 years ago.
    Senator Smith. Yes.
    Mr. Size. So I am hoping you attend to some of these 
issues.
    Both nationally and in Wisconsin, rural health's many 
successes are a testament to the endurance and creativity of 
rural communities. Federal initiatives, whether they be formal 
reform or informal, need to build on this strength and not 
weaken it.
    Regarding workforce, the soon-to-explode retirement of baby 
boomers will lead to a critical shortage of workers. Our 
current approach to growing the next generation of doctors, 
nurses, pharmacists, et cetera, is in critical disarray, and I 
don't use that description lightly. I think you can think about 
Keystone Cops. We don't know where we need to go, and we don't 
know how to get there.
    I think Dennis mentioned some really important points about 
the pipeline, and that is a major problem. It is not the only 
problem.
    Many rural communities already face staff shortages. We are 
actually even beginning to hear our urban colleagues having 
problems. But I can assure you, and this is a quote from one of 
my board members at our last strategic planning session, that 
when it starts raining in the suburbs, you can expect a tsunami 
in rural communities. We get the mal-distribution on top of the 
supply problems, and the supply problems are coming.
    The Association of Academic Health Centers has just 
released, I think last week, ``Out of Order, Out of Time: The 
State of the Nation's Health Workforce,'' which focuses 
attention on the critical need for a new collaborative, 
coordinated national health workforce planning initiative. They 
draw three critically important conclusions, all of which I 
strongly agree with, and it is what we are seeing in Wisconsin.
    A broader, more integrated national strategic vision than 
our historic approach to health workforce policymaking and 
planning is needed if complex and urgent health workforce 
issues are to be addressed effectively.
    Two, a new mechanism is needed to serve the currently 
unfilled integrative role that existing health workforce 
policymaking and planning processes are not designed and are 
ill equipped to serve.
    Three, it is critically important to act immediately to 
develop and implement an integrated comprehensive national 
health workforce policy before intensifying health workforce 
needs outpace available resources, putting U.S. seniors and the 
rest of the country at substantial risk.
    Regarding Medicare Advantage, MA plans are gaining rural 
market share. We are now at actually 23 percent in rural 
Wisconsin, which is the State-wide average. The potential 
consequences to rural health are significant and potentially 
quite negative.
    I would like to digress for a second and say that I am kind 
of agnostic. I am not here to talk for Medicare Advantage or 
against it, but to talk about current implementation.
    In a 2007 report to the Department of Health and Human 
Services Secretary, his National Advisory Committee on Rural 
Health noted that rural America cannot wait to see what MA does 
or doesn't do. Potential problems need to be identified and 
resolved before the MA program becomes entrenched and less 
readily adjusted. If not, the negative impact on the rural 
healthcare infrastructure could take a generation to rebuild.
    Medicare beneficiaries should not be required to lose 
access to local services to obtain the promise of increased 
benefits. The National Rural Health Association has made 
numerous specific recommendations about how CMS should enhance 
the accountability required of Medicare Advantage plans, and I 
have detailed them in my written testimony.
    Rural health provides care to small communities at some 
distance from large urban hospitals and clinics. We do so even 
as patients are attracted out of our communities or forced out 
of town. For example, the 25-bed cap.
    Laws have long been required that insurers respect the 
right of people to receive healthcare locally when they are 
enrolled in closed network plans. These laws will continue to 
be stretched and tested. Protecting access to local care for 
Medicare Advantage must be a high priority.
    Regarding health communities, the American Hospital 
Association is definitely on target when they call for 
America's hospitals to get serious about individual and 
community wellness. In their agenda, ``Health for Life: Better 
Health, Better Healthcare,'' the AHA says without change, 
America's healthcare capabilities and finances will be 
overwhelmed.
    As a society, we must provide access to education and 
preventive care, help all reach their highest potential for 
health, and reverse the trend of avoidable illness. As 
individuals, we must achieve healthier lifestyles, take 
responsibility for our health behaviors and choices, and each 
one of us must take action.
    Reform is about people getting the care they need at a cost 
our country can afford. Equally important, reform must help 
individuals and communities to become healthier, to not need as 
much healthcare. If the growing need for care is not reduced, 
costs will explode, whatever the form of reform or adjustments 
we make.
    Unlike Lake Wobegon, two out of three counties in rural 
Wisconsin are less healthy than average. But it is no surprise. 
We predict them to be so. They are less healthy not because of 
poor rural healthcare. It is due to too much smoking, too much 
drinking, and in my case, too much eating. It is due to too 
little exercise, too little education, too few jobs, and too 
low income.
    Reform without the bigger picture will fail. At the very 
least, healthcare reform must lay down a roadmap to make our 
seniors and communities as healthy as we know they can be.
    Thank you.
    [The prepared statement of Mr. Size follows:]

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    Senator Smith. That is excellent, Tim.
    Many of you have talked about the shortage of providers, 
and I just wonder--why we don't have more people in medical 
school and nursing training? I know so many young people with 
superior grades can't get into these programs. What is holding 
them back, Tim? Is the cost of medical education just so high 
that--
    Mr. Size. I am not an expert on workplace education. We 
have worked a lot with our educational institutions on that 
very issue. There are multiple problems.
    One is to produce graduates is not the same thing as 
producing graduates that are sensitive and able and interested 
in working in rural America. So there is a burden that I think 
academia needs to take on to focus more on their responsibility 
to produce graduates that will work in a variety of settings.
    My sense that we, over the last few years, have not 
anticipated the baby boomers and what that will do in terms of 
massive numbers of people exiting the health workforce as well 
as large new numbers of patients coming into our systems. So, 
in fact, we have kind of been holding our own on average, 
continuing to bump along with mal-distribution problems in 
rural America.
    However, now--and it is something I am really scared 
about--part of the problem is we are not real good planning 5, 
10 years down. We need to be forecasting today what doctors, 
nurses, pharmacists, physical therapists, nurse practitioners 
we need 10 years from today. Because if we don't get them in 
school today and next year, we will have the shortage in 10 
years.
    Maybe that gets messed around a little bit with J1 and all 
that stuff, but we have a responsibility, I think, to grow our 
own. Right now, the focus in our State is basically just to get 
our arms around the description of what current problems we 
have and what we are forecasting those problems to be like once 
the real baby boomer bulge starts to work its magic.
    That is one of the big problems with the proposed HPSA 
rule. It assumes a level of data that is simply not there. So 
we have a lot of work. We have got to take it a lot more 
seriously. I have no involvement with the Association of 
Academic Medical Centers, I just came across their report last 
week when it was released. It is thinking like that that we 
have to pay attention to.
    I know the Chronicle of Higher Education last winter also 
had a major report on exactly the same issue. We are really, 
really behind in our planning.
    Senator Smith. Scott, you are located at OHSU. I know you 
may not have any responsibility for this area, but do you know 
whether the medical school, the dental school, and the nursing 
school are doing more to increase enrollment? They have sure 
got a lot of applicants.
    Mr. Ekbald. We are trying very hard to increase the pool of 
candidates, but we are really quite restricted physically with 
the location of Oregon Health and Science University.
    Senator Smith. That is why we built that cable car there.
    Mr. Ekbald. As soon as we get the new building at the 
bottom of the cable car, we will be in good shape.
    But I just want to echo what Tim said, it is not just 
production of providers. It is distribution, and most of the 
problems in distribution to rural areas has to do with economic 
challenges. I mean, primary care is the backbone of a rural 
healthcare system. Yet they are the very lowest paid of all the 
physician specialties.
    There has got to be more incentives for people to choose a 
primary care specialty and then to choose a rural practice. The 
research clearly shows that people will end up practicing in 
close proximity to where they were trained. Well, if we can't 
train them in rural areas, we can't expect them to go there.
    You can't spend 8 years training in, you know, Portland is 
a fairly small city, let alone New York or Boston. So don't 
expect them to move to a rural area. It is really unrealistic. 
So--
    Senator Smith. Any other thoughts? Closing comments?
    Yes, Bill?
    Mr. Finerfrock. There is a few years ago, there was a movie 
out called ``A Field of Dreams,'' and one of the seminal lines 
in that was, ``If you build it, they will come.'' Well, I think 
what Scott just touched on is the corollary in healthcare, 
which is, ``If you pay them, they will come.'' Part of the 
problem that we have with rural providers is that what we pay 
rural providers to deliver care in rural communities is 
dramatically less than what we would pay them to provide the 
same care. So if one looks at it from an economic standpoint 
strictly, then your reaction is I will go provide, I will live 
in suburban Portland. I will have access to more urban 
environment, potentially different school opportunities and 
options than I would have in a rural community.
    We have to overcome those payment disincentives in order to 
get the providers to go out there. It is not the only thing, 
but it is a key part of it.
    Senator Smith. Tim, you had a--
    Mr. Size. Yes, I agree with Bill on the economic 
incentives. But I would also like to get in the record 
something I think Wisconsin is doing right and is a model for 
other States. We have created a rural medical school inside our 
medical school called the Wisconsin Academy of Rural Medicine. 
We are now beginning our third year. When that is fully up and 
going, that will be 25 rural-focused medical students per year.
    We are basically building on a strategy of recruiting young 
people from rural communities, who have a particularly 
community and primary care orientation. Then--the first and 
second year is in Madison. But the third and fourth year are 
with academic partners around the State. In fact, they are 
having a medical school experience in rural areas with rural 
mentors, and they have been chosen for a higher probability of 
going back to rural.
    Senator Smith. Do you know whether, either Wisconsin or 
Oregon, they have incentives in terms of admission if they 
commit to go to rural?
    Mr. Size. We have--that was a very interesting question. I 
mean, the University of Wisconsin is a very prestigious medical 
school, and sometimes I think some members of the admissions 
committee, it is all about the so-called ``best and 
brightest,'' but very narrowly defined with MCATs and the grade 
point averages.
    We are saying, look, the research is really clear. Once you 
get a certain point of smartness, to be a good doctor, it is as 
much about relationship--
    Senator Smith. Exactly. I just know a lot of kids in 
northeastern Oregon who wanted to go to medical school, but 
they were not admitted. Had there been any preferences given to 
the actual need in society would that have benefited them? They 
are smart enough. My heavens.
    Mr. Size. Well, we created the slots. Basically, we have 25 
slots that are being held for rural, and they are plenty smart 
enough to meet and do the work. So, we stopped looking at the 
grades, stopped looking at MCAT, and look at other attributes.
    Senator Smith. Any other final comments? Yes, Dennis?
    Mr. Burke. I just wanted to mention, along that same vein, 
that we have the first medical school opening in about 60 years 
in Yakima, WA. The Pacific Northwest is the most under medical 
school to population area of any place in the country. The new 
Pacific Northwest University of Health Sciences, which focuses 
on students from rural areas with the idea of returning them to 
the rural areas, they are taking their first class of 30 
medical students this September.
    Good Shepherd Healthcare System is signed up as a clinical 
rotation site. Two years after intense academics, we will be 
looking forward to having them on our campus.
    Senator Smith. There you go.
    Mr. Burke. That is a very exciting concept and program.
    Senator Smith. Well, listen, I thank you all so very much. 
Your testimonies added, I think, greatly to the Senate record, 
and you have helped us to turn up some light and heat on the 
parties that be. So our time is well spent this morning because 
you have come this long way to help us, and thank you.
    We are adjourned.
    [Whereupon, at 12:06 p.m., the hearing was adjourned.]


                            A P P E N D I X

                              ----------                              


           Prepared Statement of Senator Robert P. Casey, Jr.

    Senator Smith, thank you for bringing us together today to 
discuss the important issue of health care for our older 
citizens who live in rural areas. This is an issue that too 
often gets ignored, and I appreciate your drawing our attention 
to it.
    Rural health care is an important issue that deserves 
consistent attention, especially with respect to our older 
citizens who do not always have the means or ability to travel 
the many miles that are often necessary to get the health care 
they need. Many older citizens also live on fixed incomes and 
the high gas prices of recent months underscores this issue.
    In Pennsylvania, 48 or our 67 counties are classified as 
rural. We also have the second highest number of residents over 
the age of 65 in the country. We must carefully examine whether 
or not we are meeting the current health care needs of our 
older citizens who live in rural areas, and also continue to be 
innovative and farsighted in designing new ways to help these 
individuals, especially as the baby boom generation retires and 
enters this demographic.
    Access to providers continues to be a challenge in rural 
areas. In 2007, only 12 percent of primary care physicians in 
Pennsylvania practiced in rural areas. This translates into 
approximately one physician per 1300 residents. In urban areas, 
the ratio is approximately one physician per 650 residents. We 
must continue to work to increase the number of health care 
practitioners in rural areas, and examine how we can utilize 
nurse practitioners, certified nurse midwives and other health 
care providers to meet the needs of older citizens in rural 
areas.
    Providers in rural areas face their own set of challenges. 
As I mentioned before, they have proportionately greater 
numbers of patient load and often have fewer resources to care 
for those patients. Furthermore, rural providers tend to see 
more patients covered under Medicare and Medicaid.
    The Medicare Improvements for Patients and Providers Act 
which became law earlier this month included several provisions 
for rural health care. Telehealth services were expanded, FLEX 
grants were extended and payments for sole community hospitals 
and critical access hospitals were improved. These were 
important changes, but there is more work to do.
    I would like to thank Senator Smith again for organizing 
this important hearing. I look forward to hearing the testimony 
of the witnesses and working with my colleagues to find 
solutions to the challenges of health care for our older 
citizens who live in rural areas.

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