[Senate Hearing 115-702]
[From the U.S. Government Publishing Office]


                                                    S. Hrg. 115-702

                     RURAL HEALTH CARE IN AMERICA: 
                      CHALLENGES AND OPPORTUNITIES

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

                                HEARING

                               BEFORE THE

                          COMMITTEE ON FINANCE
                          UNITED STATES SENATE

                     ONE HUNDRED FIFTEENTH CONGRESS

                             SECOND SESSION

                               __________

                              MAY 24, 2018

                               __________

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
                                     
                                     
            Printed for the use of the Committee on Finance            

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                    U.S. GOVERNMENT PUBLISHING OFFICE                    
38-094 PDF                  WASHINGTON : 2019                     
          
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                          COMMITTEE ON FINANCE

                     ORRIN G. HATCH, Utah, Chairman

CHUCK GRASSLEY, Iowa                 RON WYDEN, Oregon
MIKE CRAPO, Idaho                    DEBBIE STABENOW, Michigan
PAT ROBERTS, Kansas                  MARIA CANTWELL, Washington
MICHAEL B. ENZI, Wyoming             BILL NELSON, Florida
JOHN CORNYN, Texas                   ROBERT MENENDEZ, New Jersey
JOHN THUNE, South Dakota             THOMAS R. CARPER, Delaware
RICHARD BURR, North Carolina         BENJAMIN L. CARDIN, Maryland
JOHNNY ISAKSON, Georgia              SHERROD BROWN, Ohio
ROB PORTMAN, Ohio                    MICHAEL F. BENNET, Colorado
PATRICK J. TOOMEY, Pennsylvania      ROBERT P. CASEY, Jr., Pennsylvania
DEAN HELLER, Nevada                  MARK R. WARNER, Virginia
TIM SCOTT, South Carolina            CLAIRE McCASKILL, Missouri
BILL CASSIDY, Louisiana              SHELDON WHITEHOUSE, Rhode Island

                     A. Jay Khosla, Staff Director

              Joshua Sheinkman, Democratic Staff Director

                                  (ii)
                                  
                                  
                            C O N T E N T S

                              ----------                              

                           OPENING STATEMENTS

                                                                   Page
Hatch, Hon. Orrin G., a U.S. Senator from Utah, chairman, 
  Committee on Finance...........................................     1
Wyden, Hon. Ron, a U.S. Senator from Oregon......................     3

                               WITNESSES

Pink, George H., Ph.D., deputy director, North Carolina Rural 
  Health Research Program; senior research fellow, Cecil G. Sheps 
  Center for Health Services Research; and Humana distinguished 
  professor, Gillings School of Global Public Health, University 
  of North Carolina, Chapel Hill, NC.............................     7
Mueller, Keith J., Ph.D., interim dean, College of Public Health; 
  director, RUPRI Center for Rural Health Policy Analysis; and 
  Gerhard Hartman professor of health management and policy, 
  University of Iowa, Iowa City, IA..............................     9
Martin, Konnie, chief executive officer, San Luis Valley Health, 
  Alamosa, CO....................................................    10
Thompson, Susan K., M.S., B.S.N., R.N., senior vice president, 
  integration and optimization, UnityPoint Health; and chief 
  executive officer, UnityPoint Accountable Care, West Des 
  Moines, IA.....................................................    12
Murphy, Karen M., Ph.D., R.N., chief innovation officer and 
  founding director, Glenn Steele Institute of Health Innovation, 
  Geisinger, Danville, PA........................................    14

               ALPHABETICAL LISTING AND APPENDIX MATERIAL

Hatch, Hon. Orrin G.:
    Opening statement............................................     1
    Prepared statement...........................................    43
    ``Ensuring Access to Emergency Services for Medicare 
      Beneficiaries in Rural Communities,'' Medicare Payment 
      Advisory Commission, May 24, 2018..........................    45
Martin, Konnie:
    Testimony....................................................    10
    Prepared statement...........................................    50
    Responses to questions from committee members................    58
Mueller, Keith J., Ph.D.:
    Testimony....................................................     9
    Prepared statement...........................................    64
    Responses to questions from committee members................    71
Murphy, Karen M., Ph.D., R.N.:
    Testimony....................................................    14
    Prepared statement...........................................    79
    Responses to questions from committee members................    84
Pink, George H., Ph.D.:
    Testimony....................................................     7
    Prepared statement...........................................    89
    Responses to questions from committee members................    96
Thompson, Susan K., M.S., B.S.N., R.N.:
    Testimony....................................................    12
    Prepared statement...........................................   104
    Responses to questions from committee members................   109
Wyden, Hon. Ron:
    Opening statement............................................     3
    Prepared statement...........................................   122

                             Communications

American Ambulance Association...................................   123
American Clinical Laboratory Association (ACLA)..................   125
American Hospital Association....................................   128
Association of Air Medical Services (AAMS).......................   134
Centerstone......................................................   137
Medicare Dependent Rural Hospital Coalition......................   144
National Association of Chain Drug Stores (NACDS)................   147
National Rural Health Association (NRHA).........................   149
Point of Care Testing Association (POCTA)........................   156
Rural Referral Center/Sole Community Hospital Coalition..........   159

 
       RURAL HEALTH CARE IN AMERICA: CHALLENGES AND OPPORTUNITIES

                              ----------                              


                         THURSDAY, MAY 24, 2018

                                       U.S. Senate,
                                      Committee on Finance,
                                                    Washington, DC.
    The hearing was convened, pursuant to notice, at 9:07 a.m., 
in room SD-215, Dirksen Senate Office Building, Hon. Orrin G. 
Hatch (chairman of the committee) presiding.
    Present: Senators Grassley, Crapo, Roberts, Enzi, Thune, 
Burr, Portman, Cassidy, Wyden, Cantwell, Carper, Cardin, Brown, 
Bennet, Casey, Warner, McCaskill, and Whitehouse.
    Also present: Republican staff: Jay Khosla, Staff Director. 
Democratic staff: Joshua Sheinkman, Staff Director.

 OPENING STATEMENT OF HON. ORRIN G. HATCH, A U.S. SENATOR FROM 
              UTAH, CHAIRMAN, COMMITTEE ON FINANCE

    The Chairman. The hearing will come to order.
    I would like to welcome everyone to today's hearing. The 
topic today is rural health care, which is a critical issue for 
virtually every member of this committee and so many others.
    I have long considered it a special mission to create the 
same rural payment opportunities that many of our Nation's 
urban counterparts enjoy. Representing a western State, I 
understand the challenges our rural hospitals and providers 
face to deliver high-quality medical care to families in 
environments with more limited resources.
    In the Senate, rural health-care policy boasts a long 
history of collaboration and cooperation on both sides of the 
aisle. Take, for example, back in 2003 when we passed the 
Medicare Modernization Act. The MMA included a comprehensive 
health-care package tailored specifically with rural 
communities, hospitals, and providers in mind. The MMA finally 
put rural providers on a level playing field with their 
neighbors in larger communities.
    The law also put into place common-sense Medicare payment 
provisions that help isolated and underserved areas of the 
country provide access to medical care as close to home as 
possible.
    However, while the vast majority of rural health payment 
policies enacted in the MMA were permanent, some were only 
temporary. In the years following, these temporary provisions 
have become known as the Medicare extenders. As many of us 
know, the problem with extenders is that annual debate over 
necessary funding often takes priority over developing a more 
robust, strategic plan for the future.
    Although some partisan and bipartisan health-care policies 
have since altered Medicare payments, many rural and frontier 
health-care providers still face significant obstacles 
attempting to successfully participate in Medicare's delivery 
system reforms and bundled payment arrangements.
    And while these changes continue to emphasize new ways to 
pay providers, Medicare's existing strategies to preserve 
access to health care in rural areas still rely on special 
reimbursement programs that either supplement inpatient 
hospital payment rates or provide cost-based hospital payments.
    Now, these special payment structures may work just fine in 
certain parts of the country. But even with the wide range of 
special Medicare rural payment programs, some smaller 
communities are home to hospitals that still find it hard to 
achieve financial stability. The reasons, as we will learn from 
the expert witnesses on the panel today, are complex and 
multifaceted.
    For example, when compared to their urban counterparts, on 
average, the 4 million Medicare beneficiaries living in rural 
and frontier areas are less affluent, suffer from more chronic 
conditions, and face higher mortality rates.
    To make matters worse, small rural hospitals continue to be 
more heavily dependent on Medicare inpatient payments as part 
of their total revenues. At the same time, we are seeing a 
steady nationwide shift away from inpatient care to providers 
offering more outpatient services, it seems to me.
    Many rural hospitals serve as a central hub of community 
service and economic development, but some struggle to keep 
their facilities operating in the black in order to meet local 
demands for a full range of inpatient, outpatient, and 
rehabilitation services.
    Resolving these issues is no easy task. Clearly, for some 
communities, Medicare's special rural payment structures may 
stifle innovations that could pave the way for more sustainable 
rural health-care delivery systems.
    One consistent theme that we will hear from our witnesses 
today is the need for flexibility. They are not asking Congress 
for a one-size-fits-all Federal policy. They want the 
flexibility to design innovative ideas that are tailored to 
meet the specific needs of the communities they serve. They 
need the Federal Government to support data-driven State and 
local innovations that have the promise to achieve results, 
increasing access to basic medical care, lowering costs, and 
improving patient outcomes.
    But the Federal Government cannot tackle this challenge 
alone. And while I was pleased to see CMS release its rural 
health strategy earlier this month, I believe that this 
administration, led by HHS Secretary Azar, still needs to 
improve coordination across the agencies within the Department 
to help prioritize new rural payment models while also reducing 
regulatory burdens on rural and frontier providers.
    State and local officials must be aggressive in their 
efforts to design transformative policies and programs that 
meet their unique rural health-care needs.
    And the Federal Government really needs to listen. We 
should listen to what these folks have to say and what some of 
the solutions really are.
    In my view, States should be the breeding ground to test 
new ideas. However, it is not sustainable for every small town 
to have a full-service hospital with every type of specialty 
provider at its disposal. That is why it is so important for 
rural communities to work together, share resources, and 
develop networks.
    The Federal Government must continue to recognize the 
important differences between urban and rural health-care 
service delivery and respond with targeted, fiscally 
responsible solutions.
    By pooling our knowledge, expertise, and financial 
resources, we can work together to develop targeted payment 
policies that ensure appropriate access while also protecting 
Medicare beneficiaries and American taxpayers.
    Now, I am looking forward to hearing some of those 
innovative ideas from our witnesses here today. But before I 
turn to our ranking member, Senator Wyden, I want to bring one 
important item to the attention of the committee.
    The Medicare Payment Advisory Commission, otherwise known 
as MedPAC, has submitted a statement for the record, outlining 
the commission's latest recommendation aimed at ensuring access 
to emergency services for Medicare beneficiaries living in 
rural communities.
    I encourage all members to review MedPAC's statement, and 
ask that it be made part of the official hearing record.
    [The statement appears in the appendix on p. 45.]
    The Chairman. With that, let me now turn to my partner on 
this committee, Senator Wyden, for his opening statement.
    [The prepared statement of Chairman Hatch appears in the 
appendix.]

             OPENING STATEMENT OF HON. RON WYDEN, 
                   A U.S. SENATOR FROM OREGON

    Senator Wyden. Thank you very much, Mr. Chairman.
    And first, I want to say right out of the gate that I think 
it is very doable to produce a bipartisan product here. We did 
that with respect to CHRONIC Care, we did that with respect to 
10 years for CHIP. We did it, by the way, in the rural area as 
related to Medicare extenders, where we were talking about 
literally life-and-death matters like ambulances.
    So I want to make sure that we understand that, on this 
side, we think it is very doable to come up with a bipartisan 
product.
    Each year, I hold open-to-all town meetings in every rural 
Oregon county. And there, I meet with many leaders from the 
health-care field. And they tell me there are a few potential 
health-care calamities that have them afraid for what is coming 
down the pike.
    First, many in rural communities feel that there is a 
wrecking ball headed their way because the Trump administration 
and half of Congress have spent the last 15 months trying to 
pull out all the stops to make enormous cuts to Medicaid. The 
President's budget, which, of course, is a public document, 
indicates that another assault could be coming.
    The fact is, Medicaid is a lifeline for rural hospitals and 
patients. And those who have been on the front lines will tell 
you--those who have been out there for decades--that if you 
want to turn rural America into a sacrifice zone where 
hospitals shut down and people cannot get the health care they 
need, the fastest way to do it is by slashing Medicaid.
    Second, people in rural areas today feel that their local 
hospitals are already teetering on the brink of closing their 
doors. And if the local hospital goes under, that means no more 
emergency departments available in a crisis.
    Now, this is not a far-off, theoretical problem. Decades 
ago, back when getting routine health care more often meant 
spending multiple nights in a hospital inpatient bed, rural 
hospitals were much more secure. They could afford then to 
maintain the emergency department.
    But that service may be on the ropes now because rural 
hospitals are under such huge financial pressures. Offering a 
variety of inpatient services and keeping that emergency room 
open is extraordinarily expensive. And at the same time, more 
and more Americans are turning to outpatient settings for 
chronic care, rehab, and routine surgeries.
    Since 2010, 83 rural hospitals have closed their doors, and 
hundreds more are in dire straits.
    Bottom line: when you live in a big city, like Portland, 
Chicago, or Los Angeles, you take it for granted there is 
always going to be an emergency department nearby. But rural 
Americans who fear their hospital will be the next to close are 
left wondering, what is going to happen if their son or 
daughter breaks a leg in a high school basketball game?
    I heard exactly that kind of concern just a couple of weeks 
ago in rural Oregon. Where would the family go if an older 
loved one suffered a stroke? Would they get to a hospital in 
time if dad suffers a heart attack?
    Keeping these hospital emergency departments open is a key 
challenge when it comes to rural health care. In my view, it is 
step one when you are working to prevent rural America from 
turning into that sacrifice zone where people cannot get the 
care they need.
    And I will just close with this point. I have already 
indicated I think we can produce a bipartisan product here. I 
mean, a country as wealthy as ours--looks like we spent about 
$3.5 trillion last year on health care. For that amount of 
money, you could practically send every family of four in 
America a check for $40,000 and say, ``Here, get health care.''
    It ought to be possible to guarantee that rural Americans 
are not on the outside looking in.
    Thank you, Mr. Chairman. I am looking forward to working 
with our colleagues and getting that bipartisan product.
    The Chairman. Well, thank you, Senator.
    [The prepared statement of Senator Wyden appears in the 
appendix.]
    The Chairman. Let me just set the record straight. The 
decline in rural hospitals started long before Medicaid 
expansion and prior to the Trump administration, of course. 
Rather than touting Medicaid expansion or blaming Trump, I hope 
we can set politics aside and evaluate whether Medicare and 
Medicaid are yielding an appropriate Federal response to States 
and communities. That is, after all, the purpose of this 
bipartisan hearing.
    We cannot just spend more money on Medicaid and expect to 
solve every problem. So I look forward to continued discussion 
with our expert witnesses about what more can be done to ensure 
Federal dollars are being spent judiciously and wisely to help 
our rural hospitals and providers. So we need to do that.
    Now, I would like to extend a warm welcome to each of our 
five witnesses today. I want to thank you all for coming.
    Today we will briefly introduce each of you in the order 
you are set to testify. First, we will hear from Dr. George H. 
Pink, the Humana distinguished professor in the Department of 
Health Policy and Management at the Gillings School of Global 
Public Health; deputy director of the North Carolina Rural 
Health Research Program; and a senior research fellow at the 
Cecil G. Sheps Center for Health Services Research, all at the 
University of North Carolina at Chapel Hill.
    Prior to receiving his Ph.D. in corporate finance, Dr. Pink 
spent 10 years in health services management planning and 
consulting.
    Dr. Pink holds a bachelor's degree in marketing from the 
University of Calgary, a master's degree in health 
administration from the University of Alberta, and a Ph.D. in 
corporate finance from the University of Toronto.
    Our second witness, Dr. Keith J. Mueller, will be 
introduced by my good friend and fellow committee member, 
Senator Grassley.
    Senator Grassley, if you would like to, you can proceed 
right now with your introduction.
    Senator Grassley. Okay. Before I do that, since rural 
hospitals have been brought up, I would like to point out to my 
colleagues and particularly to Senator Wyden, because he 
brought it up, I have a bill and it goes by the acronym REACH, 
that I think about half the Senate is cosponsoring.
    And in fact, you may even be a cosponsor of it.
    I hope people will look at that, because that is an 
alternative to the possible closing of some rural hospitals.
    It is my privilege to welcome another Iowan, Dr. Keith 
Mueller. Dr. Mueller is a renowned researcher who is an expert 
about rural health care. He is the interim dean of the College 
of Public Health and a professor of health management and 
policy at the University of Iowa. He directs the RUPRI, which 
is an acronym for the Center for Rural Health Policy Analysis 
at the University of Iowa.
    Dr. Mueller has published more than 220 scholarly articles 
and has received national recognition for his rural health-care 
research.
    Welcome, Dr. Mueller.
    The Chairman. Thank you, Senator.
    Senator Grassley. Yes.
    The Chairman. Next to speak will be Ms. Konnie Martin. She 
will be introduced by our friend and colleague, Senator Bennet.
    Senator Bennet?
    Senator Bennet. Thank you, Mr. Chairman.
    And thank you so much for holding this hearing.
    Rural communities have long been struggling with the 
scarcity of health-care providers and facilities. This has 
exacerbated the challenge of responding to the opioid epidemic, 
which has hit rural Americans particularly hard.
    I am pleased to introduce my fellow Coloradan Konnie 
Martin, the chief executive officer of San Luis Valley Health, 
an independent nonprofit health system in Alamosa, CO. Ms. 
Martin has been working to serve the health-care needs of rural 
Coloradans in the San Luis Valley for more than 30 years.
    Prior to being named CEO in 2013, Ms. Martin served as San 
Luis Valley Health's chief operating officer. She completed 
advanced leadership training at the Regional Institute for 
Health and Environmental Leadership at the University of 
Colorado, also the health-care executive program at the UCLA 
Anderson School of Business. She graduated from the University 
of Arkansas at Monticello.
    Ms. Martin also plays a pivotal role in the local 
community. She is the Adams State University Presidential 
Search Committee's community liaison and a member of the 
Alamosa County Economic Development Corporation.
    I look forward to hearing Ms. Martin's testimony.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Bennet.
    Now, our fourth witness to speak will be Ms. Susan K. 
Thompson, who is also from Iowa and who will also be introduced 
by Senator Grassley.
    So, Senator Grassley, take it away.
    Senator Grassley. Sue, it is my privilege to introduce you 
to the committee.
    She is a senior vice president of integration and 
optimization for UnityPoint. Sue was also the CEO of UnityPoint 
Accountable Care, a nurse by training, and she is the first 
Iowan to be named to the Medicare Payment Advisory Commission--
as you said, Mr. Chairman, known as MedPAC for short.
    Sue's professional achievements and expertise will speak 
for themselves. However, I would like to say that a part of her 
legacy is sitting behind her today, so I am going to talk about 
her family, who are involved in rural health care as well.
    Nate Thompson is Sue's son. Nate is the CEO of Story County 
Medical Center, a critical access hospital in Nevada, IA.
    Ashley Thompson is Sue's daughter-in-law and Nate's wife. 
Ashley is a government relations specialist for UnityPoint.
    Dr. Katelyn Thompson is Sue's daughter. Dr. Thompson is a 
psychiatrist working with the Berryhill Center for Mental 
Health, a community mental health center in Fort Dodge, IA.
    And Chad Baedke is Sue's son-in-law and Dr. Thompson's 
husband. Chad is the director of physician billing operations 
for UnityPoint clinics.
    So, Sue, it seems to me like your family is as much 
involved in rural health care as you are. Welcome to the 
committee.
    The Chairman. Well, thank you, Senator, for providing that 
kind introduction.
    Our final witness will be Dr. Karen M. Murphy, who will be 
introduced by our good friend and colleague, Senator Casey.
    Senator Casey. Thank you, Mr. Chairman.
    I am privileged to introduce Dr. Murphy. Dr. Murphy is 
chief innovation officer at Geisinger Health System. I know her 
from our home town. And she has a long record of service in 
health care.
    She served our State as Pennsylvania's Secretary of Health. 
She was president and CEO of the Moses Taylor Health Care 
System, which is just blocks from my home.
    Her education is substantial: a doctorate of philosophy and 
business administration from Temple's Fox School of Business, 
an M.B.A. from Marywood University--my mother and my daughter 
and my sisters would want me to mention Marywood--a bachelor of 
arts from the University of Scranton, and a nursing diploma.
    So, whether it is nursing itself, which was her calling, or 
a real commitment to the reform in the health-care delivery 
system, in so many ways, Karen has brought a passion and a 
degree of excellence to these issues that I think is unmatched.
    So, Karen, Dr. Murphy, welcome.
    The Chairman. Well, thank you, Senator Casey, for rounding 
off our introductions.
    I would also like to thank the witnesses for being here 
today. And in particular, I thank them for their testimony and 
in advance for their patience and their flexibility, as members 
will be moving in and out of today's hearings because we have 
other markups going on right now.
    I have two or three markups going on right now. Personally, 
I have to leave to attend a Judiciary Committee markup.
    Now, with all of that out of the way, Dr. Pink, we will 
begin with your opening remarks.
    Dr. Pink?

  STATEMENT OF GEORGE H. PINK, Ph.D., DEPUTY DIRECTOR, NORTH 
CAROLINA RURAL HEALTH RESEARCH PROGRAM; SENIOR RESEARCH FELLOW, 
CECIL G. SHEPS CENTER FOR HEALTH SERVICES RESEARCH; AND HUMANA 
   DISTINGUISHED PROFESSOR, GILLINGS SCHOOL OF GLOBAL PUBLIC 
     HEALTH, UNIVERSITY OF NORTH CAROLINA, CHAPEL HILL, NC

    Dr. Pink. Chairman Hatch, Ranking Member Wyden, and members 
of the committee, thank you very much for the opportunity to 
testify today on behalf of my colleagues at the North Carolina 
Rural Health Research Program and the Gillings School of Global 
Public Health at the University of North Carolina at Chapel 
Hill.
    We research problems in health care and rural health-care 
delivery and are funded primarily by the Federal Office of 
Rural Health Policy.
    I am here to discuss what we know about rural hospital 
closures. And I will start with an all-too-common story. 
Coalinga Regional Medical Center in Coalinga, CA is a 24-bed 
acute care hospital with 200 employees. On May 1st, it 
announced that after 18 months of losses totaling $4.5 million, 
it is insolvent and will close all services in June.
    The closure will leave residents in the rural Fresno County 
city of 17,000 people without an emergency room. The nearest 
hospital is Adventist Health in Hanford, which is over 40 miles 
away.
    Coalinga will be the second hospital in the San Joaquin 
Valley to close in the past 6 months. Tulare Regional Medical 
Center, a 112-bed hospital, closed 6 months ago.
    Across the country, 125 rural hospitals have closed since 
2005--83 since 2010.
    Why is this happening? For many reasons, but long-term 
unprofitability is an important factor. Years of losing money 
results in little cash, debt payments that cannot be made, 
charity care and bad debt that cannot be covered, older 
facilities, and outdated technology.
    Why do they lose money? Small rural hospitals serve 
patients who are older, sicker, poorer, and more likely to be 
un- or under-insured. They staff emergency rooms often in 
communities with small populations and low patient volumes.
    Combine this with reimbursement reductions, professional 
shortages, and many other challenges, and you can see why I 
prefer being a professor to a rural hospital executive.
    What happens after a closure? Some convert to another type 
of health-care facility, but more than one-half no longer 
provide any health-care services. They are parking lots, empty 
buildings, and apartments.
    Patients travel an average of 12\1/2\ miles more to the 
next-closest hospital, but many travel 25 miles or more. For 
the old, poor, and disabled who cannot afford or do not have 
access to such transportation, these distances can be very real 
barriers to obtaining needed care.
    Who is most affected? We have investigated communities 
served by rural hospitals at high risk of financial distress, 
because they may be the next facilities to close. These 
communities have significantly higher percentages of people who 
are black, unemployed, lacking a high school education, and who 
report being obese and having fair-to-poor health. In other 
words, vulnerable people.
    If the hospitals that serve these communities reduce 
services or ultimately close, already-vulnerable people will be 
at increased risk.
    What can be done? We can try to improve what we have by 
exploring ways to better target Medicare payments at rural 
hospitals in greatest need and where closure would have the 
greatest adverse consequences on the communities.
    Preferably, we should develop something new. At meetings 
around the country, the most common frustration I hear is the 
lack of a model to replace a distressed or closed hospital. We 
have acute care, inpatient hospitals with emergency rooms on 
one end, and we have primary care clinics on the other end. We 
need something in between.
    There is no shortage of innovative ideas. Eight to 10 new 
rural models have been proposed by various organizations. The 
profound challenges facing providers that serve rural 
communities are not going away. We need to step up the pace of 
innovation, faster evaluation and implementation of new models, 
and development of the Medicare policies and regulations that 
will allow and sustain them.
    Thank you again for the opportunity to discuss these issues 
with you today, particularly because, during the past 35 years, 
some of the most innovative and effective developments in rural 
health policy have emerged from the Senate Finance Committee.
    The Chairman. Well, thank you so much.
    [The prepared statement of Dr. Pink appears in the 
appendix.]
    The Chairman. We appreciate having you here, and we 
appreciate your expertise.
    Dr. Mueller, we will turn to you now.

STATEMENT OF KEITH J. MUELLER, Ph.D., INTERIM DEAN, COLLEGE OF 
 PUBLIC HEALTH; DIRECTOR, RUPRI CENTER FOR RURAL HEALTH POLICY 
 ANALYSIS; AND GERHARD HARTMAN PROFESSOR OF HEALTH MANAGEMENT 
         AND POLICY, UNIVERSITY OF IOWA, IOWA CITY, IA

    Dr. Mueller. Chairman Hatch, Ranking Member Wyden, members 
of the Finance Committee, thank you for this opportunity to 
share my perspectives on key issues in rural health and related 
policy considerations.
    While some things have changed in the 30 years I have been 
conducting rural health research and policy analysis, the 
underlying dynamics remain much the same. But we have new 
tools, both in health-care delivery and through public policy, 
to help us continue our quest to establish a high-performance 
health system in rural America.
    We have had an interesting ride in policy debates and 
developments over that time, including weathering the aftermath 
of creating prospective hospital payment in the 1990s, 
considering health-care reform in those years, major changes in 
Medicare payment and benefits, changes through the Patient 
Protection and Affordable Care Act, and now a renewed and 
welcome discussion of what we should be doing to best serve the 
needs of rural residents.
    I have benefited from exchanges with this committee and 
others throughout, starting with a conversation Senator Roberts 
and I had when I testified as part of the RUPRI Health Panel, 
which I now chair, to the House Committee on Agriculture in 
1993.
    We provided analysis of five reform proposals, including 
the Health Security Act, by assessing their impacts on key 
rural considerations.
    Senator Roberts may remember--and it looks like he does--
sharing an appreciation for the straightforward analysis that 
we provided, which helped give me the confidence to continue 
bringing forward the best we can offer from policy analysis.
    Of course, then-Representative Roberts may not have liked 
the thumbs-up, thumbs-down table of our conclusions that my 
local newspaper provided displayed during the hearing.
    The RUPRI Health Panel launched in 1992 to bring rural 
dimensions front and center in policy discussions. We provided 
analysis during development and implementation of major 
national policies, including the Balanced Budget Act of 1997, 
the MMA that Senator Hatch referred to in 2003, and, of course 
PPACA in 2010.
    We provided feedback to this committee and others during 
policy formation and followed up with analysis of rural impacts 
of new policies, including calling attention to unintended 
consequences of the BBA in 1997 before that term was as 
ubiquitous as it is now.
    I have come to appreciate the nexus of what we do in the 
research community with the concerns and needs of our 
colleagues developing health-care services.
    As president of the National Rural Health Association in 
1996, I represented the needs of rural providers in policy 
discussions.
    One of my funded projects in the early 1990s was working 
with providers in Nebraska and Iowa to develop a template for a 

provider-sponsored Medicare+Choice plan. Much of my research 
now involves visits to rural health-care organizations to 
understand the implications of Medicare and other policies on 
what they do.
    My engagement and that of the RUPRI Center, the RUPRI 
Health Panel, the Rural Telehealth Research Center based in 
Iowa, and collaboration with others covers a host of specific 
topics of interest to this committee, including Medicare 
Advantage, rural ACOs, rural pharmacy, implications of changes 
in health-care delivery and organization, delivery system 
reform initiatives, the evolution of the marketplace in health 
insurance coverage, and the role of telehealth.
    My written testimony includes specific research findings on 
some of those topics, along with policy considerations.
    I would like to share some important questions to consider 
for the future of the Medicare ACO program.
    Are there benefits other than savings related to changes in 
delivery models that help achieve the triple aim of patient 
experience, better health, and lower costs?
    Should there continue to be different tracks?
    Should variations of advance payment, perhaps as grants, 
continue to be available?
    Finally, what is the next iteration of payment reform that 
builds from the experiences of ACOs? Perhaps global budgeting, 
which we will hear about later.
    I now offer the RUPRI Health Panel's five rural 
considerations for policies designed to encourage delivery 
system reform. One, organize rural health systems to create 
integrated care. Two, build rural system capacity to support 
integrated care. Three, facilitate rural participation in 
value-based payments. Four, align Medicare payment and 
performance assessment policies with Medicaid and commercial 
payers. And five, develop rural-appropriate payment systems.
    In general, policies should be sensitive to the rural 
practice environment, including population density, distance to 
providers, and the need for infrastructure investment.
    New models can build on the strengths of the rural system, 
notably primary care.
    Thank you for this opportunity, and I look forward to your 
questions.
    The Chairman. Well, thank you.
    [The prepared statement of Dr. Mueller appears in the 
appendix.]
    The Chairman. We appreciate having your testimony here 
today.
    So we will go to Ms. Martin now at this point.

 STATEMENT OF KONNIE MARTIN, CHIEF EXECUTIVE OFFICER, SAN LUIS 
                   VALLEY HEALTH, ALAMOSA, CO

    Ms. Martin. Thank you for the opportunity today to share 
our health-care story.
    I am the CEO of a small health-care system located in the 
San Luis Valley, which is a rural, agriculture-based community 
in southern Colorado. We serve six counties, an area roughly 
the size of Massachusetts, and are the safety net for our 
nearly 50,000 residents.
    Two of our counties are the poorest in Colorado. Nearly 70 
percent of our patients are covered by Medicare or Medicaid, 
with less than 20 percent having commercial insurance.
    With this challenging payer mix, we have a constant 
struggle to remain financially viable. SLV Health and the rural 
hospitals around the country are appreciative of this 
committee's commitment to rural communities, and we are hopeful 
that meaningful help is on the way.
    Our system is comprised of a 49-bed sole community hospital 
and a 17-bed critical access hospital. We operate five rural 
health clinics, two of which are provider-based. This past 
year, we provided 2,500 hospital visits, 58,000 outpatient 
services, and over 65,000 clinic visits.
    We are a level-three trauma center and the only facility 
that delivers babies, provides surgery, or has any type of 
specialty care for 120 miles in any direction.
    We serve veterans, farm workers, college students, 
tourists, and our own friends and families. We are a resilient 
and creative team of health-care providers.
    We are the largest employer in our region, with a staff of 
over 800. Many of them have lived in the community their entire 
lives, and their families for generations.
    As for me, I moved to the valley in 1985, and I began my 
health-care career in an entry-level IT position, back when the 
personal computer was new technology, and have worked my way 
into the current CEO role.
    Our staff struggles with the cost of meeting regulatory 
requirements, which are often different and sometimes 
conflicting across payers. Our system must report on dozens of 
measures for the Medicare quality and pay-for-performance 
programs. However, our private insurers ask us to report yet 
more, sometimes on the same topic, but using a different 
definition. This complex and confusing data reporting takes 
time away from what really matters, which is delivering on our 
health-care mission.
    Recruiting and retaining a qualified workforce is another 
challenge for rural providers. We have been fortunate to form 
partnerships with local and State schools that help develop and 
maintain our workforce. Specifically, we have multiple grow-
your-own programs, from paramedic training to hosting medical 
students, internships, and mentoring those who are pursuing a 
health-care M.B.A.
    We collaborate with the local community health center to 
host a rural residency training track program. We are set to 
have the first two physicians complete this training in June of 
2019.
    We do have our workforce success stories to celebrate as 
well, with two family medicine physicians in our system who 
returned to their childhood homes to care for friends and 
neighbors, and we have a physician who came during college to 
serve as a volunteer in a local shelter, and today he is a 
surgeon in our organization.
    Rural communities pride themselves on hard work and taking 
care of their own. However, Federal payment systems and 
delivery models must recognize the unique circumstances of 
providing care in a rural community, and they must be updated 
to meet the reality and challenges of how health care is 
delivered today and into the future.
    About 10 years ago, the critical access hospital that is 
part of our system now, approached us for help. Nearing closure 
and in dire financial condition, we entered into a partnership 
to provide management services and financial support.
    In 2013, this critical access hospital fully merged into 
the system that is today San Luis Valley Health. This type of 
arrangement prevented a hospital closure, but such partnerships 
are not available to many rural hospitals. We see the result, 
with hospital closures across the country, and today, 12 rural 
hospitals in Colorado are operating in the red.
    Therefore, I am here today to ask for your support and 
consideration for new financial models that consider our needs, 
including the creation of a 24/7 rural emergency medical center 
designation, such as the American Hospital Association has 
recommended and Senator Grassley has championed.
    And I ask you to provide appropriate resources, 
flexibility, and ongoing dialogue with those of us in rural 
America who stand ready to innovate, work hard, and meet the 
current challenges of caring for our friends and neighbors.
    In a country as great as ours, where you live should not 
determine if you live.
    Thank you.
    The Chairman. Thank you so much.
    [The prepared statement of Ms. Martin appears in the 
appendix.]
    The Chairman. Ms. Thompson, we will turn to you now.

STATEMENT OF SUSAN K. THOMPSON, M.S., B.S.N., R.N., SENIOR VICE 
PRESIDENT, INTEGRATION AND OPTIMIZATION, UNITYPOINT HEALTH; AND 
CHIEF EXECUTIVE OFFICER, UNITYPOINT ACCOUNTABLE CARE, WEST DES 
                           MOINES, IA

    Ms. Thompson. Thank you and good morning. Thank you for 
this great opportunity to address the committee on several of 
the challenges facing health care in rural America and to offer 
up some ideas for potential solutions.
    Now, I would be remiss if I did not take this opportunity 
to publicly thank our Senator from Iowa. Senator Grassley has 
made access to quality health care in rural regions of our 
country a relentless priority.
    Thank you, Senator, for everything you do for Iowa and for 
our country.
    Before assuming my job at the corporate office of 
UnityPoint Health, I was the CEO of a small health system 
affiliated with UnityPoint in Fort Dodge, IA. Trinity Regional 
Medical Center is a 49-bed hospital, including a group of 
physician clinics and home-care services that over the years 
have held the designations of a 200-bed PPS hospital, a sole 
community hospital, a rural health clinic, and most recently, a 
tweener as it participates in the rural demonstration program.
    Trinity has formal management agreements with five critical 
access hospitals and close referral relationships with sister 
UnityPoint metropolitan markets, including Des Moines. But 
possibly the most unique experience Trinity has participated in 
to date has been as a Medicare Accountable Care Organization, 
an ACO.
    Classified as a Pioneer ACO, Trinity took responsibility 
for improving the quality and lowering the total cost of care 
for approximately 10,000 Medicare beneficiaries attributed to 
them in this rural northwest Iowa community. They did this 
successfully and continue to do so as a next-generation ACO.
    It is through this work that challenges facing rural health 
communities, hospitals, and providers have become so palpably 
clear to us.
    The first challenge to highlight is the dichotomy in 
incentives that exists between those who operate under total-
cost-of-care programs, like ACOs, Medicare Advantage plans, and 
bundled payment programs, and their rural counterparts, who 
operate under fee-for-service, cost-based reimbursement 
methods.
    While the former looks to keep members healthy and out of 
the hospital, the latter is rewarded when hospital beds are 
full of Medicare patients. If the two groups worked in 
isolation of each other, this might work. But they do not. They 
are intrinsically woven together.
    The beneficiaries attributed to the Trinity Pioneer ACO 
move in and out of the rural facilities in the region.
    When regarding value-based payment models, the rural groups 
would ask, ``Where do we fit in?'' And to date, the answer to 
that question has been, ``You do not.''
    The policy approach has been to exempt them from value-
based policy altogether. We submit that this approach is not 
working and needs to change. Rural health care can fit into 
value-based payment models.
    So you wonder, is UnityPoint Health advocating that cost-
based reimbursement be deconstructed? And to that, we answer 
``no.'' We are requesting it be renovated.
    This brings me to the second challenge I must highlight, 
and this challenge is the greatest: access to health-care 
services in rural areas.
    Bringing quality care to rural Americans comes at a cost, 
and the cost is distinct from the actual provision of the 
medical service. These additional, unique costs relate to the 
time and the distance from major service centers, lack of 
comprehensive community services, and health-care workforce 
dead zones.
    We propose that the renovation of health-care delivery in 
rural areas include a value-based component tied to quality 
medical outcomes and expenditures and that a separate and 
distinct payment structure be developed for the portion of 
cost-based reimbursement that pays for the costs associated 
with access in rural areas.
    While our written testimony goes into greater detail about 
how such a system could be structured, I offer you some playful 
dos and just one do not as we design this type of system.
    The dos: Do encourage the CMS Innovation Center to develop 
pilots that test Medicare Advantage programs designed to work 
in rural markets like Iowa. We see great potential for Medicare 
Advantage to bring the benefits of population health methods to 
rural areas.
    Do design ACO benchmarks to accommodate for the additional 
cost of bringing access to rural markets.
    And do support bills, like the REACH Act, that allow rural 
hospitals to transition to new designations designed to meet 
modern needs.
    And do continue to allow telehealth practice to extend the 
reach of our in-person providers.
    And with the utmost respect, just one do not. Do not 
embrace a policy that allows freestanding ambulatory surgery 
centers to establish residence in rural markets and cherry-pick 
patients by procedure, further straining the viability of 
community hospitals.
    I challenge you to find one for-profit, freestanding ASC 
that has an emergency room.
    In closing, health-care entities are the backbone of many 
of our rural communities. We need our rural health-care 
delivery systems to be viable. We need them to make the 
transition to rural health-care access centers we know they can 
become.
    Thank you for this opportunity to share these views.
    The Chairman. Thank you.
    [The prepared statement of Ms. Thompson appears in the 
appendix.]
    The Chairman. Dr. Murphy, we will turn to you. You will be 
our final witness.

  STATEMENT OF KAREN M. MURPHY, Ph.D., R.N., CHIEF INNOVATION 
OFFICER AND FOUNDING DIRECTOR, GLENN STEELE INSTITUTE OF HEALTH 
              INNOVATION, GEISINGER, DANVILLE, PA

    Dr. Murphy. Chairman Hatch, Ranking Member Wyden, and 
members of the committee, thank you for inviting me to testify 
today about rural hospitals.
    In addition to my clinical background, which you have 
already heard, I spent 2 years at CMMI before assuming my role 
as Secretary of Health, working on the State innovation models 
initiative.
    Today I would like to share the development of an 
innovative payment and delivery model that was developed when I 
served as Secretary of Health in Pennsylvania.
    I began my tenure as Secretary of Health assessing the 
status of the health-care delivery systems in Pennsylvania. I 
was struck by the financial instability of the rural hospitals. 
In research, I found that the situation in Pennsylvania was 
being replicated across the country.
    Pennsylvania has the third-largest rural population in the 
United States. Sixty-seven of our 169 hospitals in Pennsylvania 
are in rural communities. More than 58 percent of those 
hospitals in rural areas have mounting financial pressure 
resulting in break-even or negative operating margins.
    We began to look for a solution.
    After having worked on the Maryland all-payer model while 
at CMMI and seeing the impressive results, we decided to design 
a similar model for rural hospitals in Pennsylvania.
    We worked collaboratively with CMMI on designing the model. 
I would also like to acknowledge Senator Casey and his office's 
support as we designed this model.
    The design period was launched in January of 2017. The 
objective of the model was to provide a path to improving 
health and health-care delivery in rural communities.
    The model changes the way participating hospitals will be 
reimbursed. The model replaces the current fee-for-service 
system with a multi-payer global budget based on the hospital's 
historic net revenue.
    Like Maryland, the payment model in Pennsylvania is 
designed to include all payers. However, it was necessary to 
develop a new methodology, since Maryland has the authority to 
establish hospital rates and Pennsylvania does not.
    The model moves rural hospitals from focusing inpatient-
centric health-care services to a greater focus on outpatient-
centric health-care services, with an emphasis on population 
health and care management.
    It replaces the current fee-for-service system, with little 
emphasis on quality and safety, to a payment model that 
includes direct incentives to improve quality and safety and 
eliminate subscale service lines.
    Rural hospitals are encouraged to move from traditional 
models delivered directly on-site to innovative care models 
that are enabled by technology, such as telehealth, video 
conferencing, and remote monitoring. The vision is that rural 
hospitals will invest in care coordination, such as reaching 
out to patients who frequently use the emergency room services 
and connecting them with a provider.
    It also includes population health and preventative care 
services, such as chronic disease prevention programs and 
behavioral health initiatives, including those targeting 
substance abuse disorder, with the expansion of medical homes 
to include medication-assisted treatment programs.
    Participating hospitals will have the ability to invest in 
social services that address community issues that lead to 
detrimental health outcomes.
    Based on the global budget, participating hospitals are 
expected to develop a transformation plan that could outline an 
innovative approach to improving health and health-care 
delivery for the communities they serve.
    They are encouraged to work with community agencies, such 
as United Way, area agencies on aging, and drug and alcohol 
treatment centers, to develop services based on their community 
needs.
    To provide participating hospitals with transformation 
support, Pennsylvania plans to create a Rural Health Redesign 
Center.
    CMS has entered a cooperative agreement with Pennsylvania 
to provide up to $25 million over 5 years to support the Rural 
Health Redesign Center. This will provide a way to deploy 
capabilities to support all participating hospitals.
    Pennsylvania is planning to engage six hospitals in the 
initial performance year, gradually expanding to 30 rural 
hospitals in Pennsylvania.
    At Geisinger, we are a participant in the initial phase. 
Dr. David Feinberg, Geisinger's CEO, has been a staunch 
supporter of the initiative since its inception, as it builds 
on our vision for building a health-care delivery system that 
focuses on improving health and value-creation for each 
community we serve.
    We are looking forward to working with the State on this 
very important initiative.
    The financial challenges of rural hospitals today are the 
result of a changing health-care industry. They may not be able 
to offer the same services that they did in the past, but it is 
possible that they can be leveraged to improve the health of 
those residing in rural communities.
    Next week, I will be speaking at the Global Budgeting 
Summit at Johns Hopkins University. Twenty-six States have 
registered to participate. The Federal Government has the 
opportunity to engage additional States in the Pennsylvania 
rural health model. Implementing across diverse States would 
give us the opportunity to evolve this innovative payment and 
delivery model.
    Thank you for your interest in aiding rural hospitals. I 
too believe rural communities deserve access to health care, 
and we must continue to work to identify innovative approaches 
that are a pathway to that goal.
    The Chairman. Well, thank you so much.
    [The prepared statement of Dr. Murphy appears in the 
appendix.]
    The Chairman. I think this testimony has been very 
interesting today.
    Let me just start with you, Ms. Martin.
    In your testimony, you referenced times when your hospital 
system has been on the verge of financial crisis in the past. 
How did you leverage resources and streamline service delivery 
or operation lines to stay financially viable? And can you talk 
about what you think an appropriate Medicare margin should be 
for small, nonprofit, rural hospitals like yours?
    Ms. Martin. Thank you, Senator.
    I think it is interesting when you talk about margins for 
rural hospitals. I think any margin would be helpful to so many 
rural hospitals.
    I think for my system, located in the rural part of 
Colorado, if we can be in a margin area of 3 to 5 percent, we 
consider that a very successful year.
    And so I think different areas have different needs. So 
much depends on your infrastructure and what you need to 
replace as far as equipment and facilities go. So I think for 
our system and from my perspective, that is the margin that we 
are trying to achieve. But so many times, we are under 1 
percent or sometimes in the negative.
    I think what we did initially over these past few years is 
put our two systems of care together, the critical access 
hospital and our sole community hospital. And we used the 
economies of scale. You know, we have one CEO for that rural 
system of care, we have one finance department, we share a lot 
of services between our two organizations, and that makes it 
cost-effective to run the different departments.
    You know, we have a person who is an expert in laboratory 
or a person who is expert in imaging, and they help a larger 
organization when you can divide them across a couple of 
communities.
    The other thing we do is, we are just very frugal. I think 
in rural America, we are very thoughtful about what we buy. We 
do not provide services that our community does not need, 
because we do not have that luxury. We have to match our 
services to the needs of our community.
    We have built our primary care base over these past few 
years, and that has made a substantial difference with keeping 
our care close to home. And we have added specialty services 
that are the highest need for our patients and our community. 
For instance, we have added oncology services in the past 3 
years. We started out with a model where we brought a 
specialist a day or two a month, and we have built that to 
where we could have a full-time provider.
    I think part of our challenge is, with one single 
specialist in a rural community, you know, you have to have the 
connections to have coverage and support for that individual.
    So those have been some of our strategies. We are not a 
lucrative health system at all.
    The Chairman. Well, thank you.
    Let me go to you, Dr. Murphy.
    First, let me say that there is a lot of excitement around 
the Pennsylvania rural health model. It clearly holds great 
promise. And I am personally pleased to see CMS working with 
States to design innovative rural health-care payment 
strategies.
    Is there any concern under Pennsylvania's new multi-payer 
global budget payment method that rural hospitals might lose 
incentives to be efficient in providing health-care services? 
And secondly, how do you think your State's rural hospitals 
will figure out ways to lower costs and improve health outcomes 
if they already know what they are going to get paid for 
procedures under the global budget?
    Dr. Murphy. Well, thank you, Senator. And I think the 
challenge--which is why I recommend that CMMI look to expand 
the test--is to determine if we can successfully transform 
rural hospitals in a way that is efficient and improves 
population health as well as health-care delivery services.
    There is a monitoring component within the global budget 
methodology--the model is being evaluated from day one--that 
will determine the appropriateness of the services and the 
possibility for unintended consequences to occur. So that is 
built in within the test of the model.
    But I think the goal here--the difference is there is a 
transformation plan that goes along with the global budget with 
monitoring metrics throughout the life of the global budget. So 
the hospital is going to be very tightly monitored as we go 
through implementing the global budget.
    I can assure you that certainly Medicare would be concerned 
about that, as would all the other commercial payers.
    So I believe the model is robust in the way that it will 
measure for those unintended consequences.
    The Chairman. Well, thank you.
    Let me turn to Senator Wyden.
    Senator Wyden. Thank you very much, Mr. Chairman.
    I think this has been a terrific panel.
    And next week when I have open-to-everybody town meetings 
in Prineville, Paisley, and Joseph, OR, I am going to remember 
what you said, Ms. Martin, that where you live should not 
determine if you live.
    And I can just tell you, I looked around the room and 
practically the whole place got whiplash when you said that, 
because that really sort of sums up the challenge.
    Colleagues, let me give you my sense of where we are in 
terms of the bipartisan possibilities going forward. We had the 
Bipartisan Budget Act, we got 5 years additional funding for 
several important programs for rural communities, extending the 
Medicare-dependent hospital program, increasing payment for 
low-volume hospitals, and, as I touched on earlier, the 
ambulance add-ons. So that at least gives us some measure of 
predictability for the next 5 years.
    But it seems to me we have really got some heavy lifting to 
do in the next 5 years. I think we understand that this 
calamity did not arrive on us in 15 minutes; we are not going 
to solve it in 15 minutes.
    So what I would like to do for purposes of going forward in 
a bipartisan way here under the efforts of colleagues on both 
sides is, I would like to just go down the row and have each of 
you give me what would be your top priority for Medicare as it 
relates to longer-term stability for rural providers and 
particularly for rural seniors in our country. Because we know 
that we have a disproportionate number of seniors in rural 
communities.
    So right down the row: top priority for Medicare for this 
long-term stability that we have a chance to work on, because 
we have at least a little predictability for the next 5 years.
    So just go right down the row.
    Dr. Pink. Thank you, Senator. We have talked to people in 
communities where rural hospitals have closed, and almost 
always the first thing we hear is the disappearance of the 
emergency department, the emergency room.
    So I would say my top priority is maintaining access to 
emergency care.
    Senator Wyden. Good.
    Dr. Mueller?
    Dr. Mueller. I would say mine would be building that 
integrated system that I talked about that would include non-
hospital-based services, particularly both post-acute care 
after a hospitalization and care for the elderly with chronic 
conditions, which was, in part, addressed by the CHRONIC Care 
Act. And we need to move forward with some of the innovations 
that are coming out of that.
    Senator Wyden. Good.
    Ms. Martin?
    Ms. Martin. The flexibility to develop a model in each 
rural community that meets their needs so that they can keep 
emergency care and can keep services.
    Senator Wyden. That is a very good point. What would be 
your top priority for flexibility? Because we are all 
interested in that.
    Ms. Martin. Right. I think it would be to allow critical 
access hospitals to develop, to merge into a different model, 
which would limit their need to have inpatient beds and to be 
able to be emergency departments and do outpatient care and 
keep the financials healthy in that model.
    Senator Wyden. Good.
    Ms. Thompson?
    Ms. Thompson. Top priority would be recognition of the 
difficulty in acquiring and retaining providers to rural 
communities.
    Senator Wyden. So if you could wave your wand, what would 
we pursue, because that is enormously important. What would we 
do by way of provider policy?
    Ms. Thompson. Rural health care and rural communities 
create an environment that is unique in this country. The 
community cares for each other. And I think the opportunities 
that are before us that have been demonstrated in some of our 
ACO models create not only an integration of hospitals and 
physicians, but in all components of health care across the 
continuum, this kind of an environment that is motivating, that 
is inspiring, and I think, quite frankly, could create a 
platform for transforming health care for the country.
    Senator Wyden. Let us do this, because I want to give Dr. 
Murphy the chance to wrap up this round.
    I would like to--and the chairman is always very gracious 
about this--let us keep the record open for you all to give us 
as many concrete ideas for getting more providers to rural 
America, because this is enormously important. And we have 
tried loans, and we have tried this and that.
    And look, we all understand that year after year we are 
faced with this question of whether there is going to be 
anybody to keep the lights on. In other words, you have 
buildings and light, but you have to have people who can run 
them.
    Dr. Murphy, your one priority for Medicare as we kind of 
use this period where we have 5 years to kind of really push 
hard for the longer term?
    Dr. Murphy. Expand the test for global budgets to different 
States.
    Senator Wyden. Very good.
    Mr. Chairman, thank you. Only 7 seconds over.
    The Chairman. Okay.
    Senator Roberts?
    Senator Roberts. Thank you, Mr. Chairman. I am very 
grateful that we are holding this hearing on rural health care 
in America. It is long overdue that Congress tries to focus on 
the unique needs, as espoused by all the witnesses, of people 
in rural areas, the health-care challenges faced by these 
constituents.
    I have the privilege of serving as the co-chair of the 
Senate Rural Health Care Caucus, along with the ever-
enthusiastic and helpful co-chairman, Senator Heidi Heitkamp of 
North Dakota. We have very similar problems or challenges--we 
do not have problems, we have challenges.
    We have long said that rural residents deserve the same 
quality health care as their urban counterparts. I think every 
witness has gone over that. There is no reason why rural 
communities should be left behind as other areas continue to 
advance their health-care systems.
    Dr. Mueller, thank you so much for reminding everybody that 
I was here in 1993, as you were. [Laughter.]
    And that indicates that this has really been a long-term 
battle. I can remember clear back when it was not HHS, it was 
HEW, Secretary Joe Califano.
    I think you remember the time that, all of a sudden there 
was a regulation that came out that said that, before any rural 
hospital could receive a Medicare reimbursement, three doctors 
had to review all of the patients that came in and the 
procedures. And the team of three doctors had to do this every 
24 hours. That was ludicrous. I do not know who came up with 
that.
    But then I decided it would be a good thing to be for that, 
because maybe one of the doctors would stay if in fact they 
were inspecting the hospital. But it has been a long-term 
effort.
    I want to focus--by the way, we have 86 critical access 
hospitals in Kansas. And I hope that when we renovate--I think 
Ms. Thompson said we should renovate, we should not eliminate.
    We are on first base or second base, you know, trying to 
hold on. I do not want to get picked off by all of a sudden 
saying ``no'' to the critical access or moving to some other 
thing without really knowing where we are going.
    I want to really concentrate on the workforce situation. 
And I would like you all to comment on that.
    Recruiting, training, and retaining staff are some of the 
biggest challenges we have. An example in some areas--our 
physician assistants, our nurse practitioners may be the only 
primary care providers available.
    We have to drive quite a few miles to get to that hospital, 
like you have in Alamosa, Ms. Martin.
    In Wyoming, they have to travel a couple hundred miles 
maybe to do that.
    So let us go down the panel and say--the one thing that I 
am really interested in is the Federal regulations that come 
between the provider and the patient. I am talking about the 
96-hour rule, I am talking about the face-to-face regulations, 
things that just do not--it just takes a terrible amount of 
time and expense.
    And if you could really focus on that, what suggestion 
could you make? And we will start with Dr. Pink.
    Dr. Pink. Senator, I would defer that question to my 
colleagues who have much more expertise on that than I do, if 
that would be all right.
    Senator Roberts. That would be fine.
    Dr. Mueller?
    Dr. Mueller. Two suggestions. One is looking at Medicare 
conditions and participation and what is required for 
supervision. The kind of thing you alluded to from the Califano 
years still exists today.
    And second, whatever we can do to open up even more the use 
of telehealth services to support the local rural health-care 
professionals. And we have some of that, as I mentioned 
earlier, in the CHRONIC Care Act to work with.
    Senator Roberts. You mentioned telemedicine.
    And I am not trying to interrupt, Ms. Martin.
    But there were three unique places where telemedicine was 
to start out. This is back in the 1980s. One was in New Mexico 
with an Indian reservation, another was an island in Maine, and 
then the third one was Cimarron, KS between Garden City and 
Dodge.
    And they were selected. We were about to announce that, and 
then all of a sudden they called up and said, ``Do not announce 
that, we found a doctor.'' After all that hard work, I was very 
upset that they had found a doctor. And sure enough, the doctor 
came.
    And they were not like your doctors, the two that came 
back. Six months, that doctor was gone. And in the meantime, we 
lost the opportunity for the telemedicine.
    Now we have it back, and it is just, you know, very 
typical.
    Now, you have two doctors who came back because they 
believed in their community and they wanted to live in a 
community where they could raise their family and all the good 
things that have been referred to by Ms. Thompson.
    But on the Federal regulations side, which one would you 
pick?
    Ms. Martin. I think I would pick aligning quality measures 
so that, as we measure value in rural communities it is with 
measures that are relevant to who we are and what we provide.
    Right now, we report so many different measures to so many 
different agencies. And they are not meaningful always in 
moving us ahead with our quality. For instance, some of the 
things we report on, the volume that we do, is so small that 
one single fallout appears to make us look like we have a 
lesser quality than maybe our urban counterparts, and that is 
just simply not true. So I think that is a very important 
point.
    And then the point with meaningful use. You know, the 
evolution of meaningful use has certainly improved the use of 
technology in the health-care industry, but the pace at which 
the change is happening and the expense that it takes rural 
facilities to keep up--I worry about those kind of measures 
really getting between the doctors and their patients.
    Senator Roberts. Ms. Thompson?
    Ms. Thompson. Yes, consistent with my concerns around 
access for providers, I would strongly recommend continuing to 
expand the use of telemedicine.
    Senator Roberts. Dr. Murphy?
    Dr. Murphy. I think the two I would give--I think the 
relaxation of Medicare regulations in terms of allowing rural 
hospitals to maybe execute more innovative strategies in 
recruiting physicians. So we have some rules that prohibit 
that.
    And secondly, I think the relaxation or the acceleration of 
the ability of the Medicare program to waive certain 
requirements for rural hospitals on their overall management. 
And CMMI does--
    Senator Roberts [presiding]. I thank you all for your 
testimony.
    Senator Enzi?
    Senator Enzi. Thank you. And I appreciate that this hearing 
is being held, and I appreciate the great talent that we have 
put together to do it.
    I come from the least-populated State in the Nation. Our 
biggest city is 60,000. And all of our towns are at least 40 
miles apart. We only have 19 towns where the population exceeds 
the elevation.
    I have one county that is the size of Delaware. And the 
city--and you get to be a first-class city when you hit 2,500 
people, and they just did--is 2,500 for the whole county. So we 
just tried to keep a hospital open there, which usually means 
having a physician assistant. So this is a critical hearing for 
us.
    And I will begin my questions with Ms. Thompson.
    The way Medicare pays rural hospitals, including critical 
access and sole community, like we have in Wyoming, is closely 
related to inpatient services. As medical providers have 
started to shift towards providing more and more services on an 
outpatient basis, is the inpatient metric still the most 
appropriate measure for hospital costs?
    Ms. Thompson. I think that is a great point. I am not 
certain that it is.
    You know, when we began our work in the Pioneer ACO, the 
entire question around utilization of inpatient services was 
very much at hand, because that is very much what drives the 
predominance of spend and what calculated the PMPM. And in the 
contract with the Federal Government in the ACO, we essentially 
made a promise that we were going to reduce that total cost of 
care while improving quality to the Medicare beneficiaries.
    As a result of a lot of focus, work, and investment in 
reducing spend, we reduced inpatient utilization, and a lot of 
these services moved to outpatient. And what I think is more 
important in terms of the takeaway for this hearing is not that 
we reduced the spend or that we improved the quality--both 
quite important and both predominant components of the 
agreement in terms of the ACO.
    What we learned--and what I believe is so important as we 
rethink policy around rural health care--is how strong and how 
absolutely woven together a rural community is in commitment to 
caring for its patients.
    And in that lies some secret sauce in terms of how we 
rethink, not just payment for hospitals or how we think about 
inpatient or payment for physicians or payment for home care--
which is typically how we think about policy development--but 
rather, how we look at an organized system of care of a defined 
community, whether it is a rural hospital with six counties 
they are serving, and create an accountability and motivate a 
community to want to come together, whether in a global payment 
model or in some model that gets us out of this siloed way of 
thinking about how we organize payment structure in rural 
America.
    And in that way of thinking, I believe we will transform 
not only how we pay for care, but how care is delivered and how 
we recreate an entirely new health-care system.
    That, to me, is the most important thing.
    Senator Enzi. I am running out of time.
    Ms. Thompson. I am sorry.
    Senator Enzi. Thank you very much.
    For Dr. Murphy: Medicare used to allow States to decide 
whether to designate hospitals as critical access. I understand 
we have prohibited State-based designations because of concerns 
they were overutilized, but we allowed hospitals that had 
already earned that State-based designation to keep it.
    In cases where the critical access designation may have 
been overutilized, how do hospitals compare to the CMS 
definition of a critical access hospital?
    Dr. Murphy. So I think the definition of critical access 
hospitals, Senators, and their impact on whether a hospital is 
a CA or a non-CA, is probably outdated to even think about. 
Because the problems suffered by rural hospitals today are 
really because the health-care industry has changed.
    And critical access hospitals, whether they are designated 
or not, they still have the same--all rural hospitals have the 
same problem. They have few resources to deliver any type of a 
substantial inpatient care. They are devoting all their 
resources to inpatient care for a very small number of 
patients.
    The critical access hospital designation was definitely a 
plus for hospitals 2 decades ago, but I think what we are faced 
with today is that any type of assistance to hospitals that 
exists in a fee-for-service environment, regardless of where it 
is tied, is going to lead us to the same place, sitting here 2 
years from now, if we do not take a look at an innovative 
payment model.
    Senator Enzi. Thank you.
    And I have some more questions, and if we have a second 
round, I will do those. Otherwise, I will submit them.
    I appreciate all the expertise that we have here. My time 
is expired.
    Senator Roberts. Senator Cassidy?
    Senator Cassidy. Now, folks, I am a physician, and I have 
worked in a hospital for the uninsured and often interfaced 
with my colleagues who are in an emergency room at some 
understaffed critical access hospital, but so understaffed that 
they frankly had to send all their patients to the hospital 
where I worked.
    And so a lot of what I will say now will reflect that 
perspective.
    Let me first go here. I am interested in the Medicare wage 
index in which hospitals with a higher cost structure get more. 
If you will, the more get more.
    Now it seems as if under current law, based upon your 
geographic area, rural hospitals in my State cannot compete 
with the urban hospital because of Medicare policy, which tells 
the urban hospital, ``We are going to give you more.''
    And so, obviously, if you are a nurse and you have to 
decide where to work, you tend to go where you would earn more.
    The cost of wages--the current policy does not have a floor 
or ceiling in place for an adjustment in which the cost of 
wages is considered when reimbursing providers. And so, as I 
just said, urban hospitals get more, rural less.
    I guess I could ask many of you this question. But, Dr. 
Pink, does the lack of a ceiling or floor for the Medicare wage 
index frankly give a perverse incentive for the urban hospitals 
to keep increasing wages to make it harder for a rural hospital 
in Louisiana or Iowa or Tennessee to compete and to be able to 
keep that nurse who lives close to home, home?
    Dr. Pink. Senator, we have done some research on the 
various rural designations that Congress has created, and there 
are some of these designations where the wage index does play a 
key role.
    For example, in one study we completed last year, we found 
that many of the sole community hospitals in the country--it is 
an important payment designation--but they are located in 
States which have lower wages, and therefore, for the hospitals 
that are eligible for that designation, in fact there is no 
advantage to taking it. They take the PPS payment instead of 
sole community.
    So I believe it is an issue. We have not studied it beyond 
sole community hospitals, however.
    Senator Cassidy. Okay. I will say that Senator Isakson has 
a bill, which I cosponsor, to put a floor under the Medicare 
wage index, which we do think would help rural hospitals 
substantially.
    Secondly--and I will stay with you, Dr. Pink--over the last 
decade, there has been a lot of consolidation in hospital 
systems.
    Just for folks to see, Obamacare passed in about 2009, and 
that is kind of an inflection point. Whether or not it is 
causal or just associated, we do not know. But I wanted to show 
others to see as well.
    But subsequent to 2009, we can see that the number of 
consolidation episodes has increased, about doubling year to 
year.
    Now, we know that that increases cost. There is good data 
showing that prices at a monopoly hospital are 12-percent 
higher than those markets with four or more rivals. And I could 
give more evidence to that.
    Dr. Pink, given that these mergers coincided with rural 
hospital closures--I do not know the answer to this; I am 
asking you--has consolidation by large hospital systems reduced 
competition or increased prices and kind of resulted in rural 
hospital closures?
    Dr. Pink. We have not studied urban mergers and 
acquisitions, Senator. I can say that for many rural hospitals 
and small communities, merging with a larger health system has 
been the only option available to them, where they are 
literally faced with the choice of, do we do nothing or do we 
affiliate or are we bought by a large system?
    Senator Cassidy. Now, Ms. Thompson raised the issue of 
these ACOs not being extended to the rural area. But 
presumably, if an urban hospital consolidated, bought a rural 
hospital, they would just extend their ACO out to the rural 
area.
    Ms. Thompson, has that not occurred?
    Ms. Thompson. That has not occurred.
    Senator Cassidy. Now, pourquoi pas--as my French teacher 
would tell me to say--why not?
    Ms. Thompson. The cost-based reimbursement model that is at 
place with critical access hospitals simply reduces any 
opportunity, because they are reimbursed based upon their costs 
associated with the Medicare patients they are caring for.
    Senator Cassidy. Okay.
    Ms. Thompson. So they do not have an opportunity to see the 
shared savings associated in that.
    Senator Cassidy. So we get the consolidation, which may 
keep the doors open, but none of the extensions, the putative 
benefits, get extended to others.
    Let me move on. I have 9 seconds left and want to fit one 
more in.
    Ms. Martin, we have heard about the rise of freestanding 
ERs in places like Texas and Colorado. Several of you have 
mentioned that when these facilities close, frankly, folks' 
primary complaint is, ``I want to have an emergency room 
nearby.''
    Proponents argue the facilities are providing increased 
access to ER care in rural areas where it is not financially 
feasible to have an entire acute care hospital.
    The opponents argue that they are cherry-picking. And 
although I am told they take anybody who comes and that the 
physician-owned facility--the fact the physicians owned it is 
an issue. Currently, the facilities are not reimbursed for 
Medicare or Medicaid patients.
    Ms. Martin, you work in Colorado. They are allowed. If we 
were to allow these facilities to be reimbursed by Medicare and 
Medicaid, would this be a good thing for your rural area, 
increasing access to rural ER care, if you will, or not?
    Ms. Martin. I do not believe that it would be a good thing 
in the rural areas. The freestanding EDs that have originated 
in Colorado are all exclusively in the urban areas. They are 
not in the rural markets.
    And I believe, in a rural market, the idea of an emergency 
department conversion from a critical access hospital is that 
you keep care located close to a community where----
    Senator Cassidy. Now, let me stop you for a second. It is 
impractical if somebody has a head injury that you are going to 
have a neurosurgeon in a rural hospital, and quite likely you 
will not have a general surgeon, just because a general surgeon 
cannot--my wife is a general surgeon; I will use the feminine--
she cannot maintain her practice because there is not enough 
volume and/or your payer mix is so poor.
    So I thought the emerging paradigm was, if you stabilize 
the patient, do as much as you can, but then transport 
quickly--would that not work in Colorado?
    Ms. Martin. I guess what I am referring to is the 
freestanding emergency departments that have been created in 
the front-range market.
    In our rural community and the hospital that I work in, we 
do have general surgery. And some of the critical access 
hospitals that neighbor us, they do a lot of stabilization and 
transferring. That is what we do in the rural facilities.
    I think that keeping an emergency department in a rural 
facility is very positive and something that we need to do 
collectively. My statement was simply that the freestanding 
emergency departments that have started on the front range have 
not----
    Senator Cassidy. You have to wrap it up because I am way 
over. Okay. I am sorry, I did not mean to interrupt, but I am 
2\1/2\ minutes over, and my folks have been forbearing. I 
apologize.
    Thank you very much for your answer.
    Thank you all.
    Senator Roberts. Senator Cantwell?
    Senator Cantwell. Thank you, Mr. Chairman.
    I thank the witnesses. And I thank both my colleagues for 
this important hearing.
    Obviously, I was not here, Ms. Martin, when you gave your 
statement, but this statement by you about how where you live 
should not determine if you live resonates a lot in my State.
    The access to health care through the Medicaid expansion 
was big in rural communities in my State. Writ large, 600,000 
people in our State got expanded coverage.
    But we have counties like Douglas and Chelan where, again--
so the chairman knows where our apple and cherry and pear 
industry is located--they have seen the uninsured rate drop 
more than 60 percent thanks to that Medicaid expansion.
    So I just wanted to ask about the importance of making sure 
that we keep that expansion and the importance of not allowing 
any kind of cap or reduction.
    Under this discussion that we had, CBO was saying that the 
previous proposals on block granting and changing Medicaid 
might cut as much as a quarter out of Medicaid over the next 2 
decades.
    So is that problematic, Ms. Martin, for rural areas?
    Ms. Martin. I think certainly the ACA expansion made a very 
positive difference in the community where my service area is, 
and I think in Colorado overall.
    We had an uninsured rate of nearly 20 percent, and that has 
been reduced in my community down to low single digits.
    And so the coverage for patients allows patients to get 
access to care. It has improved the financial bottom line of, 
certainly our organization.
    I spoke earlier that 70 percent of our population is 
Medicare and Medicaid, so our relationship with government 
payers is critical to our survival.
    Senator Cantwell. Did you say 70?
    Ms. Martin. Seventy.
    Senator Cantwell. And ours is up there as well, over 50. I 
do not know what the latest numbers are. But I do not think 
people quite understand that that is the challenge we face.
    I mean, we love our rural economy, and we love our rural 
communities. They are a great place for people who are aging to 
retire and live. And it is more affordable, but that means it 
is a different mix of the population as it relates to how you 
build a health-care delivery system. So the Medicaid expansion 
is so critical to that.
    I also wanted to ask about telemedicine, because that is 
another delivery system that I think--for us, we have this 
Project ECHO, the University of Washington working with 
Harborview. You have heard of it, obviously, probably in your 
State as well, but it has allowed medical professionals from 
Seattle to consult with people over in the Yakima Basin, some 
of our clinics, to talk about the decisions for really highly 
complex patients, for hepatitis C and substance use disorders.
    So what do we do about that as it relates to the payment 
system? Because I do not think fee-for-service is any kind of 
friend to that cost-saving technology and that cost-saving 
collaboration that is existing.
    Ms. Martin. I think in our community, we are modestly 
beginning the use of telehealth. And part of our challenge is 
that we do not have the resources for a lot of the startup 
equipment. And some of the payment constraints do not allow us 
to be able to provide the service.
    I think one of the best things we could do is to invest in 
the startup expense, particularly for rural hospitals, and then 
allow the services to be reimbursed on a fair basis.
    We currently do telehealth now in our community for 
infectious disease, genetic counseling. And we are trying to 
build that for oncology coverage and for cardiology coverage. 
And it would actually save the system money.
    For instance, when a person goes into our emergency 
department and we have one cardiologist in the community, when 
that person is not there, if the condition of the patient 
warrants, we have to transfer them to another area to be 
evaluated by a cardiologist. They oftentimes get transferred or 
evaluated and then they are dismissed from the hospital.
    If we could have cardiology services available 24/7, we 
would save the expense of an air ambulance or a ground 
transport for a patient with a cardiology problem.
    Senator Cantwell. And there is no reason you cannot with 
telemedicine, right, with that kind of technology?
    Ms. Martin. Yes, ma'am, that is true.
    Senator Cantwell. So it is just getting it recognized into 
the system in some way.
    Ms. Martin. And paid for.
    Senator Cantwell. Right. Well, that is what I meant--
recognized into the system. And that is why the challenge--just 
a fee-for-service model challenge.
    For anybody--well, actually, I do not have any time left--
but the doctor shortage issue for rural communities continues. 
And we just need to fight that.
    And so, you know, we have counties in our State that have, 
like, 4,000 people and no access. So we have got to do better.
    Thank you.
    Senator Roberts. Senator Carper?
    Senator Carper. Thanks so much.
    My first question for the witnesses is, how many counties 
are there in America?
    All right; let the record show they have no idea. 
[Laughter.]
    The answer is 3,007. Delaware has three counties, and the 
southernmost county is called Sussex County. It is the third-
largest county in America. We do not have many of them, but we 
make them big. [Laughter.]
    In Sussex County, we raise more chickens than any county in 
America. Last time I checked, we raise more soybeans than any 
county in America. I think we raise more lima beans than any 
county in America. We have more five-star beaches, I think, 
than any county in America. All in one county: Sussex County.
    And we have a lot of rural areas and a lot of people who 
live in rural areas, despite all of that. We have a lot of 
people who live along the coast, you know, Rehoboth and Lewes 
and places like that, Dewey Beach, but the rest of the county 
is largely agriculture.
    And we have some hospitals, rural hospitals. We have 
community-based outpatient clinics. We have a VA clinic that is 
actually quite good. But we still have a lot of people who do 
not have access to health care because we are just so spread 
out in a big county.
    I want to talk a little bit with all of you, now that we 
have gotten that out of the way, about costs that flow from 
tobacco use, costing our--I say our health-care system; it is 
actually really costing all of us.
    And I understand that we are spending in this country about 
an extra, I want to say, $200 billion each year because of our 
addiction to tobacco products. And we are spending, I am told, 
another $150 billion to maybe $200 billion a year because of 
obesity from one end of the country to the other, including in 
Sussex County.
    But I am told that America's rural communities are still 
more likely to use tobacco products than other parts of our 
country. Our rural communities are also more overweight and 
more obese.
    And I would just ask, what tools--here is my second 
question of the day--what tools, what resources, what delivery 
system reforms could we be using to reduce the disparity in 
rural communities when it comes to tobacco use and obesity?
    And I want to start with Dr. Murphy.
    Dr. Murphy. Thank you, Senator.
    Senator Carper. I was told you are really good on this 
question.
    Dr. Murphy. Oh, thank you. What we have talked about 
earlier was a new way to pay for rural health--I do not even 
say rural hospitals--but a new way to reimburse rural 
hospitals. And it is a multi-payer global budget system that 
allows hospitals to focus on the problems that you just talked 
about. And instead of investing in subscale services, invest in 
tobacco cessation programs, invest in substance use disorder 
treatments, investment in the health status outcomes that we 
are looking for to end this disparity, or to gradually decrease 
this disparity, between rural health outcomes and those of 
their urban counterparts.
    So that is the beauty of this model. It allows for the 
investment in care coordination. It allows communities to 
really take those chronic disease problems and reallocate the 
dollars that they were receiving from subclinical care services 
that they had to provide because that was the only way they got 
paid. It now allows them to address this population's health 
more.
    Senator Carper. Let me ask the other four witnesses. If any 
of you agree with what she has just said, would you raise your 
right hand?
    All right. Do any of you have something you would like to 
add to what Dr. Murphy said?
    Ms. Martin?
    Ms. Martin. I would just like to add that an investment in 
primary care providers--because I think that is the 
relationship that impacts patients' behaviors--impacts 
patients' ongoing quality of life.
    And so, in so many communities, it is the importance of the 
primary care provider that impacts these behaviors.
    Senator Carper. Does anybody else want to add to it?
    Yes, please.
    Dr. Mueller. I would add to that the investment in public 
health infrastructure. And you can come at that in two ways: 
one, encouraging collaboration between the health-care sector, 
the clinical sector, and the public health sector, which the 
ACO model does; and two, direct investment into public health 
agencies.
    Senator Carper. All right. One last quick question. What 
are your recommendations for how we can increase the supply of 
mental health workers and improve access to mental health 
treatment in rural and underserved areas?
    And we will start all the way on my left, please.
    Dr. Pink?
    Dr. Pink. Again, I would defer to my colleagues. I have no 
expertise in that area.
    Senator Carper. All right; thank you.
    Dr. Mueller. One comment would be to integrate our support 
for behavioral and mental health services with primary care.
    Senator Carper. Okay; thank you.
    Ms. Martin?
    Ms. Martin. I think it is investing in the education and 
programs where, as community hospitals, we can educate and 
train a workforce of our own. We have an extreme shortage in 
the number of qualified professionals in that area.
    Senator Carper. Thank you.
    Ms. Thompson?
    Ms. Thompson. Yes. I believe it is to further study the 
integrated health home model that is at play with our Medicaid 
population. And I think there is a great deal to learn there 
and a great deal of excitement to create in young folks if we 
can get into high schools and educate and motivate them about 
the opportunities in mental health.
    Senator Carper. Okay.
    Dr. Murphy, do you want to add anything to this?
    Dr. Murphy. I would just say leveraging the technology so 
that we can access, rural areas can access the more urban 
centers.
    Senator Carper. All right. Where have you all come from? 
Tell me where you are from.
    Dr. Murphy, where are you from?
    Dr. Murphy. I am the chief innovation officer at Geisinger.
    Senator Carper. Oh, good. I have been there before. You 
guys do good work.
    Yes?
    Ms. Thompson. UnityPoint Health in Des Moines, IA.
    Senator Carper. Okay, yes.
    Ms. Martin. San Luis Valley Health, Alamosa, CO.
    Dr. Mueller. University of Iowa.
    Dr. Pink. University of North Carolina at Chapel Hill.
    Senator Carper. Okay. Well, you have come from--some of you 
have come from a long ways. We thank you, and we thank you for 
the work you do. It is really important for our country and for 
the people of our country. Thank you so much.
    Senator Roberts. Senator Portman?
    Senator Portman. Thank you, Chairman Roberts.
    And thanks to the panel. I was here earlier to hear your 
testimony. I really appreciate it, some of the insights about 
the special challenges we face in the rural areas.
    I come from Ohio. We have a lot of big urban hospitals, and 
we have a lot of small rural hospitals. Sadly, some of them are 
closing down or consolidating.
    And I will tell you, in my State, one of the issues that is 
particularly difficult to deal with in our rural areas is the 
opioid epidemic. And I would think if you did a per-capita 
analysis of the opioid epidemic in my State, you would probably 
find that in the rural areas the problem is even more acute 
than it is in some of our suburban and urban areas, although it 
is in every ZIP code. But the difference is really not so much 
the per-capita impact, but the services that are provided.
    And one of the issues, as you know, is that we have more 
and more children who are being born with neonatal abstinence 
syndrome, meaning they really have to be taken through 
withdrawal themselves.
    We have some great programs, taking moms who are addicted, 
weaning them off of their addiction and helping to ensure that 
these babies are born without the neonatal abstinence syndrome. 
But it is overwhelming us, our neonatal units. I am sure the 
same is true with you.
    One of the things I am hearing about from our children's 
hospitals is that sometimes they can take care of the babies 
shortly after their birth, but then these babies go home, and 
there is not the ability to continue to monitor, particularly 
in our rural areas.
    And so I guess what I am asking you today is--and I know, 
Dr. Murphy, you mentioned the opioid epidemic earlier. I think 
you were the one who talked about that.
    But to the hospital CEOs, maybe you could help me a little 
on this. What services do your hospitals offer to support the 
longer-term recovery needs of these growing number of children 
who have this neonatal abstinence syndrome, and for their moms 
and their families?
    And in particular, if you work with kids with NAS, how do 
you work to ensure that the families receive the support that 
they need?
    Ms. Martin. In our community, we have certainly seen an 
increase in this issue. Just last year, about 11 percent of the 
babies that we delivered had this syndrome that you speak of.
    And we have done a lot of training with our staff to have 
them have the skillset to help the babies, you know, for the 
first few weeks of life. And we sometimes keep them for that 
period of time.
    When they move out into the homes--and oftentimes, 
unfortunately, they are going into foster homes because, if the 
mother was a user, unfortunately, they are placed in foster 
families. And so we have pediatricians who try to work with 
these families. And we have a grassroots community organization 
that involves the schools, early childhood development, some of 
our primary care providers. And together, we are trying to sort 
of leverage and learn about resources.
    It is a challenge, because there is just not a lot of 
information about that. We hear from our school teachers, 
particularly of elementary schools, that they do not feel 
equipped to deal with the challenges that some of these young 
children bring to the classroom.
    And so I think just additional resources around education 
and training, so that our workforce would know better how to 
help these children, would make a huge difference.
    Senator Portman. Yes.
    Any others?
    Dr. Murphy. Senator, at Geisinger, we are just beginning to 
develop a program for moms who have substance abuse and their 
children subsequently born with neonatal abstinence syndrome.
    So the vision for the program is that we would intervene 
when the mother begins medication-assisted treatment 
prenatally. And then we would, what we say is, wrap our arms 
around the mother and the baby with services such as behavioral 
health services, addiction medicine, counseling, pediatric 
services, and other social services that would enhance the 
likelihood of the mom staying in recovery after the baby is 
born.
    So the idea behind it is that we would test. We would offer 
these services for a period of up to 2 years and evaluate the 
model and determine what interventions really helped that mom 
stay in recovery and go on to live a productive life.
    Senator Portman. Well, thank you.
    And we did pass legislation here called the Comprehensive 
Addiction and Recovery Act, which has a separate title for 
pregnant moms, postpartum moms, and these kids with NAS.
    Since that time, we passed a budget which increased the 
funding for that. So for those few who are not aware of that, 
apply for it. We are looking for good pilot programs around the 
country.
    But I think Ms. Martin is right; Dr. Murphy is right. If we 
can, spend some money up front to avoid some of the longer-term 
problems and figure out what works.
    You mentioned information and the right kind of therapies 
to be able to help these babies as well as their moms take 
advantage of this moment.
    Many of these moms are facing their addiction because of 
their pregnancy. In other words, they do not want their kids to 
be born with this syndrome, so they are willing to go into 
treatment and, maybe previously, they were not.
    And I think Dr. Murphy is right. How do you then, once the 
baby is born, keep them--usually it is a Suboxone treatment 
that is a weaning off of the opioid. How do you then keep them 
in that treatment program and longer-term recovery and use that 
family relationship to help kindle some better prospects for 
longer-term recovery?
    So anyway, we look forward to working with you all on that. 
And I think in the rural hospitals, again, the rural setting, 
we have a particular challenge.
    And I appreciate your being here today and look forward to 
following up.
    I have another question on the Stark Law, but I will offer 
that as a question for the record. Senator Bennet and I have 
some legislation I want to get your views on. Thank you.
    Senator Roberts. Well, thank you, Senator.
    Coop, you are up next. [Laughter.]
    Senator Thune. Thank you, Mr. Chairman. It must be ``High 
Noon.''
    Thank you for holding this hearing.
    We have, in my home State of South Dakota, lots of 
challenges in accessing health-care services in rural areas. 
And we have providers who work diligently coming up with 
creative solutions, but there are still barriers and 
complications that they face on a daily basis. Part of it has 
to do with traveling long distance and having limited 
transportation options. They are big hurdles for people to 
overcome.
    And attracting providers, of course, to rural areas is 
another challenge that we face. Too often, we lose South 
Dakotans if they attend school and train in other States.
    And we have a unique issue in South Dakota as well with our 
tribal communities, making sure that they have access to 
quality health-care services, due to the pervasive problems 
that Indian Health Service facilities throughout the Great 
Plains region continue to have.
    So I look forward to working with my colleagues on this 
committee in trying to advance solutions that will address many 
of these challenges.
    Dr. Mueller, in your written testimony, you mention that 
RUPRI Center has completed multiple studies on how telehealth 
can serve as a tool to expand access to care in rural settings. 
And I could not agree more.
    I understand that you have a current project that is 
looking at Avera Health's eCARE initiatives in South Dakota, 
which range from emergency department, e-ICU, e-pharmacy, e-
behavioral health, and more.
    I have seen some of this technology first-hand. I know they 
are working hard to innovate.
    I should say for this committee's benefit, could you 
discuss what you have learned so far about Avera's model and 
how it has helped increase access in our State of South Dakota?
    Dr. Mueller. Well, thank you, Senator Thune, for the 
question. I will focus primarily on what we have learned about 
the use of telehealth in the emergency rooms, because that has 
impressed us the most.
    What that has done, especially since--I mentioned earlier, 
the CMS condition of participation was changed a number of 
years ago to allow meeting the necessity for an on-call 
physician through the use of telehealth. And that has made a 
tremendous difference across South Dakota and other facilities 
that Avera supports, because you can have an advanced-practice 
primary care provider, not a physician, in the ER who can 
quickly access a board-certified physician.
    But more important even than that is the finding that the 
use of that kind of telehealth actually helps in recruitment 
and retention of primary care providers. And this goes to a 
broader point that the more we can do to support the 
professional activity of those health-care professionals in the 
local environment, the greater the likelihood they will come 
there--because that is how they want to practice, with the 
support of board-certified physicians--and the greater the 
likelihood they will stay, because they are getting that kind 
of consultative support.
    The other quick example is in the case of pharmaceutical 
services. Inside the hospital in particular, which is how the 
e-health suite from Avera reaches out, you can meet the 
requirements for review of medication as it is being prescribed 
in a hospital much more efficiently and effectively through the 
use of telehealth.
    Senator Thune. We have, perhaps as you know, put forward 
multiple policies that were signed into law this year that will 
reduce barriers to the use of technology in Medicare and 
promote telehealth in Medicare Advantage, in Accountable Care 
Organizations, and other areas, including in treating stroke 
patients. And these are significant advancements.
    But I am wondering if there are other areas where 
technology can transform delivery of care in rural States. I 
mean, what should we be looking for in terms of technology 
opportunities in Medicare and Medicaid from your perspective?
    And, Ms. Thompson, if you would care to comment on that as 
well.
    We are making some headway, but what else should we be 
doing?
    Dr. Mueller. I think we should try to learn as rapidly as 
we can--you mentioned the use of telehealth in ACOs and 
Medicare Advantage plans--so that we can transfer that 
knowledge into the basic Medicare system and affect 
reimbursement policy, as was mentioned earlier this morning as 
one of the barriers to the expansion of telehealth.
    Senator Thune. Ms. Thompson?
    Ms. Thompson. And I would simply add I think there is a 
great opportunity to attract the new generation of physician 
providers, or providers in general, to rural health. These 
young people have grown up with technology, it is very familiar 
to them, and, frankly, it gives them a lifestyle that is 
something that is very attractive and I think would help us 
answer the needs of recruiting to the rural areas.
    Senator Thune. Good.
    Mr. Chairman, I have another question I can submit for the 
record having to do with the EHRs and how that impacts service 
delivery in rural areas as well. But I see my time is expired, 
so I will submit that for the record.
    Thank you.
    Senator Roberts. We thank you, Senator.
    Senator Warner?
    Senator Warner. Thank you, Senator Roberts.
    One of the issues that--and I think, Ms. Martin, it was 
raised in your testimony--I am increasingly seeing is kind of 
isolated areas where there may be, you know, two competing 
hospital systems, and they leave an isolated island in between 
where the two systems' catchment area comes. And you may have 
rural communities with a single doc. And in my State, in the 
county of King George, the doc has been practicing 35 years, 
done a great job, and is about to leave, and because it falls 
in between two competing health-care systems, nobody has wanted 
to take this region. And should he retire--and frankly, his 
system is being sold--we have a community that could frankly go 
without any kind of coverage at all.
    This problem of isolated areas where there is not a larger 
system to provide the back-office coverage, even if the rural 
area has relatively high affluence--this one particular 
community, King George, has relatively high affluence--you 
know, how are we going to get at that? How do we--are there any 
systemic things we can do, whether it would be a slight 
increase in terms of Medicaid reimbursements or other 
reimbursements, to make these islands more attractive on a 
longer-term basis?
    Ms. Martin. I think we do not--I do not--experience that 
quite as much in my region of Colorado, because geographically 
we are defined by a mountain range. And so certainly, anything 
within our valley, we are covering and taking care of.
    We see that a little more in the eastern plains of 
Colorado, where you will have a community that, with the 
retirement of a physician or the closure of a hospital, you 
have a gap in coverage.
    And I really hope that the State-wide leadership can make a 
difference in that in pushing people there.
    I do think that the age of physicians going and starting 
practices on their own, if it has not come to an end, it is 
slowly coming to an end. And I think it is going to take 
working with existing rural health-care systems so that they 
have the financial means to do a startup and a practice.
    I think loan repayment for physicians makes a difference 
with that. And I think certainly Medicaid reimbursement makes a 
difference with that in rural communities. Because when you 
have 70 percent Medicare or Medicaid, like you do in my 
community, you cannot make a private-model business work.
    Senator Warner. But this notion of an individual doc going 
has to have some kind of back-office operation to support him 
or her. And do you have other ideas?
    I know back in the 1990s, the Robert Wood Johnson 
Foundation had a huge kind of focus on this issue of 
underserved communities and GP practices opening up. But as you 
said, the ability to open up a practice on your own right now 
without some additional support from an overall system is 
really hard.
    Is there any way--has anyone thought about beyond what the 
government could do in terms of reimbursement levels or loan 
forgiveness, you know, incentives to health-care systems to 
make sure you do not leave these isolated islands not having 
coverage?
    Ms. Martin. I guess my thought on that would be that I 
think rural systems do really look at that geography and make a 
difference.
    The idea of even the J-1 Visa programs, things that will 
help small hospitals like ourselves be able to get providers 
that will go to these communities through long-term incentives, 
that is what comes to mind for me.
    I think the idea of a critical access hospital or a rural 
hospital like the one we have in Alamosa being able to get paid 
under a different reimbursement model in those communities 
gives you the resources to take on those communities that do 
not have providers.
    I think it is a real challenge. And I wish I had a better 
answer.
    Senator Warner. Yes.
    Does anybody else want to add on to this? I do think the 
notion of a higher reimbursement level--but then, do you create 
almost an incentive for some systems to kind of drop providers 
so that they could then qualify for an increased reimbursement?
    It is a real conundrum. I mean, I would be happy to hear 
from anybody else on the panel. This will be my only question.
    Well, I think this is not--when you have the hospital 
systems that want to make a profit and are not willing to 
stretch for these isolated islands, and with the retirement of 
many docs and the inability for a new doc to go into these 
communities, it is a real problem, a real issue. They cannot 
set it up on their own. We have to find a way to crack this 
code.
    Thank you, Mr. Chairman.
    Senator Roberts. Senator Cardin?
    Senator Cardin. Thank you, Mr. Chairman.
    I thank the panel.
    I first want to just concur with the comments of several of 
my colleagues on telemedicine and particularly for rural health 
care. I think it is really an area where we can do much better.
    I am proud to join some of my colleagues on legislation 
that would allow for Medicare reimbursement for telemedicine 
broader than it is today.
    But I want to talk about what we do in Maryland. We are the 
only State in the country that has an all-payer rate structure 
for hospital reimbursement. And we went to the next plateau a 
couple of years ago, and just approved this month, the final 
aspects of this demonstration that allows our hospitals 
basically to be judged on the overall reduction of the growth 
rate of health-care costs rather than just the hospital element 
of it.
    So we have an all-payer rate structure in our hospitals, 
but coordinated with reducing the overall costs of that 
patient's health care beyond the hospital care. So there are 
incentives to keep people healthy.
    And by way of example, the Western Maryland Regional 
Medical Center, which is in a rural part of our State, offers 
care coordinators, navigators, and local practices to use its 
telemonitoring for blood glucose, blood pressure, and weight, 
and works on the social needs of the patients. And that can be 
incorporated into the all-payer rate structure, which means all 
of the third-party payers are helping to reimburse for that, 
because you cannot get discounts in Maryland hospitals.
    So it works to allow rural areas to have full access to the 
continuum of services.
    So my point is, this model--and this is now being 
implemented in our State--how do we take this type of a model 
into the rest of the country that is still in the stovepipe-
type reimbursements that, to me, work against rural America? 
How do we take the model of what we are doing in Maryland and 
use this to develop more access to care and reduce the growth 
rate of health-care costs in rural America?
    Dr. Murphy. Senator, thank you for that question. So I had 
the opportunity when I worked at CMMI to work on the Maryland 
model and can share your enthusiasm with the model.
    And in Pennsylvania, there is actually a Pennsylvania 
Health rural initiative that is looking to do exactly what you 
just articulated, so taking the Maryland model in a State that 
is not an all-payer rate-setting State and developing a 
different methodology, but similar in the way that it includes 
all payers and has also the metrics of total cost of care 
involved in the model, but really using it in the way Maryland 
did for the Total Patient Revenue hospitals back in 2010, but 
with 8 more years of knowledge on how we transform and how we 
focus on population health.
    So we concur that it is a great model. I had previously 
testified that in your State next week the Johns Hopkins 
University School of Public Health is conducting a summit for 
States to attend on global budgeting. And it is my 
understanding that we have over 26 States that are interested 
in pursuing this.
    Senator Cardin. Yes?
    Ms. Martin. I would just say that in Colorado we are 
beginning to explore this model as well. We are very much in 
the beginning stages of it. But the conversations around global 
budgets and ways to keep our community healthy and control cost 
are at the forefront of our mind too.
    Senator Cardin. Ms. Thompson?
    Ms. Thompson. And I just simply want to applaud the 
recognition that the current payment structures, the current 
payment systems for rural America, while all well-intentioned 
and all designed at a certain point in time to help save rural 
health care, at this point in time are now setting rural health 
care back and not being able to move into population health and 
the alternative payment models and MACRA.
    And I just want to applaud the work.
    Senator Cardin. Well, thank you. And my concern is that I 
think the payment structure does not allow for this to occur, 
so you really have to find very creative ways in order to do 
it. And we should be looking at some mechanisms that allow you 
to use a reimbursement structure modification that brings down 
the overall cost of health care in your community so that the 
hospitals are not the driving force for utilization, rather 
that they are part of the overall coordinated and integrated 
care.
    Thank you, Mr. Chairman.
    Senator Roberts. Senator McCaskill?
    Senator McCaskill. Thank you very much, Mr. Chairman.
    I for the record want to thank the chairman and ranking 
member. They actually moved up the hearing this morning because 
we anticipated that a number of us would be in the NDAA markup. 
We did so well in the NDAA yesterday, we finished it last 
night, but I still appreciate the consideration.
    I want to talk a little bit this morning--well first, I 
want to just say for the record this is a crisis in our 
country, the costs of health care in rural communities, and we 
are doing nothing in the U.S. Congress to address it at this 
moment.
    We know that premiums on the exchanges are going up because 
of various things that have occurred. And I think I can get 
everybody to agree that when we have more uninsured and 
underinsured, we have more rural hospitals in stress, and 
insurance premiums go up for those of us who buy it. Correct? 
Correct?
    All five witnesses agree.
    So every time the uninsured number goes up, it costs 
everybody who is paying, including taxpayers and including 
everyone who buys insurance. So the idea of keeping the 
uninsured number down is all about saving money in the health-
care system and making everyone responsible for their own 
health-care bills.
    So it is just ironic to me that we are going to go back to 
the bad old days where uninsured numbers are climbing, and we 
are doing nothing right now to address it.
    And there are a lot of bills out there that would help. So 
I am hoping that Leader McConnell will see fit to allow some of 
the bipartisan bills that have been negotiated to the floor so 
we can actually provide some relief.
    My issue I want to talk about--there was a really good 
State audit done in my State by the auditor, Nicole Galloway, 
about a rural hospital. And what was discovered was there was a 
small rural hospital that transferred operational ownership 
through a lease agreement in November of 2016, and all of a 
sudden there was this giant increase in laboratory billings.
    And what happened is the vast majority of these billings 
were for lab activity for individuals who were not even 
patients of that hospital. Billings began immediately after the 
management agreement, despite the fact the hospital in 
Unionville, MO had not even begun processing tests.
    The Hospital Partners, which is the company that took over 
this small rural hospital, also placed on the hospital payroll 
33 out-of-state phlebotomists to perform laboratory services 
throughout the country. It appears that Hospital Partners 
reduced Putnam to a shell organization for purposes of lab 
billing.
    This morning, I am directing a letter to the Inspector 
General at HHS to investigate this. Evidently, this same group 
was involved in the northern district of Georgia, sued on a 
pass-through billing scheme at Chestatee Regional Hospital.
    The Missouri audit findings note that a large private 
insurance company has identified up to $4.3 million in payments 
for fraudulent claims to Putnam in recent months.
    So my question to all of you who are researching rural 
hospitals and who are working in rural systems is, is this a 
trend? Are these companies coming around and buying up these 
hospitals to front for shady billings on lab work? Have you 
seen this anywhere else?
    No, you have not? Okay.
    Well, this letter is going to HHS today. And I think there 
is some--in all likelihood, I am betting there is some criminal 
activity somewhere. And I think that maybe there should be some 
kind of cap on payments to labs outside of the State, 
particularly if the billings are coming from a rural hospital.
    I know you all have talked about the lack of doctors in 
rural communities. I had the University Hospital in Columbia, 
MO say they were taking in more rural patients than they 
should. Rural patients were bypassing their local hospitals and 
going to the University Hospital, mainly because that is where 
their doctors were.
    Can any of you address--maybe, Ms. Martin, you can address 
the real problem, especially that we have with OB/GYNs being 
able to be in rural areas, and any ideas you might have of how 
we can incentivize doctors to stay in these rural communities, 
go to these rural communities and stay in these rural 
communities.
    Ms. Martin. I think the workforce issues are very much 
challenges in rural areas. I think we spoke today about the 
loan repayment programs, the Conrad 30 J-1 Visa programs; I 
think they are very important to rural communities.
    But I also think it is about easing some of the regulatory 
burden on physicians who work in small areas, because they just 
want to be physicians; they want to take care of patients. And 
when they can work to the top of their license and to the top 
of their skill, they are more satisfied in a rural community.
    And I think that we talked about telehealth a bit today. 
When physicians know that they can be covered when they are off 
and they are out or they do not feel the burden of a 24/7 
responsibility, I think that is a more satisfying opportunity 
for them as well.
    We know with OB/GYNs we are very fortunate in the community 
that I am in that we have three OB/GYNs who work there. And we 
work a lot with nurse midwives to do first-line coverage for 
call, for regular deliveries, to give them a little bit of 
relief so that their call time and their quality of life 
balances, is different maybe than what they would experience 
without those.
    And so it is the use and the complement of those advanced-
practice nurses that help to keep the OBs in our community.
    Senator McCaskill. Thank you.
    Thank you, Mr. Chairman.
    Senator Roberts. Senator Brown?
    Senator Brown. Thank you, Mr. Chairman.
    My State of Ohio struggles with some of the highest rates 
of infant mortality and maternal mortality in the country. 
Shamefully, it is partly because we have under-invested in 
public health for decades. It is more complicated than that.
    Between 2008 and 2014, 400 women died from pregnancy-
related causes in Ohio, and in 2016 more than a thousand babies 
died before their first birthday. Obviously, these losses, 
these tragedies, were not felt equally across all communities. 
African-American communities in our cities suffered 
disproportionately to the greatest extent.
    We also know that, in terms of maternal and infant 
mortality, places like Appalachia, Ohio and other small towns 
generally a little more affluent than Appalachia, dealt with 
this.
    This hearing is about rural hospitals and rural health 
care, so I will stick to that. I am concerned, though, that--
not in a conspiracy sort of way--this committee has done 
nothing that I can see on infant mortality generally when the 
problems are equally acute, maybe even more so, in urban areas, 
among low-income people of color especially.
    There is a national Republican effort, troubling, that 
Governors are--work requirements seem to be the new far-right-
wing rage in this country: work requirements for food stamp 
beneficiaries, even if they are getting treatment from opioids 
and even if they are, you know, incapable of working. They are 
also now looking to do work requirements for Medicaid. And they 
are doing it in a way that will absolve more rural white 
communities' high unemployment from these work requirements, 
but will have these work requirements on inner-city families, 
increasingly because they are really smart and they have 
figured out how to do it legally, apparently, but immorally, if 
I could say that.
    But because this hearing is about rural health, I will 
stick to a question about that--a couple of questions.
    Dr. Murphy, if I could start with you, what do we do? And 
partly taking off on Senator McCaskill's question, what do we 
do to support rural communities in improving outcomes for moms 
and babies?
    Ms. Martin said something about that. I would like to hear 
your thoughts, and particularly about maintaining access to 
obstetric services.
    Dr. Murphy. I think we have to be realistic with the 
maintaining of obstetrical services in rural communities.
    I think Ms. Martin gave an example where there is adequate 
coverage, three physicians there who, in case of an emergency, 
could certainly cover for one another.
    It is a very high intensity. An OB/GYN has a very high-
intensity schedule, so you really need the numbers that Ms. 
Martin talked about to be able to effectively and safely render 
obstetrical care.
    So I think in areas where they are fortunate enough to be 
able to have the physician services on-site in a safe and a 
high-quality manner, I think then we should do that.
    I think we should work through other providers, such as 
nurse midwives, certified nurse practitioners, physician's 
assistants, to be able perhaps to offer some of the obstetrical 
care in the rural community when it is not possible to deliver 
there, so a mom does not have to drive 35 miles for her monthly 
appointment.
    But I think it is a very difficult service to staff in 
rural communities unless you have the number of physicians that 
Ms. Martin talked about.
    Senator Brown. Thank you.
    A few weeks ago, I hosted a conference in our office, and 
Rob worked with us to host a conference for CEOs from Ohio's 
smaller hospitals. We have some of the best hospitals in the 
country in Ohio. But rural hospitals are not often part of the 
conversation, and they rarely come to Washington. And so we 
hosted a number of them.
    One of the questions that came up, of course, was the 
challenge faced when attracting and retaining a strong 
workforce.
    So I am sorry I have been in another hearing today, but 
from Ms. Martin's comments and Dr. Murphy's comments, I 
appreciate that.
    I would like to, before I yield back, Mr. Chairman--and I 
wanted to thank, too, Senator Wyden, who has been helpful on 
this Medicaid work requirement, and, as you know, we are 
working on some things together. I wanted to thank him.
    But I want to just close with this.
    And just a comment, Senator Roberts.
    I want to thank Senators Grassley and Casey for their work 
on a bipartisan bill we introduced together, Senate bill 109, 
that would allow pharmacists to bill Medicare for services they 
are trained to provide in underserved areas. I understand 
pharmacists are not perhaps the greatest need in every case, 
but they obviously are central to a lot of this too. They can 
work then with rural hospitals to help improve access to basic 
health-care services like immunizations and chronic disease 
management in their communities.
    About a dozen members of this committee, if I could just 
name them--Thune, Scott, Roberts, Stabenow, Cardin, Nelson, 
Bennet, Enzi, and Cantwell--are also cosponsors of this 
legislation.
    And I am hopeful that--I know the chairman is not here--I 
am hopeful that Chairman Hatch and Ranking Member Wyden will 
commit to working with Senator Grassley and me on this bill and 
other creative initiatives to help all of you deal with the 
challenges you have in workforce retention.
    So thank you all so much.
    Thanks, Senator Roberts.
    Senator Roberts. Senator Wyden?
    Senator Wyden. Thank you very much.
    And before he leaves, I just want to tell Senator Brown I 
am anxious to work with him on the agenda he has outlined. 
Because as usual, he is going to bat for folks who do not have 
clout and do not have power, and I want to thank him for his 
comments.
    So we have been at it for almost 2\1/2\ hours.
    You all have been terrific.
    But what I am struck by is, I do not think we have 
mentioned over the course of 2\1/2\ hours what is really the 
backbone of rural health care, literally from sea to shining 
sea, and that is rural health clinics.
    And I am heading home. We have 83 of them in my home State.
    And I know, Ms. Martin, you have a significant number of 
them.
    Dr. Mueller, you have expertise on this.
    In my home State, from Curry County to Enterprise, these 
rural clinics are literally the backbone of health care. And 
they are where seniors go and people go for preventive 
screenings and primary care services and everything that helps 
them to stay healthy and out of the hospital.
    So what I would like to do, since we are getting ready to 
wrap up, is go right down the row again, since we have this 
little window here to try to look at what is important going 
forward--I do not think it gets much more important than these 
rural health clinics.
    So why don't we start with you, Dr. Mueller?
    Everybody, one item on your wish list for the rural health 
clinics going forward.
    Dr. Mueller?
    Dr. Mueller. Optimizing the use of the non-physician 
professionals through State policy, scope of practice, and 
Federal policy on conditions of participation and supervision 
requirements.
    Senator Wyden. I missed your colleague Dr. Pink. And maybe 
I just need to wear my glasses.
    Dr. Pink?
    Dr. Pink. The suggestion made by Dr. Mueller, I would 
strongly endorse.
    Senator Wyden. Okay.
    Ms. Martin?
    Ms. Martin. The issue with colocation and comingling rules 
that prevent the true integration of the health-care provider.
    Senator Wyden. I think that is so important. And you know, 
Chairman Roberts is one of the co-chairs of this really 
important Rural Health Caucus, along with our colleague Senator 
Heitkamp, who talks to me about this constantly. Hardly a week 
goes by when she does not bring it up.
    I would just say, Mr. Chairman, this whole question of the 
comingling rules that Ms. Martin is talking about, this just 
looks like a bureaucratic la-la land to me, trying to sort all 
this stuff out. So I am going to talk with Chairman Roberts 
about it.
    Yes, ma'am?
    Ms. Thompson. Strengthening the support to these advanced 
registered nurse practitioners and P.A.s and extenders that 
many times are working in very isolated areas, to give them the 
support, the education, the retraining, and the access to 
consultation.
    Senator Wyden. Giving them a bigger role.
    Ms. Thompson. Absolutely.
    Senator Wyden. I have to tell you--and we had it in our 
Healthy Americans Act, our bipartisan bill with eight Democrats 
and eight Republicans--you ought to be able to practice at the 
top of your license and particularly in these rural areas.
    So, Mr. Chairman, that is another one. I mean, why you 
would not let people practice up at the top of their license in 
a rural area--I mean, that is just common sense. That has 
nothing to do with Democrats and Republicans.
    Well, you all have been terrific. You know, we have been at 
it for close to 2\1/2\ hours.
    And I think, to me, without rural health care, you cannot 
sustain rural life. This is not rocket science. There are a 
couple of pieces to the puzzle that are a part of this.
    We are trying, for example, to expand broadband. And one of 
the striking aspects about this is, I think we started a 
revolution in Medicare with our CHRONIC Care bill, because what 
we are doing is moving from acute care, which back when I was 
director of the Gray Panthers, was the program. You broke your 
ankle--that is not Medicare anymore. Today, Medicare is cancer, 
diabetes, heart disease, strokes, that kind of thing.
    So we had a terrific group of members, led by Senator 
Schatz and Senator Wicker, come and make the case for 
telemedicine. It is really, really important in rural areas. 
But what we have seen in central Oregon and the like is that if 
they do not have broadband, they cannot tap all the 
opportunities for telemedicine.
    So there are a lot of pieces to this puzzle. But you have 
given us a lot of suggestions.
    I want also to say I am especially looking forward to the 
suggestions for the record with respect to how to get more 
providers in rural health care, because you can have the 
facilities, but if you do not have the providers, that is that.
    So, Mr. Chairman, I think it has been a really good, really 
important hearing. People know I have very, very strong 
feelings, which I will not express again, which will please the 
chairman, about how damaging these Medicaid cuts would be.
    We can get a bipartisan package here--this is doable--a 
bipartisan product in a crucial kind of area.
    I am looking forward to working with all of you and with 
Chairman Hatch and all of my colleagues on both sides of the 
aisle. There was not a bad question in the house today. So we 
have a lot of work to do.
    I look forward to working with you, Senator Roberts.
    Senator Roberts. Thank you, Senator Wyden.
    And thank you all for your attendance and your 
participation today.
    This was in fact an important and very helpful 
conversation. All of us look forward to working with each of 
you in a bipartisan way, both sides of the aisle, as we 
continue to work on a path forward to improve our rural health 
care for all of us who are privileged to represent rural and 
small-town America.
    Dr. Mueller, let us see, it was 1993 that you testified 
before me, I guess. And now here it is 2018. So I look forward 
to hearing from you in 2033, when I hope we have these things 
settled. [Laughter.]
    I ask any member who wishes to submit questions for the 
record to do so by the close of business on Friday, June 8th.
    With that, this hearing is adjourned. Thank you so much.
    [Whereupon, at 11:20 p.m., the hearing was concluded.]

                            A P P E N D I X

              Additional Material Submitted for the Record

                              ----------                              


              Prepared Statement of Hon. Orrin G. Hatch, 
                        a U.S. Senator From Utah
WASHINGTON--Senate Finance Committee Chairman Orrin Hatch (R-Utah) 
today delivered the following opening statement at a hearing to examine 
the challenges and discuss ways to improve health care in rural 
America.

    The topic today is rural health care, which is a critical issue for 
virtually every member of this committee.

    I have long considered it a special mission to create the same 
rural payment opportunities that many of our Nation's urban 
counterparts enjoy. Representing a western State, I understand the 
challenges our rural hospitals and providers face to deliver high-
quality medical care to families in environments with more limited 
resources.

    In the Senate, rural health-care policy boasts a long history of 
collaboration and cooperation on both sides of the aisle.

    Take, for example, back in 2003 when we passed the Medicare 
Modernization Act. The MMA included a comprehensive healthcare package 
tailored specifically with rural communities, hospitals, and providers 
in mind.

    The MMA finally put rural providers on a level playing field with 
their neighbors in larger communities.

    The law also put into place common-sense Medicare payment 
provisions that help isolated and underserved areas of the country 
provide access to medical care as close to home as possible.

    However, while the vast majority of rural health payment policies 
enacted in the MMA were permanent, some were only temporary. In the 
years following, those temporary provisions have become known as the 
Medicare extenders. As many of us know, the problem with extenders is 
that annual debate over necessary funding often takes priority over 
developing a more robust strategic plan for the future.

    Although some partisan and bipartisan health-care policies have 
since altered Medicare payments, many rural and frontier health-care 
providers still face significant obstacles attempting to successfully 
participate in Medicare's delivery system reforms and bundled payment 
arrangements.

    While these changes continue to emphasize new ways to pay 
providers, Medicare's existing strategies to preserve access to 
healthcare in rural areas still rely on special reimbursement programs 
that either supplement inpatient hospital payment rates or provide 
cost-based hospital payments. Now, these special payment structures may 
work just fine in certain parts of the country.

    But even with a wide range of special Medicare rural payment 
programs, some smaller communities are home to hospitals that still 
find it hard to achieve financial stability. The reasons, as we will 
learn from the expert witness panel with us here today, are complex and 
multifaceted.

    For example, when compared to their urban counterparts, on average, 
the 4 million Medicare beneficiaries living in rural and frontier areas 
are less affluent, suffer from more chronic conditions, and face higher 
mortality rates.

    To make matters worse, small, rural hospitals continue to be more 
heavily dependent on Medicare inpatient payments as part of their total 
revenues. At the same time, we are seeing a steady, nationwide shift 
away from inpatient care to providers offering more outpatient 
services.

    Many rural hospitals serve as a central hub of community service 
and economic development, but some struggle to keep their facilities 
operating in the black in order to meet local demands for a full range 
of inpatient, outpatient, and rehabilitation services.

    Resolving these issues is no easy task.

    Clearly, for some communities, Medicare's special rural payment 
structures may stifle innovations that could pave the way for more 
sustainable rural health-care delivery systems.

    One consistent theme that we will hear from our witnesses today is 
the need for flexibility.

    They are not asking Congress for a one-size-fits-all Federal 
policy.

    They want the flexibility to design innovative ideas that are 
tailored to meet the specific needs of the communities they serve.

    They need the Federal Government to support data-driven State and 
local innovations that have the promise to achieve results--increasing 
access to basic medical care, lowering costs, and improving patient 
outcomes.

    But the Federal Government cannot tackle this challenge alone.

    While I was pleased to see CMS release its rural health strategy 
earlier this month, I believe that this administration, led by HHS 
Secretary Azar, still needs to improve coordination across all agencies 
within the Department to help prioritize new rural payment models while 
also reducing regulatory burdens on rural and frontier providers.

    State and local officials must be aggressive in their efforts to 
design transformative policies and programs that meet their unique 
rural health-care needs.

    And the Federal Government should listen.

    In my view, States should be the breeding ground to test new ideas.

    However, it is not sustainable for every small town to have a full-
service hospital with every type of specialty provider at its disposal.

    That is why it is so important for rural communities to work 
together, share resources, and develop networks.

    The Federal Government must continue to recognize the important 
differences between urban and rural health-care service delivery and 
respond with targeted, fiscally responsible solutions.

    By pooling our knowledge, expertise, and financial resources, we 
can work together to develop targeted payment policies that ensure 
appropriate access while also protecting Medicare beneficiaries and 
American taxpayers.

    I am looking forward to hearing some of those innovative ideas from 
our witnesses today.

    But before I turn to Ranking Member Wyden, I want to bring one 
important item to the attention of the committee.

    The Medicare Payment Advisory Commission--otherwise known as 
MedPAC--has submitted a statement for the record outlining the 
commission's latest recommendation aimed at ensuring access to 
emergency department services for Medicare beneficiaries living in 
rural communities.

    I encourage all members to review MedPAC's statement and ask that 
it be made part of the official hearing record.

                                 ______
                                 

               Ensuring Access to Emergency Services for 
              Medicare Beneficiaries in Rural Communities

                              May 24, 2018

       Statement of James E. Mathews, Ph.D., Executive Director, 
                  Medicare Payment Advisory Commission

The Medicare Payment Advisory Commission (MedPAC) is a small 
congressional support agency established by the Balanced Budget Act of 
1997 (Pub. L. 105-33) to provide independent, nonpartisan policy and 
technical advice to the Congress on issues affecting the Medicare 
program. The Commission's goal is to achieve a Medicare program that 
ensures beneficiary access to high-quality, well-coordinated care; pays 
health care providers and health plans fairly, rewarding efficiency and 
quality; and spends taxpayer dollars responsibly. The Commission would 
like to thank Chairman Hatch and Ranking Member Wyden for the 
opportunity to submit a statement for the record today.

The Commission has a long history of developing Medicare payment 
policies to improve access to care, quality of care, and efficiency of 
care delivery in rural areas. The Commission conducted broad-based 
reviews of Medicare payment policy in rural areas in our June 2001 and 
June 2012 reports to the Congress. More recently, the Commission has 
evaluated causes of rural hospital closures and voted unanimously on a 
recommendation for a new, voluntary payment option for rural hospitals 
that would preserve access to emergency services in isolated rural 
areas. (The recommendation will appear in our forthcoming June 2018 
report to the Congress.)

To help ensure beneficiary access to hospital care in rural 
communities, over time the Medicare program has implemented several 
adjustments that increase payments to rural hospitals. Many of 
Medicare's special payments to rural hospitals are linked to inpatient 
status and are based on hospitals' costs. Despite these special 
payments, hospital closures have increased in rural areas as 
populations have declined. The volume of inpatient services provided in 
small rural hospitals has declined even more rapidly. Though 
beneficiaries in rural areas where hospitals have closed may be able to 
receive planned, nonemergent inpatient care from other hospitals, the 
Commission is concerned that these closures may leave beneficiaries 
without access to timely emergency care. Given changes in demographics 
and in the way that care is delivered, Medicare payment policies must 
change as well. As we outline below, we have recommended a new, 
voluntary model of payment that will allow stand-alone emergency 
departments to operate in rural areas that cannot support an inpatient 
hospital.

Evaluating Access to Care in Rural Areas

Each year, the Commission assesses Medicare beneficiaries' access to 
health care services. To conduct that assessment, we survey 
beneficiaries, interview beneficiaries in focus groups, and analyze 
Medicare data on beneficiaries' use of services. We frequently examine 
variation in Medicare spending and use of health care services in rural 
areas across the country, and we visit rural areas with different 
demographic and practice pattern characteristics. In general, we find 
that beneficiaries in rural areas use similar levels of hospital 
services as beneficiaries in urban areas (Medicare Payment Advisory 
Commission 2017, Medicare Payment Advisory Commission 2012). More 
broadly, beneficiaries in rural and urban areas also report similar 
levels of satisfaction with their access to routine care, even though 
some rural beneficiaries have to travel outside their area to obtain 
care. (On average, rural beneficiaries travel farther for routine care 
and obtain about 30 percent of their routine care in urban areas 
(Medicare Payment Advisory Commission 2012).)

However, while, on average, rural and urban beneficiaries use similar 
levels of health care services and express comparable satisfaction with 
their care, there are beneficiaries in some rural communities who may 
have difficulty accessing emergency care. When a hospital that serves 
an isolated community closes, even though beneficiaries may be able to 
travel and receive their nonemergent, planned hospital care in other 
locations, the Commission is concerned that beneficiaries may not be 
able to access emergency care in a timely fashion.

The recent increase in small rural hospital closures has underlined the 
Commission's concern. Fifty-one rural hospitals closed between 2013 and 
2017 (Young 2018).\1\ Among those closures were 22 critical access 
hospitals. While 28 of the hospitals that closed were located less than 
20 miles from the nearest hospital (suggesting that there may have been 
excess capacity in these markets and that beneficiaries have 
alternative sources of hospital care), 21 of the closed hospitals were 
located between 20 miles and 35 miles from the nearest hospital, and 2 
were over 35 miles from the next nearest hospital.
---------------------------------------------------------------------------
    \1\ We generally define rural as all areas outside of metropolitan 
statistical areas (MSAs). This definition of rural includes 
micropolitan areas. Others have a broader definition of rural areas 
that includes some small towns within MSAs.

Medicare's Special Payments to Rural Hospitals Are Not Targeted to 
                    Preserve Access to Emergency Services

In addition to evaluating beneficiary access to care, the Commission 
also examines the adequacy of Medicare payments to providers. In 
general, our analyses have found that the adequacy of fee-for-service 
(FFS) payments to rural hospitals does not differ systematically or 
significantly from the adequacy of urban hospitals' payments. However, 
the financial performance of rural hospitals varies, and some of the 
smallest rural hospitals have had the most financial trouble, 
potentially creating problems for beneficiary access to hospital care.

To support beneficiary access to hospital care, over time the Medicare 
program has implemented several adjustments that increase hospital 
payments. For example:

      Sole community hospital (SCH)--SCHs are hospitals that are at 
least 35 miles from the nearest hospital that is paid under Medicare's 
inpatient prospective payment system (IPPS). More than 300 hospitals 
are eligible for this program. Payments to SCHs for inpatient services 
are based on the SCH's historical costs, updated for inflation. This 
program increased payments to participating hospitals by about $1 
billion in 2015, relative to the IPPS rates that would have otherwise 
applied.

      Medicare-dependent hospital (MDH)--MDHs are hospitals with high 
shares of Medicare patients (60 percent of days or discharges). About 
150 hospitals are eligible. In this program, hospitals receive an 
increase to their inpatient payments that is based 75 percent on the 
MDH's costs and 25 percent on IPPS rates. Medicare payments to MDHs 
were about $100 million higher in 2015 than they would have been under 
the IPPS.

      Critical access hospital (CAH)--CAHs are small rural hospitals 
with 25 or fewer acute care beds. About 1,300 hospitals are designated 
as CAHs. Each is paid 101 percent of its Medicare costs for inpatient, 
outpatient, and laboratory services, as well as post-acute skilled 
nursing care in the hospital's swing beds (acute care beds that can be 
used for post-acute nursing care). New CAHs must be 35 miles from other 
hospitals, but many older CAHs were exempted from the distance 
requirement. The program increased payments to CAHs by about $1 billion 
in 2015 relative to IPPS rates; because of the way beneficiary 
coinsurance is calculated for CAH services, the program also increased 
beneficiary cost sharing by about $1 billion.

In some communities, these special payment policies have not preserved 
access to high-quality, efficient care for two reasons: (1) these 
special payments require hospitals to maintain inpatient status, and 
(2) these special payments are linked to hospitals' costs.

The dilemma is that, for many rural communities, an expensive inpatient 
delivery model may not be a financially viable option but, to receive 
these special payments from Medicare, a hospital must maintain its 
inpatient status and all of the associated costs (e.g., complying with 
certain staffing and facility requirements). This dilemma has become 
more acute because the volume of inpatient admissions in rural 
hospitals has continued to decline.

For example, in 2016, the median number of inpatient admissions (all 
payers) at CAHs reached fewer than one per day (Figure 1). (In that 
same year, about 10 percent of CAHs had fewer than two admissions per 
week.) Declining inpatient volume has important consequences for a 
rural hospital's financial viability. As the number of admissions 
falls, the hospital has fewer inpatients over whom to spread its fixed 
costs. Thus, the cost per admission increases, undermining the 
efficient delivery of care. In addition, Medicare's special payments to 
rural hospitals are linked to inpatient volume, so a hospital's special 
payments fall as volume declines. The drop in inpatient volume has thus 
contributed to hospital closures.

 [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

While the use of inpatient services in these hospitals has fallen, in 
some communities the hospitals may still be needed as a source of 
emergency care. However, under current policy, isolated communities 
that want an emergency department (ED) must maintain a hospital with 
inpatient capacity, even if the hospital does not admit enough patients 
to be financially viable. This requirement can result in some hospitals 
offering services (e.g., post-acute services, MRI services) to increase 
their volume, even though the hospital may not be a relatively 
efficient provider of that care.

The second reason why Medicare's special payments are poorly targeted 
to maintain access to care is that payment is based on a hospitals' 
costs. Thus, these policies provide little incentive for hospitals to 
manage their costs, resulting in higher spending for the Medicare 
program and for beneficiaries. In addition, cost-based payment is 
poorly targeted because it focuses subsidies on a hospitals' historical 
costs, rather than the access needs of beneficiaries in isolated 
communities. The challenge for Medicare is to develop payment policies 
that ensure access to efficient emergency care in rural communities 
where it is not financially viable to support a costly inpatient 
facility, while also protecting the taxpayer and beneficiary dollars 
used to finance the program.

The Commission's Recommendation for a New Payment Option for Rural 
                    Communities to Maintain Access to Emergency 
                    Services

In our June 2012 report to the Congress, the Commission set out three 
principles for designing special payments to preserve access to care in 
rural areas:

      Payments should be targeted toward low-volume isolated 
providers_that is, providers that have low patient volume and are at a 
distance from other providers.

      The magnitude of special rural payment adjustments should be 
empirically justified. That is, the payments should increase to the 
extent that factors beyond the providers' control increase their costs.

      Rural payment adjustments should be designed in ways that 
encourage cost control on the part of providers.

With these principles in mind, the Commission has recommended a new 
approach for Medicare payment that would give communities options in 
choosing how best to maintain access to needed emergency care. 
Importantly, this approach would better target Medicare's subsidies and 
would not require a significant increase in federal spending. As an 
alternative to maintaining a costly inpatient-centered hospital, the 
Commission recommends a new, voluntary payment model that would allow 
Medicare to pay for emergency services at stand-alone EDs in isolated 
rural areas (more than 35 miles from another ED). The rural facility 
would have an ED that is open 24 hours a day and seven days a week, but 
it would not provide acute inpatient care. The facility could retain 
other services such as ambulance services and outpatient clinics. We 
refer to the combination of the stand-alone ED and its affiliated 
outpatient services as an outpatient-only hospital. Isolated rural 
full-service hospitals that choose to convert to outpatient-only 
hospitals would receive the same standard Medicare outpatient 
prospective payment rates for ED visits as a full-
service hospital. (While the Commission's work has focused on the 
conversion of existing inpatient-centered facilities to this new model 
of care, new outpatient-only hospitals could also participate in the 
program to provide access to needed emergency services in communities 
that do not currently have access.)

In addition, to help cover facilities' fixed costs, Medicare would make 
a set annual payment that would be the same across all outpatient-only 
hospitals. Unlike the current cost-based special payments, hospitals 
with higher cost structures would not receive a higher payment. In 
addition, the fixed payment would be the same regardless of ED volume, 
so as not to encourage unnecessary ED use.

If an inpatient hospital chooses to convert to an outpatient-only 
hospital, we expect that the financing and delivery of care would 
change as follows:

      Isolated rural hospitals choosing to forgo acute inpatient 
services would qualify to receive an annual fixed payment from 
Medicare. The hospital would have discretion on how to use that fixed 
payment, enabling the hospital to support the costs of operating an ED, 
so that beneficiaries in that community would maintain access to 
emergency services. Medicare would pay for emergency services in the 
outpatient-only hospital under the outpatient PPS.

      Shifting from CAH cost-based rates for outpatient services to 
outpatient PPS rates would lower beneficiary cost sharing dramatically. 
The Commission estimates that Medicare beneficiaries could see their 
coinsurance fall by 70 percent or more. This is because beneficiaries' 
coinsurance at CAHs is set at 20 percent of charges, which is often 
close to the full payment amount that Medicare would otherwise make 
under the outpatient PPS (Medicare Payment Advisory Commission 2016, 
Medicare Payment Advisory Commission 2011).

      Beneficiary access to scheduled, nonemergent inpatient services 
would be preserved as patients would be redirected to neighboring 
hospitals.

      Eliminating services that can be more efficiently delivered in 
centralized regional facilities (e.g., MRI services) would 
substantially lower costs relative to existing models.

      Some hospitals might choose to convert their inpatient beds to 
skilled nursing facility (SNF) beds. SNF PPS rates would be applied to 
the SNF services provided under the existing eligibility rules.

      Any existing outpatient clinics would continue to operate 
unaffected by the change in the hospital's status.


             The Commission's Recommendation to the Congress
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
The Congress should:
 
     Allow isolated rural stand-alone emergency departments (more than
     35 miles from another emergency department) to bill standard
     outpatient prospective payment system facility fees, and
 
     Provide such emergency departments with annual payments to assist
     with fixed costs.
 
This new voluntary payment option would give rural providers greater
 flexibility to maintain needed access to emergency services in
 communities that cannot support a full-service hospital. Hospitals
 would retain the option to convert back to their prior status. Medicare
 beneficiaries would benefit from local access to emergency services and
 reduced coinsurance.
 
The payment option would also preserve access to needed emergency
 services without a significant increase in Medicare spending. The
 policy would target existing Medicare payments and replace the cost-
 based programs that have not preserved access to high-quality,
 efficient care in some isolated rural communities.
------------------------------------------------------------------------
Note: This recommendation will appear in the forthcoming June 2018
  report to the Congress.

Outpatient-Only Hospitals Could Switch Back to Prior Status

In determining whether or not to participate in the rural outpatient-
only hospital model, existing hospital boards would have to decide 
whether they are willing to discontinue providing inpatient services 
and convert to outpatient-only hospitals to best meet the needs of 
their communities. Discontinuing inpatient services would be a 
difficult decision for rural communities that have long been served by 
hospitals that focused on inpatient care. To reduce the communities' 
perceived risk of losing a full-service inpatient hospital, Medicare 
could allow all small rural hospitals that convert to outpatient-only 
hospitals the option of converting back to their prior status in the 
future if the community determines that such a change is necessary. 
While we expect this option of converting back to prior status would be 
rarely used, allowing this option should make it easier for hospital 
boards to make the initial decision to convert to an outpatient-only 
hospital.

An outpatient-only hospital would also have the option of aligning with 
its area's larger hospital system to support some functions at the 
outpatient-only hospital. For example, the larger hospital system could 
help with peer review of physicians, purchasing supplies, and billing 
for services. Under this option, the new outpatient-only hospital could 
work cooperatively with other healthcare providers to ensure continuity 
of care across settings.

It is not clear how many providers would choose to convert from an IPPS 
hospital or CAH status to an outpatient-only hospital under this 
policy. The decision would in part be determined by the size of the 
fixed payment and how the program was targeted. The fixed-payment model 
we discuss is targeted to isolated providers only; isolated could be 
defined as a certain driving distance from other EDs. We use the 35-
mile criterion because under current Medicare regulations, EDs can bill 
Medicare for emergency services if they are affiliated with a hospital 
that is within 35 miles. Thus, communities within 35 miles of another 
hospital already have an existing payment method that would support an 
ED to ensure access to emergency care. In addition, the 35-mile 
criterion is the limit currently used in the SCH and CAH programs.

Summary

Maintaining emergency access in rural areas is challenging because of 
declining populations in many rural areas, coupled with a payment 
system that is tied to an expensive inpatient delivery model and 
hospitals' costs. Creating a voluntary payment model to support 
outpatient-only hospitals in isolated rural communities will help those 
areas maintain the capacity to provide emergency services, ensuring 
beneficiary access to necessary services. The Commission's 
recommendation would provide an annual fixed payment to support the 
costs of operating an ED and would allow qualified outpatient-only 
hospitals to receive outpatient PPS payment rates. This policy would 
also reduce cost sharing for rural beneficiaries dramatically.

The Commission has long recognized the unique challenges with access to 
care facing rural Medicare beneficiaries and has continuously supported 
the development of targeted payment policies to ensure appropriate 
access while protecting the taxpayers and beneficiaries whose dollars 
finance the program. The Commission looks forward to continuing to be a 
resource for the Committee as it develops its policies to achieve the 
goal of ensuring access to efficient, high-quality care for rural 
beneficiaries.

References

Medicare Payment Advisory Commission. 2017. Regional variation in 
Medicare Part A, Part B, and Part D spending and service use. 
Washington, DC: MedPAC.

Medicare Payment Advisory Commission. 2016. Report to the Congress: 
Medicare and the health care delivery system. Washington, DC: MedPAC.

Medicare Payment Advisory Commission. 2012. Report to the Congress: 
Medicare and the health care delivery system. Washington, DC: MedPAC.

Medicare Payment Advisory Commission. 2011. Medicare copayments for 
critical access hospital outpatient services--2009 update. Report 
prepared by staff from RTI International for the Medicare Payment 
Advisory Commission. Washington, DC: MedPAC.

Young, S. 2018. Personal communication with Sarah Young, Federal Office 
of Rural Health Policy.

                                 ______
                                 
                 Prepared Statement of Konnie Martin, 
            Chief Executive Officer, San Luis Valley Health
    Thank you for the opportunity today to share our healthcare story. 
I am the CEO of a small health care system located in the San Luis 
Valley, which is a rural, agricultural-based community in southern 
Colorado. We serve 6 counties, an area roughly the size of 
Massachusetts, and are the safety net for our nearly 50,000 community 
members. Two of our counties are the poorest in Colorado; nearly 70 
percent of our patients are covered by Medicare or Medicaid, with less 
than 20 percent having commercial insurance. With this challenging 
payer mix, we constantly struggle to remain financially viable. SLVH 
and rural hospitals around the country are appreciative of this 
committee's commitment to rural communities, and we are hopeful that 
meaningful help is on the way.

    Our system is comprised of a 49-bed sole community hospital and a 
17-bed Critical Access Hospital. We operate 5 rural health clinics -2 
of which are provider-based. This past year we provided 2,500 hospital 
visits, 58K outpatient services, and over 65K clinic visits. We are a 
Level III trauma center and the only facility that delivers babies, 
provides surgery or any type of specialty care for 120 miles in any 
direction. We serve veterans, farm workers, college students, tourists 
and our own friends and family. We are a resilient and creative team of 
health care providers.

    We are the largest employer in our region and employ over 800 
staff. Many of them have lived in our community their entire lives--and 
their families for generations. As for me, I moved to the Valley in 
1985, and began my health care career in an entry-level IT position--
back when the personal computer was new technology--and have worked my 
way into my current CEO role.

    Our staff struggles with the costs of meeting regulatory 
requirements, which are often different--and sometimes conflicting 
across payers. Our system must report on dozens of measures for the 
Medicare quality and pay-for-performance programs. However, our private 
insurers ask us to report yet more--some on the very same topic, but 
using different definitions. This complex and confusing data reporting 
takes time away from what really matters--delivering on our health care 
mission.

    Recruiting and retaining a qualified workforce is another major 
challenge for rural providers. We have been fortunate to form 
partnerships with local and State schools that help develop and 
maintain our workforce. Specifically, we have multiple ``grow your 
own'' programs--from paramedic training, hosting medical students, 
internships, and mentoring those pursuing a healthcare MBA. We 
collaborate with the local community health center to host a Rural 
Residency Training Track Program. We are set to have the first 2 
physicians complete their training in June 2019.

    We have our own work force success story to celebrate with two 
family medicine physicians who returned to their childhood homes to 
care for their friends and neighbors. And, we have a physician who came 
during college to serve as a volunteer at a local shelter, and today 
he's a surgeon in our organization.

    Rural communities pride themselves on hard work and taking care of 
their own. However, Federal payment systems and delivery models must 
recognize the unique circumstances of providing care in rural 
communities, and must be updated to meet the realities and challenges 
of how health care is delivered today and in the future. About 10 years 
ago, the critical access hospital that is part of our system approached 
us for help. Nearing closure and in dire financial condition, we 
entered into a partnership to provide management services and financial 
support. Then, in 2013, this CAH fully merged into the system that is 
today, SLV Health. This type of arrangement prevented a hospital 
closure, but such partnerships are not available to many rural 
hospitals. And we see the result with 83 rural hospitals closing since 
2010 and 12 CAHs in CO currently are operating in the red today.

    Therefore, I am here today to ask for your support and 
consideration for new financial models that consider our needs, 
including the creation of a 24/7 rural emergency medical center 
designation, such as the AHA has recommended, and that Sen. Grassley 
has championed. And I ask you to provide appropriate resources, 
flexibility, and ongoing dialogue with those of us in rural America who 
stand ready to innovate, work hard, and meet the current challenges of 
caring for our friends and neighbors. In a country as great as ours, 
where you live should not determine if you live.

    Again, thank you for having me here today.

    Thank you for the opportunity today to share our health care story. 
I am the CEO of San Luis Valley Health (SLVH), a small health care 
system located in the San Luis Valley, which is a rural, agricultural-
based community in southern Colorado. We serve six counties, an area 
roughly the size of Massachusetts; and are the safety net for our 
nearly 50,000 community members. Two of our counties are the poorest in 
Colorado. Nearly 70 percent of our patients are covered by Medicare or 
Medicaid, and less than 20 percent have commercial insurance. With this 
challenging payer mix, we constantly struggle to remain financially 
viable. SLVH and rural hospitals around the country appreciate this 
committee's commitment to rural communities, and we are hopeful that 
meaningful help is on the way.

    Our system is comprised of a 49-bed sole community hospital (SLVH 
Regional Medical Center or RMC) and a 17-bed Critical Access Hospital 
(Conejos County Hospital or CCH). We operate five rural health 
clinics--two of which are provider-based. This past year we provided 
2,500 hospital visits, 58,000 outpatient services, and over 65,000 
clinic visits. We are a Level III trauma center and the only facility 
that delivers babies, provides surgery or any type of specialty care 
for 120 miles in any direction. We serve veterans, farm workers, 
college students, tourists and our own friends and family. We are a 
resilient and creative team of health care providers.

    We are the largest employer in our region and employ over 800 
staff. Many of them have lived in our community their entire lives--and 
their families for generations. As for me, I moved to the Valley in 
1985, and began my healthcare career in an entry-level IT position--
back when the desktop computer was new technology--and have worked my 
way into my current CEO role.

    Rural Hospitals are facing significant challenges across the 
country with 83 rural hospitals closing since 2010. Currently 12 CAHs 
in Colorado are operating in the red. Regulatory burden, limited 
resources, challenging payer and patient mix, and geographic isolation 
are among the key hardships facing rural hospitals. For example, our 
staff struggles with the costs of meeting regulatory requirements, 
which are often different--and sometimes in conflict across payers. We 
must report on dozens of measures for the Medicare quality and pay-for-
performance programs. However, our private insurers ask us to report on 
yet more measures--some on the very same topic, but using different 
definitions. This complex and confusing data reporting takes time away 
from what really matters--delivering on our health care mission.

    Recruiting and retaining a qualified workforce is another major 
challenge for rural providers. SLVH has been fortunate to form 
partnerships with local and State schools that help develop and 
maintain our workforce. Specifically, we have multiple ``grow your 
own'' programs--from paramedic training, hosting medical students, 
internships, and mentoring students pursuing a healthcare MBA. We 
collaborate with the local community health center to host a Rural 
Residency Training Track Program and are set to have the first two 
physicians complete their training in June 2019.
               overview of health care in rural colorado
          Nearly 750,000 people live in Colorado's 47 rural counties.

          CAHs and Rural Health Clinics (RHC) were established to 
        provide access to care in rural communities. Rural Colorado has 
        older, sicker, poorer patients than its urban counterparts. 
        CAHs and RHCs do not have a high-volume patient population to 
        provide care without cost-based reimbursement.

          In Colorado's rural counties 30 percent-60 percent of 
        patients are on Medicaid and Medicare, and some facilities see 
        upwards of 70 percent Medicare and Medicaid patients (78 
        percent in Costilla County, 68 percent in Huerfano, 54 percent 
        in Delta County--see dark red counties below, data is from 
        County Health Rankings, geocoded by Colorado Rural Health 
        Center, the State Office of Rural Health as of May 2016).

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]        

               overview of san luis valley health system
    SLVH is an essential health care system with roots tracing back to 
the 1920s when a group of concerned Lutherans accepted the 
responsibility of management and operation of Alamosa Community 
Hospital. The organization's mission, ``To be a premier, fully-
integrated rural health care system providing exceptional, patient-
centered services to the San Luis Valley,'' directs its partnerships 
between patients, families, and health care providers and the 
strategies that drive current organizational priorities and program 
services.

    SLVH is a non-profit, 501(c)(3), that provides various forms of 
health care services to nearly 50,000 residents who make up the total 
population. SLVH Regional Medical Center (RMC) offers the only nearby 
Level III Trauma Center that offers 24/7 access to orthopedic and 
general surgeons. SLVH RMC also offers the only labor and delivery unit 
within 120 miles, which means that patients do not have to travel over 
a mountain pass to deliver their newborns. SLVH Conejos County Hospital 
(CCH) Emergency Department (ED) uniquely serves residents in two of the 
State's poorest counties, Conejos and Costilla, and northern New 
Mexico. Rio Grande Hospital distinctly serves the west end of the SLV. 
Three counties in the SLV region do not have a hospital.

    SLVH also includes a physician service practice that provides 
primary and specialty services, behavioral health, and other ancillary 
services--three of its five clinics are designated as RHCs and two are 
designated as provider based. SLVH partners and collaborates with each 
SLV hospital, all local clinical providers and nursing staff, in 
addition to other relevant community partners such as behavioral 
health, law enforcement, health and human services, to ensure that 
resources are maximized and not duplicated in a manner that benefits 
optimal patient outcomes. The true beneficiaries of this level of care 
are all the residents who have access to a reliable health care system 
that provides quality health care services to all patients, regardless 
of where they live or ability to pay. A geographic illustration of the 
SLV region and SLVH hospital designations are provided below: 
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                        community and geography
    The SLV is the largest and highest valley in North America, 
surrounded by three mountain ranges that effectively isolate the Valley 
from the rest of Colorado. The region spans 8,194 square miles and is 
comprised of six counties covering Alamosa, Conejos, Costilla, Mineral, 
Rio Grande and Saguache Counties. According to the 2017 U.S. Census 
Bureau Population Estimates Program, the total population is 47,204, 
with rich diversity represented by a sizeable Hispanic population (41 
percent compared to 21 percent statewide) as well as a significant 
population of indigent and migrant farm workers. Close to one third of 
the population (28 percent) speaks a language other than English at 
home, compared to a rate of 17 percent in Colorado (U.S. Census Bureau, 
American Community Survey (ACS) and Puerto Rico Community Survey 
(PRCS), 5-year Estimates).

    Three of our six counties are designated rural and three are 
frontier. Frontier areas are sparsely populated rural areas, which are 
isolated from population centers and services and are defined as 
counties having a population density of six or fewer people per square 
mile. This definition does not take into account other factors that may 
isolate a community such as challenges in accessing public 
transportation, affordable housing, health and human services, and 
other social support. Of the six counties in the region, two are among 
the five poorest counties in Colorado. 22 percent of the population 
lives below poverty level (compared to 11 percent for Colorado), and 
(in 2016 dollars) median household income levels of $35,897 fell short 
of the State's comparable $62,520 (U.S. Census Bureau, ACS and PRCS, 5-
Year Estimates). Economic, cultural and other social determinants of 
health exacerbate geographic and other challenges of providing health 
care services. The number of persons in the SLV without health 
insurance, under age 65 years averages 12.5 percent, compared to the 
State average of 8.6 percent (U.S. Census Bureau, QuickFacts). Seventy-
one percent of patients served at SLVH in 2017 were enrolled in 
Medicare and/or Medicaid. In fiscal year 2016-17 SLVH provided 
$1,126,323 in charity care, not including $1,758,532 in bad debt. 
Importantly SLVH provides services to all patients regardless of their 
ability to pay.

    Social determinants of health, the geographic expanse of the SLV 
region, inadequate reimbursements, regulatory burden and other factors 
pose public health challenges for residents and the health care system. 
Coordinating health care services across the continuum of care is mired 
with complications rooted in these factors as well as information gaps 
occurring at the point of service and siloed information systems. 
Additionally, there are significant costs associated with maintaining 
and updating aging facilities (dating back to the 1920s (RMC) and 1960s 
(CCH)) and outdated equipment, which are not factored into 
reimbursement. Through all of this, SLVH perseveres in its goal of 
providing health care services that meet the needs of its community 
while also meeting the standards of care in line with Colorado's other 
health care providers, hospitals, and designated trauma centers.
                 aligning services with community needs
    SLVH and rural hospitals around the country constantly work to 
match the services they provide to the needs of their communities. 
Every three years, SLVH conducts a community health needs assessment 
involving community stakeholders and patient feedback. The primary need 
identified during the 2016 survey was addressing substance abuse and 
mental health. This aligned with an analysis commissioned by the 
Colorado Office of Behavioral Health regarding substance use disorder 
services that documents gaps and needs that are significant and varied, 
and underlines that nearly every population (in Colorado) is 
underserved. These needs correlate directly with current demographics 
that indicate residents in the SLV report a higher incidence of poor 
mental health days compared to State and national rates. (Robert Wood 
Johnson Foundation, 2017 County Health Rankings and Roadmaps). Ranking 
data also shows SLV counties have fewer mental health provider ratios 
(except for Alamosa County).

    In addition, just as in the rest of the Nation, an increasing 
number of residents in the SLV are experiencing opioid dependence, 
abuse or misuse, and/or addiction, and many are turning to heroin and 
other cheap alternatives. These disorders are often associated with 
chronic physical illnesses such as heart disease and diabetes, and when 
one is out of control, it affects the other. These disorders also 
increase the risk of physical injury and death through accidents, 
violence, and suicide. Overall, only about half of those affected 
receive treatment according to the National Institute of Mental Health.

    SLVH has provided Behavioral Health (BH) services in its busiest 
primary care clinic since 2011, and has increased BH staffing 
throughout primary care clinics, including the use of Care 
Coordinators, who help connect and engage patients in their own self-
management beyond clinic exam rooms. Currently all SLVH primary care 
clinics provide Screening Brief Intervention Referral and Treatment 
(SBIRT), Drug Abuse Screening Tests (DAST), Pain Management Agreements, 
prescription drug monitoring, referral to medication assisted 
treatment, social supports and care coordination for patients who are 
at risk or are already abusing substances. Other ancillary supports 
include physical therapy and chiropractic treatment. BH staff 
participate in the development of integrated BH treatment plans and 
follow up on emergency room and hospital admissions in order to 
positively impact clinical outcomes, patient-provider satisfaction, and 
cost of care. SLVH EDs are implementing clinical guidelines for 
alternatives to opioids to help address the opioid epidemic and prevent 
future misuse. (Please see the attached SLVH Opioid Puzzle.)
                    commitment to quality and safety
    SLVH is dedicated to providing high quality care to our patients, 
and participates in many quality measurement and improvement efforts. 
While we are proud of our performance, many of the current measures and 
methods of publicly reporting our quality data do not fully reflect the 
quality care our patients receive in our facilities. SLVH provides safe 
and high quality clinical services and demonstrates superior outcomes 
by assessing performance with objective and relevant measures, however 
not all mandated measures are applicable or reflective of true patient 
care services.

    SLVH's Quality and Safety Plan is a collaborative effort with 
SLVH's Quality and Safety Department, Risk Management, all clinical 
services, and the medical staff. All departments of the organization 
develop annual goals to address and support improvement of the care, 
treatment, service, efficiency, and safety of outcomes that align with 
the organization's overall mission.

    The Quality and Safety Department utilizes many resources to 
identify areas of improvement for SLVH, such as: Event Reporting 
System, HAC, Culture of Safety Survey, Core Measures, HCAHPS/CGCAHPS, 
MACRA/MIPS, HQIP, MBQIP, QualityNet, etc. The chart on the following 
page helps illustrate the number of regulatory agencies to which SLVH 
reports, as well as the number of initiatives and metrics on which we 
report. It also provides a crosswalk of the number of metrics reported 
to multiple agencies. As this chart clearly illustrates, the staff time 
required for data input, the time required for manual abstraction, and 
other administrative resources needed to fulfill the reporting 
requirements render these metrics and methods of reporting antiquated 
and ineffective.

    Targeted regulatory reform is needed to allow rural hospitals to 
report meaningful, accurate quality measures aligned with the services 
provided and that account for the challenges of measuring in the rural 
environment, including low patient volumes, the wide variation in 
service mix and socioeconomic factors. Rural hospitals want to be 
recognized for the quality of care we are providing, however we need 
the right measures and methods for reporting. (Please see the Metric 
Crosswalk on the following page.)

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

    Rural hospitals face the same complex reporting and regulatory 
requirements as larger urban facilities, but with fewer available 
technology supports and financial and staff resources. As mentioned 
above, data submitted through registries and vendors requires hours of 
manual abstraction. One-size-fits-all metrics are not an accurate way 
to measure clinical care, nor do they add value to health delivery 
processes in rural areas. Oftentimes the metrics do not apply to low-
volume service lines or match the needs of the community identified in 
the health needs assessment. For example, SLVH maintains an average 
daily census of less than one in its Intensive Care Unit (ICU), but is 
still required to report specific ICU measures, such as infections from 
catheters and central lines. Although the organization has been 
fortunate to report no central line infections in several years, SLVH 
is still required to use a registry to identify all eligible patients 
and to abstract data from their charts into a national reporting 
system. There is no applicability, and this information does not 
provide a meaningful comparison against similar organizations. These 
metrics are based upon volume standards much larger than SLVH.

    Another example, in the last year: SLVH had one catheter associated 
urinary tract infection in its ICU, but because patient days are so 
low, the overall rate of infections looks disproportionately high. This 
causes confusion and frustration among caregivers and instills a lack 
of confidence in our patients seeking safe and reliable care. These 
metrics also impact SLVH's CMS star rating and potentially 
reimbursement through programs like Value Based Purchasing.

    SLVH remains completely committed to providing safe and effective 
health care and to being accountable for the delivery of quality health 
care services through established metrics. However, rural providers 
need the flexibility to report data on measures which reflect its 
services and patient population. An example of a meaningful quality 
improvement metric is the reduction of early elective deliveries. SLVH 
RMC serves as the only hospital in the SLV that delivers babies. A few 
years ago, staff recognized an uptick in early elective deliveries. 
Providers and nurses developed a process improvement plan and over the 
course of 18 months reduced early elective deliveries from 10 percent 
to 0 percent. This is great example of a quality metric that was 
meaningful, relevant and resulted in safer and more affordable patient 
care. Each rural hospital has their own unique story about their 
patient population and needs the flexibility to identify priorities 
based upon data, patient population and community health needs 
assessment data to identify a menu of reporting metrics. Rural 
providers also need to be benchmarked against similar peers so that the 
ratings are more meaningful and add context.
              meaningful use and electronic health records
    Meaningful Use (MU) reporting is another area that deserves careful 
consideration. SLVH implemented its Electronic Health Record (EHR) in 
2013, and 2018 will be the sixth year of reporting. We initially 
participated in the program because of the opportunity it held for 
improving patient care and shared investment in the adoption and use of 
EHRs. For example, the incentive potential was meaningful as both RMC 
and CCH Hospitals are dual eligible, which means incentives were 
possible under both Medicare and Medicaid. However, the incentive funds 
were not enough to address the ongoing costs of the program, including 
updating and maintaining the technology. Currently, SLVH attests to 
Medicare MU because reporting is required to avoid payment penalties. 
We no longer report to Medicaid MU.

    MU criteria is constantly changing, which presents challenges for 
any provider, but especially rural providers. SLVH's EHR vendors 
struggle to provide adequate updates to our system to pull the required 
information. Each time there is a criteria change, an EHR update is 
required and SLVH must invest more time, resources and funding in order 
to meet MU requirements or face a penalty. Furthermore, pulling reports 
from Practice Partner (outpatient EHR) for eligible clinicians is time 
consuming. And not all meaningful use measures are relevant to SLVH, 
particularly at CCH where patient volume results in a low denominator 
for the calculation. The only electronic clinical quality data SLVH 
submits for CCH are ED throughput and VTE measures.

    Additionally, the EHR has presented unintended challenges for 
clinicians, who now must report in the MACRA system. Physician 
attention is too often focused on clicking certain fields in the EHR 
instead of focused on the patient. Several measures hold the physician 
accountable for actions outside of the physician's control--such as the 
Patient Portal and Secure Messaging.
    flexibility and alternative payment models for critical access 
                  hospitals and small rural hospitals
    About 10 years ago, Conejos County Hospital (CCH), the critical 
access hospital that is now part of our system, approached us for help. 
Nearing closure and in dire financial condition, we entered into a 
partnership to provide management services and financial support. Then, 
in 2013, this CAH fully merged into the system that is today SLVH. This 
type of arrangement prevented a hospital closure, however it is 
important to note that such partnerships are not available to many 
rural hospitals.

    The frontier county CCH serves is home to 8,200 people in an 
agricultural dependent area, larger in square miles than the State of 
Rhode Island. The poverty rate for Conejos County is just above 22 
percent, and the payer mix of CCH is 80 percent Medicare and Medicaid. 
Cost based reimbursement has allowed the hospital to reduce its 
financial vulnerability and maintain access to essential services in a 
vulnerable area of the State. This reimbursement model has also 
provided flexibility in staffing and services, access to Flex Program 
resources and grants, and the inclusion of capital improvement costs in 
allowable expenses. By maintaining a modest, but positive margin, CCH 
has been able to make improvements in its existing facility, replace 
vital patient care equipment, and meet regulatory requirements. SLVH 
CCH has also been able to recruit health care professionals to an 
underserved area. Again, these partnerships are not available to all 
struggling CAHs who are facing decisions about reducing or eliminating 
services or even closing.

    Because of our partnership, SLVH has been able to streamline CCH 
and RMC services and costs to ensure the highest quality of services 
and efficiencies, with an eye toward providing services within CCH that 
meet the community's unique needs. With its aging population, the needs 
for diagnostic services, therapy, past-acute rehabilitation (swing 
beds), and 24-hour emergency services have emerged as the community's 
most pressing needs. The number and type of inpatient services offered 
at CCH have declined over the last ten years. This dramatic decrease in 
market share for inpatient services is illustrated in the chart below, 
which highlights the decline in inpatient services and rise in demand 
for ED patients, swing, observation, and other outpatient services.


------------------------------------------------------------------------
 
------------------------------------------------------------------------
Year Reported                          2014         2016         2017
------------------------------------------------------------------------
Inpatient Market Share                37.1%        23.8%        15.4%
------------------------------------------------------------------------
Outpatient Market Share               37.5%        48.1%        49.3%
------------------------------------------------------------------------


    As rural health care facilities continue to adapt to the changing 
needs of our patient population, we need the tools and flexibility 
necessary to innovate and respond. Alternative payment models, such as 
a 24/7 rural emergency department designation would provide an option 
for certain small rural hospitals struggling to maintain access to care 
in their communities. The creation of a 24/7 rural emergency medical 
center designation, has been recommended by the American Hospital 
Association (AHA) Task Force on Ensuring Access in Vulnerable 
Communities. Senators Chuck Grassley and Amy Klobuchar have introduced 
bipartisan legislation in the Senate to establish such a designation 
under the Medicare Program. Similar bipartisan legislation has also 
been introduced in the House by Representatives Lynn Jenkins and Ron 
Kind.
                          workforce challenges
    Recruiting and retaining a qualified workforce is another major 
challenge for rural providers. SLVH has been fortunate to be able to 
develop partnerships with local and State schools to help develop and 
maintain our workforce. Specifically, we have multiple ``grow your 
own'' programs--from environmental systems maintenance programs through 
technical school education to nurse professional programs through our 
local junior college and Adams State University. We partner with 
medical schools, advance practitioner training programs, physical 
therapy and pharmacy schools, and many others. We use innovative 
strategies to educate and train those who desire to work and live in a 
rural community. This partnership provides meaningful employment 
opportunities while serving our community's healthcare needs.

    SLVH collaborates with the local community health center to host a 
Rural Training Track Residency Program. We are set to have our first 
two physicians complete their education in June 2019. We have around 
100 physicians in our community; only two of those are in private 
practice: the other 98 are employed. We are at the forefront of 
provider-hospital integration driven by the financial necessity of 
collaborating.

    Federal programs currently exist to help make it easier for 
physicians to practice in rural areas. It would be helpful for Congress 
increase the number of Medicare-funded residency positions and extend 
the Conrad State 30 J-1 visa waiver program.
                               conclusion
    Rural hospitals and communities pride ourselves on hard work and 
taking care of our own. However, Federal payment systems and delivery 
models must recognize the unique circumstances of providing care in 
rural areas, and be updated to meet the realities and challenges of how 
health care is delivered today and in the future.

    SLVH's two hospitals are the anchors of the health care 
infrastructure in our region. However, the fixed costs of providing 
care in rural communities is an ongoing challenge. We must maintain and 
update our facilities, and medical equipment and hire, train and retain 
highly skilled staff. Additionally, regulatory burden, geographic 
isolation, low patient volumes, limited resources and a challenging 
payer and patient mix are also hardships we deal with every day. Some 
recommendations to address these challenges are listed below.

          Support models allowing for adjustments in what defines a 
        CAH, including the creation of a 24/7 rural emergency medical 
        center designation, such as the AHA has recommended.

          Reduce the number of metrics, streamline metrics across 
        regulatory agencies, and establish clear definitions of the 
        metrics required.

          Change the regulations to allow true integration of care. 
        Clarify the unnecessarily burdensome regulations around co-
        location, removing those that serve as barriers to integrating 
        care in rural communities. Co-location saves the system 
        resources and allows rural facilities to offer a broader range 
        of serves in a cost effective manner.

          Support flexible models for telehealth: In order to help 
        deal with the severe workforce shortages allow rural facilities 
        to be an originating site for telehealth. Remove barriers so 
        that rural facilities may fully utilize telehealth services.

          Support existing Federal programs to help make it easier for 
        physicians to practice in rural areas: increase the number of 
        Medicare-funded residency positions and extend the Conrad State 
        30 J-1 visa waiver program.

    I thank this committee for the opportunity to speak today and 
appreciate your commitment to deliver meaningful reforms and resources 
that will help us in rural communities meet the current challenges of 
caring for our friends and neighbors. In a country as great as ours, 
where you live should not determine if you live.

                                 ______
                                 
          Questions Submitted for the Record to Konnie Martin
               Questions Submitted by Hon. Orrin G. Hatch
    Question. I was very intrigued by your comments about designing 
rural quality measures. My understanding is that the National Quality 
Forum is expected to issue a final report in August that identifies a 
core set of relevant rural measures. While I know that rural hospitals 
and providers want to show how high quality their services are, they 
often cannot report on the same types of measures as urban facilities. 
In fact, some rural stakeholders have told me that the NQF measure set 
is actually more focused on process measures than on outcomes measures, 
which could increase rural hospital and provider reporting burdens. Do 
you have any specific suggestions on how Congress could most 
effectively implement value based reimbursement for Critical Access 
Hospitals?

    Answer. Rural hospitals value quality and safety. I believe most 
have programs and processes in place that demonstrate the quality of 
services they provide. We should be measured and evaluated on services 
we provide consistently and in a high enough volume to provide a true 
picture of the outcome. Some options for consideration include: (a) 
urging NQF to allocate measure development dollars towards filling gaps 
in rural measurement--for example, rather than evaluating existing 
measures to determine if any could be applied to rural providers, NQF 
should seek to address measurement gaps (e.g., access, assessing when 
to transfer patients, etc.); and (b) requesting that CMMI test a 
voluntary demonstration of a Value Based Purchasing (VBP)-like approach 
for CAHs.

    Currently, rural providers are not wholly unaffected by VBP. The 
MACRA's MIPS program, for example, has no statutory exclusion for rural 
providers. Rather, it has a low-volume threshold that CMS can choose to 
alter to include more/fewer clinicians. It is reasonable to expect that 
as CMS lowers the low-volume threshold, more providers (including 
method II CAHs with clinicians who have reassigned their billing rights 
to the hospital) will participate in these programs.

    Question. Because not every rural town can support a full-service 
hospital, rural researchers, rural stakeholders, and non-partisan 
public policy think tanks--such as the Bipartisan Policy Center--have 
called on Congress to give States and communities more flexibility to 
design locally driven health care solutions. One idea is to allow 
small, rural hospitals to transform into rural emergency centers. Do 
you think this is a good approach? What types of services, in general, 
do you think a rural emergency center should offer?

    Answer. Yes. I do support the establishment of a rural emergency 
medical center designation under the Medicare Program, and believe that 
it is right approach for keeping medical care in rural communities. In 
addition, I agree with your statement that not every rural town can, 
nor should, have a full-service hospital. Protecting emergency type 
services in strategic geographic locations aids our healthcare system 
in meeting the needs of rural residents. This designation would give 
communities an important tool to maintain access to certain services 
while improving financial viability and predictability. It unencumbers 
rural facilities from the mandate to maintain inpatient services in 
order to receive special Medicare designation status.

    These facilities should offer essential health care services such 
as emergency and outpatient services, along with additional services 
that meet a community's specific needs. Additional services could 
include post-acute, diagnostic, primary care, hospice/respite care, 
etc. Regarding payment, I encourage Congress to consider a fixed 
facility payment plus the outpatient rate for services. This approach 
aligns with MedPAC's recent recommendation and is supported by the 
American Hospital Association. Such a payment structure would provide 
needed predictability by accounting for some of the high fixed costs of 
operating a facility and unique challenges of providing services in 
rural communities.

                                 ______
                                 
              Questions Submitted by Hon. Michael B. Enzi
    Question. Critical Access Hospitals can have up to 25 beds, but the 
smaller ones in Wyoming often have only between two and ten of those 
beds occupied on an average day. It is difficult to staff a 25 bed 
hospital that only has two beds full. What can rural hospitals do to 
maintain and improve efficiency when they face this kind of patient 
volume?

    Answer. Facilities in remote geographic locations with low 
inpatient volume face significant challenges. I believe communities 
should have flexibility to determine the health care services that best 
meet their needs. For example, these low volume hospitals should have 
the option to transition to a rural emergency medical center and select 
outpatient services most needed by residents.

    Additionally, reimbursement rates for outpatient services should be 
increased. Currently, outpatient services are reimbursed at 
significantly lower rates than inpatient services, making it more 
difficult for providers to maintain access. The way reimbursement is 
currently structured, many rural hospitals have no choice but to focus 
on inpatient care over expanding services that might better align with 
the needs of their community.

    I am also an advocate for partnerships and affiliations when 
possible. Our health-care system has both a PPS hospital and a CAH. 
This partnership allows multiple opportunities for staff to learn from 
one another and have the experience and volumes that keep us competent 
and ready to care for our community.

    Finally, ending the Medicare sequestration cuts, which reduce 
payments by 2 percent, would significantly help CAHs, including those 
with very low patient volumes.

    Question. There has been a lot of focus on Critical Access 
Hospitals, and rightfully so, but how is patient care delivered and 
reimbursed in hospitals that are close to meeting the CAH designation 
but not quite there, like Campbell County Health in my hometown of 
Gillette?

    Answer. I truly understand your point and the dilemma you 
reference. Our health-care system has two hospitals; one is a PPS, Sole 
Community Provider facility and the other a CAH. I recognize firsthand 
the benefits and the shortcomings of both designations.

    Hospitals that are too large to qualify for CAH status are often 
too small to benefit from economies of scale. In cases where sustaining 
inpatient care is problematic, I support options such as the 
establishment of a rural emergency center designation. While it is not 
a solution for every community, it could offer an option for increased 
financial stability while maintaining access to essential services.

    For rural hospitals that would not meet the CAH criterion of25 beds 
or less, but remain geographically isolated, a Sole Community Hospital 
designation can be beneficial. SCHs are eligible to receive higher 
payments in order to maintain care access in their remote location.

    I also know that the Rural Community Hospital (RCH) Demonstration 
has been a lifeline for some hospitals by allowing cost-based 
reimbursement under Medicare for certain rural hospitals with 26-50 
beds. This and other alternative payment models should be available for 
communities. Finally, improved reimbursement for outpatient services 
and the elimination of Medicare sequestration would help address the 
challenges faced by this category of hospitals,which is too large to 
qualify for CAH status, but too small to benefit from economy of scale.

                                 ______
                                 
                 Questions Submitted by Hon. John Thune
    Question. Ms. Martin, in your written testimony, you discuss 
meaningful use and electronic health records as a challenge to rural 
providers. Several members on the committee and I have long advocated 
for ensuring that electronic health records do not cause undue 
compliance burdens on providers. It's why we introduced the EHR 
Regulatory Relief Act last year. CMS has since the proposed what seem 
to be positive changes to meaningful use through the 2019 IPPS rule, 
including a new scoring methodology that may help address some of our 
concerns about the current all or nothing approach to meaningful use. 
Have you had the opportunity to review these changes to the program? 
Are they a good start, or what areas would you focus on?

    Answer. Changes to the Promoting Interoperability Program included 
in the IPPS Proposed Rule would offer much needed flexibility and 
improvements; however, more is needed. Positive changes include the 
proposed scoring methodology, which would eliminate required thresholds 
and permit hospitals to get credit for building performance in some 
areas while earning additional points in areas of strong performance. 
Other flexibility and improvements include the allowanceof a 90-day 
reporting period for 2019 and 2020; the reporting of four electronic 
clinical quality measures for one quarter; and the removal of an 
objective that hold hospitals and CAHs responsible for the actions of 
others.

    However, the Proposed Rule still requires hospitals to use 2015 
Edition Certified EHR technology. Instead, balance is needed between 
the positive move toward patient apps connecting to provider EHRs and 
the real and developing risks that this approach raises for systems 
security and the confidentiality of health information. Hospitals like 
mine will take measures to secure systems, however, how this will be 
evaluated when the rules against information blocking are enforced is 
an area where greater clarity is needed.

    The IPPS Proposed Rule provided important flexibilities and changes 
to the Promoting Interoperability Program, however, it does not address 
critical challenges hospitals have in successfully meeting its goals. 
In the IPPS proposed rule, most of the points are available for health 
information exchange among providers and provider to patient. Providers 
that cannot meet one of the performance requirements are able to 
receive an exclusion but they must make up the points through 
additional health information exchange. Unfortunately, CMS offers 
limited options for exchange. For example, providers that use a Health 
Information Exchange cannot receive credit for using the HIE to support 
health information exchange. This type of barrier to successfully 
meeting the program goals should be addressed.

    Your legislation is necessary because it would remove the ``all-or-
nothing'' approach to meeting the requirements of the program. 
Providers must report something for every objective and every measure 
in the program in order to successfully meet program requirements.

                                 ______
                                 
                Question Submitted by Hon. Rob Portman 
                       and Hon. Michael F. Bennet
    Question. We have previously introduced legislation to encourage 
providers to participate in alternative payment models and facilitate 
care coordination, including the Medicare PLUS Act (S. 2498 in the 
114th Congress) and the Medicare Care Coordination Improvement Act (S. 
2051 in the 115th Congress). When we consider coordinating care for 
patients in rural settings, what administrative burdens do you face? 
What can Congress do to ensure that value-based care is effective in 
rural areas?

    Answer. As a rural facility leader, I have very little experience 
with these type of ACOs and care coordination activities for the 
Medicare population. I do not feel I can adequately answer your 
question.

                                 ______
                                 
                 Questions Submitted by Hon. Ron Wyden
                            rural workforce
    Question. As discussed during the hearing, the shortage of primary 
and specialty care providers is a critical issue facing rural 
communities across the country. In Oregon, 25.9 percent of residents 
live in a health professional shortage area. Difficulty recruiting and 
retaining physicians and other members of the care team can result in 
longer patient wait times and reduced access to care for those living 
in rural communities.

    What concrete policy ideas would you suggest this committee pursue 
to help attract more providers to rural America?

    Answer. The following are policy ideas that could assist in rural 
workforce issues: (a) increase the number of GME slots by passing the 
Resident Physician Shortage Reduction Act of 2017 (S. 1301/H.R. 2267); 
(b) pass the Conrad State 30 and Physician Access Reauthorization Act 
(S. 898/H.R. 2141), to provide regulatory relief to international 
physicians using J-1 visas who practice in rural and underserved areas; 
(c) ensure the financial stability of rural hospitals through the 
establishment of new and alternative payment models, adequate 
reimbursement (e.g., increased reimbursement for outpatient services, 
ending Medicare sequestration; telehealth coverage and reimbursement); 
and (d) partnerships? local education?
                     rural beneficiary health needs
    Question. Rural communities tend to be older, sicker, and lower 
income compared to their urban counterparts. When rural hospitals are 
forced to close their doors, Medicare beneficiaries living in the 
surrounding areas often have limited health care options. The 
prevalence of multiple chronic conditions among those living in rural 
areas heightens the need to ensure all Medicare beneficiaries have 
access to high quality care--regardless of where they live.

    In your view, where should this committee focus its efforts to 
ensure that Medicare beneficiaries living in rural areas (especially 
those with multiple chronic conditions) have access to high quality 
care?

    Answer. This most important resource for supporting rural Medicare 
beneficiaries is to keep the healthcare providers financially viable 
and the care close to home: (a) ensure adequate coverage and 
reimbursement rates for care provided in rural hospitals (including 
telehealth services and remote patient monitoring technology); (b) 
protect crucial designations and payment programs that support rural 
providers such as the CAI-I and Sole Community Hospital designations, 
and the Medicare Dependent Hospital, low-volume adjustment, and 
ambulance add-on programs; (c) provide flexibility through alternative 
payment models such as the establishment of a rural emergency medical 
center designation; and (d) invest in broadband connectivity.

    Question. What Medicare policy changes would be most impactful in 
the short term and long term?

    Answer. (a) Improved reimbursement rates for outpatient services; 
(b) coverage and reimbursement of telehealth services; (c) 
establishment of alternative payment models and additional 
demonstration programs; and (d) end Medicare sequestration cuts.
                               telehealth
    Question. Building on the proven success of telehealth in the rural 
setting, Congress passed the CHRONIC Care Act earlier this year, which 
expanded access to telehealth in Medicare to allow individuals 
receiving dialysis services at home to do their monthly check wins with 
their doctors via telehealth, to ensure individuals who may be having a 
stroke receive the right treatment at the right time, to allow Medicare 
Advantage plans to include additional telehealth services, and to give 
certain ACOs more flexibility to provide telehealth services.

    In your view, what, if any, Medicare payment barriers to adoption 
and utilization of telehealth services remain in the rural setting 
today?

    Answer. I know I join other rural providers in applauding the work 
of the Senate Finance Committee and others in Congress for passing the 
CHRONIC Care Act and including additional funds in the FY 2019 omnibus 
appropriations bill for the adoption of telehealth. These new policies 
have given telehealth a much needed boost. Yet barriers to increased 
adoption and utilization of telehealth remain.

    Reimbursement for telehealth services is not always equal to care 
provided in person. The costs associated with providing telehealth 
services include the acquisition of expensive equipment, training and 
operation costs, and maintenance. Rural hospitals often serve as 
originating sites for telehealth (where patients physically go to 
receive a service). However, even in cases where originating sites are 
eligible to bill Medicare for a telehealth facility fee, the 
reimbursement rates are marginal compared to the overall costs.

    Increased investment is needed to expand broadband. According to 
the FCC, 34 million Americans lack access to broadband--many in rural 
locations. Broadband is necessary to provide telehealth and other 
modern health-care services. For example, electronic health records, 
health information sharing for coordinated care, and remote-monitoring 
technologies all require broadband connections. In addition, these 
technologies can help improve access to specialty services for patients 
in rural communities, such as oncology and mental health and addiction 
services.

    Question. To the extent that barriers remain, what Medicare policy 
changes would you suggest the committee consider to address them?

    Answer. I would suggest the following: (a) increase coverage of 
services and equal reimbursement for services provided through 
telehealth arrangements and those provided in person, and help account 
for the costs of acquiring, operating and maintaining equipment; (b) 
expand technologies that may be used, including remote patient 
monitoring; and (c) expand access to broadband.

                                 ______
                                 
       Question Submitted for the Record by Hon. Debbie Stabenow 
                      and Hon. Benjamin L. Cardin
                              dental care
    Question. Lack of oral health care is a significant public health 
problem in the United States. Significant health professional shortages 
and lack of access to dentistry impacts rural and underserved 
communities disproportionately. We know that our seniors are negatively 
impacted by the lack of a dental benefit in Medicare. We also know that 
children, families and people with disabilities who rely on Medicaid 
and CHIP, programs which offer coverage for pediatric dental care and 
sometimes care for adults, often struggle to find providers to see 
them. Nowhere is the need for comprehensive dental coverage and access 
to providers more profound than in our rural and underserved 
communities. We have an opportunity to address the needs of our rural 
and underserved communities by improving our health care system by 
incorporating dental care more holistically through better coverage in 
Medicare, Medicaid and CHIP, utilizing telemedicine, and assessing 
provider and workforce gaps that can and should be filled in these 
communities. Ms. Martin, what is the most important thing that we, as 
the Senate Finance Committee, can do to improve dental care and 
coverage for people living in rural and underserved communities?

    Answer. As a hospital system, dental care is beyond our scope of 
care. However, having spent my career in a rural community and had some 
experience in a federally qualified health center, I believe that the 
single biggest contribution we could make to improve dental health for 
our community is to provide benefits for Medicare recipients. Most in 
rural communities are living on small fixed income, and it is difficult 
or maybe impossible, for them to afford the dental care needed. Dental 
health plays a major role in overall health, and having coverage for 
care is the answer for overall improved health.

                                 ______
                                 
              Questions Submitted by Hon. Debbie Stabenow
                           maternity coverage
    Question. We've heard from families and health-care providers in 
Michigan who are concerned about access to maternity coverage in rural 
areas. Close to 500,000 women give birth each year in rural hospitals 
and often face additional barriers and complications. For example, 
women in rural areas report higher rates of obesity, deaths from heart 
disease, and child-birth related hemorrhages. In addition, more than 
half of women in rural areas must travel at least half an hour to 
receive obstetric care, which can lead to decreased screening and an 
increase in birth related incidents.

    Since 2004, a large number of rural obstetric units have closed, 
and only increased the distances that mothers must travel in order to 
receive maternity and delivery care. Unfortunately, the percent of 
rural counties in the United States without hospital obstetric units 
increased by about 50 percent during the past decade.

    Do you have experience with loss of obstetric care for women within 
your respective fields?

    Answer. We continue to provide obstetric care for the women in our 
community and see it as an essential community service. We are over 120 
miles away from the next nearest facility that provides this service. 
Without this care, our community would wither away. I cannot fathom how 
a rural community can maintain its workforce and families without the 
support of obstetric care. We have a strong commitment to obstetric 
care and desire to maintain the services.

    Having said that, obstetric care loses money. We have over 90 
percent of our deliveries paid by Medicaid, which at this point only 
covers about 80 percent of the cost of care. The only method by which 
we can keep this service is to cost shift onto those services that 
provide margin.

    We currently employ 3 OB/GYN physicians and 2 nurse mid-wife 
providers. This compliment of professionals are able to find the right 
work/life balance and maintain skills to support our community. We 
trained our nurse midwife team through a ``grow your own'' program by 
providing resources for education and employing them through the 
training process. They are strongly committed to this community and our 
organization in this partnership.

    Question. What steps should be taken to ensure that the proper 
range of maternal care services are being offered through innovative 
rural health models?

    Answer. As Congress considers new and alternative payment models 
for rural providers, it should ensure that the Medicare and Medicaid 
Programs adequately reimburse them so that they are financially stable 
and able to maintain services in vulnerable communities. These services 
need to be reimbursed at a level that at least covers the cost of 
providing care. There are essential health services that should be 
maintained in all communities, whether rural or urban, including 
prenatal care, emergency services and transportation to higher acuity 
facilities as needed. And take actions that expand scope of practice 
Jaws and allow non-physicians to practice at the top of their license 
and adequate funding for training programs for nurses and other allied 
professionals would help address workforce challenges.

                                 ______
                                 
             Questions Submitted by Hon. Benjamin L. Cardin
                              telemedicine
    Question. Although many may think of Maryland as an urban hub with 
its DC suburbs and large cities, there are parts of my State, both on 
the Eastern Shore and on the western side of the State, that are either 
very rural or medically underserved. My constituents who live in these 
parts of the State, must often drive long distances to get the health 
care they need. One way to increase access to quality health services 
to rural and underserved communities, is by offering treatment through 
telehealth technology. Ms. Martin, how do you see the role of 
telehealth continuing to grow in health-care delivery, and how can it 
be better utilized to increase care for Medicare beneficiaries?

    Answer. I believe the role of telehealth will continue to increase 
in the healthcare delivery system. Rural communities need expanded 
access to broadband. Telehealth services can only be a strong as the 
network on which they are delivered. Coverage of service and 
reimbursement rates should be improved (e.g., adequate reimbursement 
for originating sites and payment parity with in person services). The 
high cost of acquiring telehealth equipment can be a barrier for rural 
hospitals. Grant programs could assist in these upfront costs for 
certain providers.

                   chronic kidney disease and medigap
    Question. For many Medicare beneficiaries living with kidney 
failure, particularly those living in rural or underserved areas, 
accessing affordable care for their complex and chronic condition is a 
constant financial challenge. Over 92,000 dialysis patients live in 
States with no access to Medigap. This often leaves them unable to 
afford Medicare Part B's 20 percent cost sharing, which for a patient 
with kidney failure can often amount to tens of thousands of dollars of 
out-of-pocket costs each year. Ms. Martin, have you had challenges with 
Medicare beneficiaries who don't have access to Medigap coverage 
getting the care they need? For example, Medicare beneficiaries or 
patients with ESRD under 65?

    Could you speak to the challenges Medicare beneficiaries face when 
they don't have access to Medigap plans and the benefits for Medicare 
beneficiaries who do have access to Medigap plans?

    Answer. I am sorry. I have no experience with Medigap plans and am 
unable to answer this.

                                 ______
                                 
            Questions Submitted by Hon. Robert P. Casey, Jr.
    Question. In your written testimony, you recommend that increased 
support for flexible models for telehealth can help address some of the 
challenges facing rural health-care providers. You stated that it would 
be helpful to ``remove barriers so that rural facilities may fully 
utilize telehealth services.'' Could you discuss specific changes that 
could be made to help increase the use and availability oftelehealth 
services?

    Answer. Currently, Medicare does not reimburse telehealth services 
the same as in-person services, nor does it treat all sites of services 
the same for providing telehealth services. The professional providing 
the service (located at the distant site), is paid under the Medicare 
fee schedule; however, the facility where the patient is located 
(originating site) is paid a small ``originating'' fee of about $30. 
While the Medicare statute does not specify which facilities may serve 
as distant site, CMS has excluded rural health clinics and federally 
qualified health centers. Reduced reimbursement rates fail to account 
for the fixed costs of operating an originating site, as well as 
acquisition and maintenance costs for equipment.

    There are many examples of services where telehealth could bring 
needed specialty care to a rural community. For our organization, we 
have one oncologist in our community. When this provider is out of the 
office, on vacation, or ill, there is no one to provider consultation 
and coverage when cancer patients are receiving infusion or 
chemotherapy treatments. The use of telehealth care would allow 
patients to continuing their care plans and our community to have 24/7 
coverage without that burden being place on a solo provider.

    Some options to consider are: (a) in order to increase the use and 
availability of telehealth services, Medicare should provide payment 
parity and cover all but an excluded list of services; (b) medicare 
should expand the types of technology that it allows, including use of 
remote patient monitoring; (c) in many rural areas, access to broadband 
can also prevent adoption of telehealth services; and (d) another 
specific change is allowing specialists in remote sites to provide on-
call, evening and weekend services for a rural specialist. This use of 
telehealth services will not only maintain or improve access to certain 
specialty care (e.g., oncology; behavioral health), but will help 
hospitals recruit and retain providers.

                                 ______
                                 
Prepared Statement of Keith J. Mueller, Ph.D., Interim Dean, College of 
Public Health; Director, RUPRI Center for Rural Health Policy Analysis; 
    and Gerhard Hartman Professor of Health Management and Policy, 
                           University of Iowa
    Chairman Hatch, Ranking Member Wyden, members of the Finance 
Committee, thank you for this opportunity to share my perspectives on 
key issues in rural health and related policy considerations. While 
some things have changed in the 30 years I have been conducting rural 
health research and policy analysis, the underlying rural dynamics 
remain much the same. But we have some new tools, both in health care 
delivery and through public policy, to help us continue our quest to 
establish and sustain a high performance rural health system.

    We have had an interesting ride in policy debates and developments, 
including weathering the aftermath of converting hospital payment to 
PPS, considering health reform in the early 1990s, major changes in 
Medicare payment and benefits, changes through the Patient Protection 
and Affordable Care Act, and now a renewed (and welcome) discussion of 
what we should be doing to best serve the needs of rural residents. I 
have benefited from exchanges with this committee and others 
throughout, starting with a conversation Senator Roberts and I had when 
I testified, as part of the RUPRI Health Panel (which I have chaired 
for 20 years), to the House Committee on Agriculture in 1993. We 
provided analysis of five health reform proposals, including the Health 
Security Act by assessing their impacts on key rural considerations. 
Senator Roberts may remember sharing his appreciation for the 
straightforward analysis, which helped give me the confidence to 
continue bringing forward the best we can offer from policy analysis to 
help you continue to improve policies. Of course the then 
Representative Roberts may not have liked the ``thumbs up, thumbs 
down'' table of our conclusions in my local newspaper, displayed during 
the hearing.

    The RUPRI Health Panel launched in 1992 to bring the rural 
dimension front and center in policy discussions. We provided analysis 
during development and implementation of major national policies 
including the Balanced Budget Act of 1997, the Medicare Prescription 
Drug, Improvement, and Modernization Act of 2003, and of course PPACA 
in 2010. We provided feedback to this committee and others during 
policy formation, and followed up with analysis of potential rural 
impacts of new policies, including calling attention to ``unintended 
consequences'' of the BBA of 1997 before that term was as ubiquitous as 
it is now.

    I have come to appreciate the nexus of what we in the research 
community contribute to your efforts, and the concerns/needs of our 
colleagues delivering health-care services. As President of the 
National Rural Health Association in 1996 I represented the interests 
of rural providers in policy discussions. One of my funded projects in 
the late 1990s was to work with rural providers in Nebraska and Iowa to 
develop the template for a provider-sponsored Medicare+Choice plan. 
Much of my research involves site visits to rural health care 
organizations to understand the implications of Medicare and other 
policies on what they are able to do in their communities.

    My personal engagement and that of the RUPRI Center, the RUPRI 
Health Panel, the Rural Telehealth Research Center (based in Iowa), and 
collaborations with others covers a host specific topics of interest to 
this committee. They include Medicare Advantage, rural ACOs, access to 
rural pharmacy services, rural implications of changes in health care 
delivery and organization, delivery system reform initiatives in 
Medicare and Medicaid payment, the evolution of the marketplace in 
health insurance coverage, and the role of telehealth. My written 
testimony includes specific research findings on some of those topics, 
along with policy considerations.

    I would like to share some important questions to consider for the 
future of the Medicare ACO program. Are there benefits other than 
savings, related to changes in delivery models, that help achieve the 
triple aim of improved patient experience, better health, and lower 
costs? Should there continue to be different tracks? Should variations 
of advanced payment (perhaps as grants) continue to be available? 
Finally, what is the next iteration of payment reform that builds from 
the experiences of ACOs--perhaps global budgeting?

    I now offer the RUPRI Health Panel's five rural specific 
considerations for policies designed to encourage delivery system 
reform: (1) organize rural health systems to create integrated care; 
(2) build rural system capacity to support integrated care; (3) 
facilitate rural participation in value-based payments; (4) align 
Medicare payment and performance assessment policies with Medicaid and 
commercial payers; and (5) develop rural-appropriate payment systems.

    In general, payment policies should be sensitive to the rural 
practice environment, including population density, distances to 
providers, and need for infrastructure investment. New models can build 
on the strengths of the rural system, notably primary care.

    Rural health care organizations may need access to investment 
capital they are unable to generate on their own as they participate in 
new, better ways of organizing services. We should test ideas and 
programs specific to rural circumstances, as is underway in 
Pennsylvania. Payment policies and alternative sources of financial 
support should recognize the importance of access to services in places 
wherein patient revenue will not be sufficient to cover all costs.

    Thank you for this opportunity, and I look forward to your 
questions.

                                 ______
                                 
    Chairman Hatch, Ranking Member Wyden, and other members of the 
Finance Committee, thank you for this opportunity to share work of the 
Rural Policy Research Institute (RUPRI) Center for Rural Health Policy 
Analysis and the RUPRI Health Panel, as well as other published 
research and reports. I will focus on three areas of particular 
relevance, rural experience with Medicare's accountable care 
organizations, or ACOs; payment policies driving changes in delivery 
systems; and use of telehealth. I will conclude with general 
observations about future directions in rural health policy.
                               background
    While some things have changed in the 30 years I have been 
conducting rural health research and policy analysis, the underlying 
rural dynamics remain much the same. But we have some new tools, both 
in health care delivery and through public policy, to help us continue 
our quest to establish and sustain a high performance rural health 
system.

    I have come to appreciate the nexus of what we in the research 
community contribute to your efforts, and the concerns/needs of our 
colleagues delivering health care services. As President of the 
National Rural Health Association in 1996 I represented the interests 
of rural providers in policy discussions. One of my funded projects in 
the late 1990s was to work with rural providers in Nebraska and Iowa to 
develop the template for a provider-sponsored Medicare+Choice plan. 
Much of my research involves site visits to rural health care 
organizations to understand the implications of Medicare and other 
policies on what they are able to do in their communities.

    My personal engagement and that of the RUPRI Center, the RUPRI 
Health Panel, the Rural Telehealth Research Center (based in Iowa), and 
collaborations with others covers a host specific topics of interest to 
this committee. They include Medicare Advantage, rural ACOs, access to 
rural pharmacy services, rural implications of changes in health care 
delivery and organization, delivery system reform initiatives in 
Medicare and Medicaid payment, the evolution of the marketplace in 
health insurance coverage, and the role of telehealth.
        medicare acos (shared savings plans and demonstrations)
    Rural presence in ACO activities has grown dramatically, as of the 
end of 2016 in 22 percent of rural counties at least 30 percent of 
Medicare beneficiaries were attributed to ACOs. Also by the end of 2016 
there were nearly 40 percent of rural (non-metropolitan) counties with 
at least 3 ACOs with attributed beneficiaries, up from 17 percent in 
2014.\1\ As of the end of 2017 at least one Medicare ACO was operating 
in 60 percent of rural counties.\2\ Maps showing the spread of rural 
ACOs based on attributed lives for each year 2014-2016, and a map 
showing presence of ACOs based on where there are participating 
providers, are in an attachment. Factors accounting for the increased 
rural participation include:
---------------------------------------------------------------------------
    \1\ A. Clinton MacKinney, F. Ullrich, and K. Mueller (2018), 
``Medicare Accountable Care Organization Growth in Rural America, 2014-
2016.'' RUPRI Center Data Report Brief No. 2018-1. March, www.public-
health.uiowa.edu/rupri/.
    \2\ Document in development; based on RUPRI Center for Rural Health 
Policy Analysis data set that plots location of health care providers 
included in ACOs.

          Demonstration programs making advanced payments available to 
        invest in information systems and other start-up costs;
          National firms supporting multiple ACOs (aggregators that 
        centralize functions such as data analytics);
          Rural health care organizations already engaged in care 
        management and perhaps even performance based contracting;
          Network development among rural health care organizations 
        (HCOs); and
          Spread of urban-based systems into rural regions.

    What have we learned from the early adopters of the ACO model in 
rural areas? We know that experience matters, both prior experience in 
network development and care management, and experience gained as a 
result of functioning as an ACO. Approaches to developing ACOs vary 
considerably, from a single regional system like the Billings Clinic 
and affiliates in Montana, to rural networks like the Illinois Critical 
Access Hospital Network, to affiliations of geographically disperse 
HCOs under a national organization such as CaravanHealth, to spread of 
urban-based ACOs. We also know that there is not a ``typical ACO 
model,'' that in rural areas in particular we are seeing different 
strategies for building aggregations of HCOs to reach the critical mass 
in attributed beneficiaries necessary to generate savings from 
affecting the care-seeking behavior of historically high users of 
expensive services.

    Tables 1-3 display characteristics of 525 Medicare Shared Savings 
Plans (MSSP) and Next-Gen ACOs, based on the RUPRI data about where 
there are providers participating in those ACOs. We classify ACOs based 
on the counties in which they have providers, so ``100 percent 
nonmetro'' means that all counties of the ACO with participating 
providers are designated nonmetropolitan; ``70%-99%'' is again based on 
the percent of all counties in which the ACO has participating 
providers. As we should expect, a majority of ACOs are in metropolitan 
or mostly metropolitan areas. However, as of 2017 there were 53 ACOs 
operating exclusively or mostly in nonmetropolitan counties, and nearly 
all of the AIM ACOs, as intended, serve nonmetropolitan counties. Table 
3 demonstrates the strong preference of rural-based ACOs for the Track 
1 model, but nearly 14 percent of those in the categories of mostly 
nonmetropolitan and mixed are participating in Track 3 or Next 
Generation ACOs. Table 4 uses these same categories of ACOs on a 
nonmetropolitan--metropolitan scale to display other characteristics of 
interest. Notably, rural ACOs are more likely to be non-profit and less 
likely to be independent hospitals. We have much to learn about the 
interaction of ACO development and sustainability of rural health 
infrastructure, an ongoing project of the RUPRI Center for Rural Health 
Policy Analysis.


 Table 1: Medicare ACOs by Metropolitan/Nonmetropolitan County Presence,
                           Pas of January 2017
------------------------------------------------------------------------
    Metro/Nonmetro              Description            Count  Percentage
------------------------------------------------------------------------
Nonmetro               100% nonmetro counties              8        1.5%
------------------------------------------------------------------------
Mostly nonmetro        70%-99% nonmetro counties          45        8.7%
------------------------------------------------------------------------
Mixed                  30%-69% nonmetro counties         144       27.7%
------------------------------------------------------------------------
Mostly metro           1%-29% nonmetro counties          112       21.5%
------------------------------------------------------------------------
Metro                  0% nonmetro counties              211      40.6%
------------------------------------------------------------------------
Source: RUPRI Center for Rural Health Policy Analysis database on ACO
  provider locations.


      Table 2: Medicare ACO Participation in AIM, by Metropolitan/
           Nonmetropolitan County Presence, as of January 2017
------------------------------------------------------------------------
                                                       AIM Participation
    Metro/Nonmetro              Description          -------------------
                                                       Count  Percentage
------------------------------------------------------------------------
Nonmetro               100% nonmetro counties              6       75.0%
------------------------------------------------------------------------
Mostly nonmetro        70%-99% nonmetro counties          16       35.6%
------------------------------------------------------------------------
Mixed                  30%-69% nonmetro counties          16       11.1%
------------------------------------------------------------------------
Mostly metro           1%-29% nonmetro counties            2        1.8%
------------------------------------------------------------------------
Metro                  0% nonmetro counties                5       2.4%
------------------------------------------------------------------------
Source: RUPRI Center for Rural Health Policy Analysis database on ACO
  provider locations; and CMS ``ACO Investment Model'' data (https://
  innovation.cms.gov/initiatives/ACO-Investment-Model/, accessed April
  14, 2018).


                     Table 3: Medicare ACO Model Participation, by Metropolitan/Nonmetropolitan County Presence, as of January 2017
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                Track 1                      Track 2                      Track 3                      Next Gen
    Metro/          Description      -------------------------------------------------------------------------------------------------------------------
   Nonmetro                                    Ct    Pct                    Ct    Pct                    Ct    Pct                    Ct    Pct
--------------------------------------------------------------------------------------------------------------------------------------------------------
Nonmetro       100% nonmetro                      8  100%                        0  0%                        0  0%                         0  0%
                counties
--------------------------------------------------------------------------------------------------------------------------------------------------------
Mostly         70%-99% nonmetro                 42  93.3%                        0  0%                      1  2.2%                       2  4.4%
 nonmetro       counties
--------------------------------------------------------------------------------------------------------------------------------------------------------
Mixed          30%-69% nonmetro                124  86.1%                        0  0%                      9  6.3%                      11  7.6%
                counties
--------------------------------------------------------------------------------------------------------------------------------------------------------
Mostly metro   1%-29% nonmetro                  95  84.8%                      2  1.8%                      5  4.5%                      10  8.9%
                counties
--------------------------------------------------------------------------------------------------------------------------------------------------------
Metro          0% nonmetro counties            172  81.5%                      3  1.4%                     14  6.6%                    22  10.4%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: RUPRI Center for Rural Health Policy Analysis database on ACO provider locations.


                                                                              Table 4: Medicare ACO Characteristics
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Nonmetro                 Mostly nonmetro                   Mixed               Mostly Metro        Metropol            Total
                   Characteristic                   --------------------------------------------------------------------------------------------------------------------------------------------
                                                              Ct    Pct                    Ct    Pct                    Ct    Pct                Ct  Pct           Ct  Pct           Ct  Pct
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
ACO ``For Profit'' Status
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    For-profit                                                     0  --                        0  0%                    18  45.0%              15  32.6%         25  54.3%           58  41.1%
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    Not-for-profit                                                 0  --                      9  100%                    22  55.0%              31  67.4%         21  45.7%           83  58.9%
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
ACO Taxonomy type
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    Expanded Physician Group                                       0  --                     5  26.3%                    22  25.3%              23  26.1%         30  20.8%           80  23.7%
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    Full-Spectrum                                                  0  --                      1  5.3%                    17  19.5%              15  17.1%         16  11.1%           49  14.5%
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    Hospital Alliance                                              0  --                     2  10.5%                    11  12.6%              13  14.8%          13  9.0%           39  11.5%
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    Independent Hospital                                           0  --                     4  21.1%                      8  9.2%              10  11.4%          11  7.6%            33  9.8%
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    Indep. Physician Group                                         0  --                     4  21.1%                    14  16.1%              15  17.1%         48  33.3%           81  24.0%
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    Physician Group Alliance                                       0  --                     3  15.8%                    15  17.2%              12  13.6%         26  18.1%           56  16.6%
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Sponsoring Entity Type
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    Hospital system                                             1  16.7%                    14  36.8%                    52  44.1%              52  53.1%         59  34.3%          178  41.2%
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    Physician group                                             1  16.7%                     8  21.1%                    38  32.2%              37  37.8%         85  49.4%          169  39.1%
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    Other                                                       4  66.7%                    16  42.1%                    28  23.7%                9  9.2%         28  16.3%           85  19.7%
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Provider Type
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    Hospital system                                             2  33.3%                     7  18.9%                    27  22.1%              28  28.3%         31  17.6%           95  21.6%
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    Physician group                                             3  50.0%                    15  40.5%                    50  41.0%              32  32.3%         83  47.2%          183  41.6%
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    Both                                                        1  16.7%                    15  40.5%                    45  36.9%              39  39.4%         62  35.2%         162  36.8%
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Source: RUPRI Center for Rural Health Policy Analysis database on ACO provider locations; and Levitt Partners Torch Insight Database (https://torchinsight.com/, 2018).
 
Metropolitan/Non-Metro categories:
 
   Nonmetro: 100% nonmetro counties
   Mostly nonmetro: 70%-99% nonmetro counties
   Mixed: 30%-69% nonmetro counties
   Mostly metro: 1%-29% nonmetro counties
   Metro: 0% nonmetro counties
 
 ACO Taxonomy Type (Leavitt Partners' classification)--A categorization of ACOs based on organizational structure, ownership, and patient care focus:
 
   Expanded Physician Group: ACOs who directly provide outpatient services, but will contract with other providers to offer hospital or subspecialty services.
   Full Spectrum Integrated: ACOs who provide all aspects of healthcare to their patients. ACOs in this classification are often dominated by a large integrated delivery network.
   Hospital Alliance: ACOs who have multiple owners with at least one of those owners directly providing inpatient services.
   Independent Hospital: ACOs who have a single owner and directly provides inpatient services, but do not provide subspecialty care. Outpatient services could also be directly provided by
  this type of ACO if the owner is an integrated health system.
   Independent Physician Group: ACOs who have a single physician group owner and do not contract with other providers to offer additional services.
   Physician Group Alliance: ACOs who may have multiple physician group owners--often including multi-specialty groups--but do not contract with other providers to offer additional services.
 
 Provider Type--The type of provider organizations that are participating in an ACO. Options include: ``Hospital System,'' ``Physician Group,'' and ``Both.'' For the purpose of this field
  ``Hospital System'' refers to any organization that owns and operates a hospital. The ``Both'' option is appropriate when there is a single organization, such as an integrated delivery
  network, that includes both a hospital system and a physician group as well as when there are separate hospital system and physician group organizations participating in the ACO.


    There have been two recent ``pushes'' of the ACO model in rural 
places. First, the ACO Investment Model (AIM) has provided start-up 
capital to qualifying organizations, and the criteria are weighted in 
favor of small (by beneficiary count) rural ACOs. Second, regional and 
national organizations are providing administrative support, and in 
some instances training in care management, to geographically disperse 
provider organizations. Several Management Service Organizations serve 
at least 15 ACOs, including ones in nonmetropolitan areas:

      Aledade (16 total ACOs, 10 nonmetro/mostly nonmetro/mixed).
      CaravanHealth (22 total ACOs, 21 nonmetro/mostly nonmetro/
mixed).
      Collaborative Health Systems (19 total ACOs, 6 nonmetro/mostly 
nonmetro/mixed).
      Imperium Health (15 total ACOs, 7 nonmetro/mostly nonmetro/
mixed).

    While there is debate regarding the aggregate impact of ACOs on 
Medicare spending, our research and that of others find improvements in 
the quality measures used in the program. Rural ACOs, for example 
perform well (better than urban counterparts) on care management/
patient safety and preventive health domains. Expenditure savings vary; 
a 2017 OIG report found net reduction in spending across all ACOs, but 
concentrated in less than half of them. Eight of the 11 rural ACOs in 
the Advanced Payment Model, an early demonstration prior to the current 
AIM demonstration, generated savings. Analysis of 2016 final reports 
showed that 56 percent of MSSP ACOs saved Medicare expenditures, with 
31 percent receiving share savings bonuses.\3\
---------------------------------------------------------------------------
    \3\ R. Saunders, D. Mulestein, and M. McClellan (2017), ``Medicare 
Accountable Care Organization Results for 2016: Seeing Improvement, 
Transformation Takes Time.'' Health Affairs Blog. November 21. 10.1377/
hblog20171120.211043.

    We are at a critical point in time in learning from the experiences 
of early entrants into the Medicare ACO program. Some important 
questions should be addressed. Is the policy goal solely to 
continuously show lower expenditures versus a target influenced by the 
ACO's own previous success and the regional market? Are there benefits 
to this payment model related to changes in delivery models, including 
greater likelihood of achieving the triple aim of improved patient 
experience, better health, and lower costs? Should policy continuously 
accommodate different cost savings expectations, given variability in 
circumstances across all participating ACOs? Should variations of 
advanced payment (perhaps as grants) continue to be available? Finally, 
what is the next iteration of payment reform that builds from the 
experiences of ACOs--perhaps global budgeting?
              payment policies and delivery system reform
    The ACO program is generating a great deal of attention, but it is 
but only one approach to payment reform designed to motivate changes in 
the delivery system (delivery system reform or DSR). We should expect 
more payment reform initiatives going forward, including implement of 
physician payment reform. As we do so the RUPRI Panel encourages 
attention to five rural specific considerations:

    1.  Organize rural health systems to create integrated care.
    2.  Build rural system capacity to support integrated care.
    3.  Facilitate rural participation in value-based payments.
    4.  Align Medicare payment and performance assessment policies with 
Medicaid and commercial payers.
    5.  Develop rural-appropriate payment systems.

    In discussing each of those considerations, the Panel provides 
specific suggestions in our Policy Paper, which can be downloaded from 
the Panel's website: http://www.rupri.org/wp-content/uploads/FORHP-
comments-km-DSR-PANEL-DOCUMENT_PRD_Review_112315.clean-4_sn-3.pdf.

    In general, payment policies should be sensitive to the rural 
practice environment, including population density, distances to 
providers, infrastructure investment including information technology 
and data analytics capabilities, and opportunities to develop models 
that actually take advantage of smaller scale and integrating all local 
services with those provided at some distance. One example of that 
sensitivity is to be aware of differences in readiness to change. For 
example, our analysis of 2015 data from physician compare shows that 
among categories of urban, rural, and ``mixed'' physician practice 
locations, rural practices were least likely to report quality measures 
(58.5 percent) and use electronic records (17.7 percent). These data 
indicate a need for a modified timeline to implement payment reform, 
and/or a rationale to provide additional technical assistance and 
access to capital.
                               telehealth
    Appropriate use of telehealth, the third area of focus in my 
testimony, could facilitate taking full advantage of the strengths of 
the rural model, focused on direct patient engagement from a primary 
care base. Studies completed by the RUPRI Center (www.ruprihealth.org) 
and underway by the National Center for Rural Telehealth Research 
(www.ruraltelehealth.org), show that telehealth can be a tool that 
reinforces and augments care provided by primary care providers (PCPs) 
in rural settings. Access to specialist services included in the 
continuum of care initiated by PCPs is enhanced when the specialist is 
brought to the rural site through telehealth. Further, virtual office 
visits and home monitoring provide the specialist with information 
needed to manage chronic conditions.

    In our research focused on use of telehealth in hospital facilities 
we found that tele-emergency care enhanced local access by having 
board-certified emergency doctors available on call. This was 
instrumental in recruiting and retaining primary care physicians who 
knew they had the support of those board certified physicians who see 
many cases of what in a rural setting are infrequent occurrences. We 
also found reported improvements in quality of care, greater ability to 
focus on patient needs, and improved community support of the local 
hospital. Use of telehealth services is expected to increase, 
especially given provisions in the Chronic Care Act section of the 
Bipartisan Balanced Budget Act. As that happens there are ongoing 
policy considerations. First, fee-for-service payment policies need to 
be in place allowing payment for services delivered through telehealth. 
As payment evolves away from fee-for-service telehealth should be 
supported as a means to the achieving the triple aim. Second, support 
is needed for ongoing research indicating when telehealth services add 
value to health care delivery.
                        concluding observations
    I now offer general observations based on the past several years of 
RUPRI Health Panel work in policy analysis and using our framework of a 
high performance rural health delivery system. We are in a time of 
transformation in health care, both in what is possible in delivery and 
how we pay for services. In this time of health care transformation, we 
should provide support to rural providers who because of the scale of 
their organizations cannot adapt as rapidly as the system may change. 
Rural HCOs may need access to investment capital they are unable to 
generate on their own as they participate in new, better ways of 
organizing services. Many rural HCOs want to participate in delivery 
system reform and new payment methodologies, but we should test ideas 
and programs specific to rural circumstances, as is underway in 
Pennsylvania. Payment policies and alternative sources of financial 
support should recognize the importance of access to services in places 
wherein patient revenue will not be sufficient to cover all costs.

    I offer these observations about how to approach changes to 
policies affecting rural health delivery:
      We should think in terms of total cost of care, not the prices 
of individual services or single encounters.
      New approaches to delivering services and payment policies 
should be coordinated across payers.
      Individual and population health are affected by circumstances 
and policies beyond the immediate purview of health policies; that 
interaction should be considered in a rural context.

    Finally, I offer other resources as the committee considers policy 
improvements serving rural America. I realize that much attention 
focuses on the closure of rural hospitals and the struggles those 
remaining open incur to meet financial needs. Discussions about future 
action include thinking through alternative models for rural 
communities. Abrupt closure of the local hospital should not be an 
option because there will be residents who lose access to essential 
services as a result. The RUPRI Health Panel has completed work to 
summarize and compare alternative models for rural communities, 
accessible from our website: http://www.rupri.org/wp-content/uploads/
Alternatives-for-Developing-the-High-Performance-Rural-Health-System-
FIN....pdf. But the issues facing rural communities are much more 
encompassing than the focus on hospitals, and communities fortunate to 
have a viable, robust hospital delivery system still confront questions 
about how to transform to a value-based system. In addition to our work 
on Medicare payment reform, the Health Panel published a document 
describing challenges and opportunities for rural health systems in 
Medicare payment and delivery system reform: http://www.rupri.org/wp-
content/uploads/RUPRI-Health-Panel-Medicaid-and-Delivery-System-Reform-
June-2016.pdf. Finally, the RUPRI Health Panel is committed to helping 
providers and policy makers learn of options that advance us toward a 
high performance rural health system. We established a framework for 
defining that end objective in documents released in 2011, with a 
follow up document in 2014 suggesting a specific strategy: http://
www.rupri.org/wp-content/uploads/2014/11/Advancing-the-Transition-
Health-Panel-Brief.pdf.

    More recently, the Health Panel completed a comprehensive 
assessment of progress of health system transformation, including 
impacts on rural health delivery and outcomes for rural populations. We 
included an assessment of remaining gaps and how policies across seven 
topical areas could address them. The areas are Medicare, Medicaid and 
CHIP, Insurance Coverage and Affordability, Quality, Healthcare Finance 
and System Transformation, Workforce, and Population Health. The 
document (Taking Stock: Policy Opportunities for Advancing Rural 
Health) can be accessed as a single download, or by the chapters just 
enumerated: http://www.rupri.org/areas-of-work/health-policy/
#paneldochealth.\4\ The RUPRI Center for Rural Health Policy Analysis, 
as referenced earlier in this testimony, publishes research briefs and 
papers, as well as scholarly journal articles, on a number of topics. 
Those topics include Medicare Advantage, health insurance markets, 
rural pharmacies, rural ACOs, and physician payment. The Center's 
website is www.
ruprihealth.org.\5\
---------------------------------------------------------------------------
    \4\ The work of the RUPRI Health Panel has been supported by the 
following sources:
      The U.S. Department of Agriculture (special grant to RUPRI from 
which Panel support was provided in its early years).
     The Federal Office of Rural Health Policy, Health Resources and 
Services Administration, U.S. Department of Health and Human Services 
(ongoing cooperative agreement).
     The Robert Wood Johnson Foundation (work in 2009-2010).
     The Agency for Healthcare Research and Quality (1990s).
     The Leona M. and Harry B. Helmsley Charitable Trust (current 
grant).
    The information, conclusions and opinions expressed in this 
testimony are those of the author and no endorsement by any of the 
funders is intended or should be inferred.
    \5\ The work of the RUPRI Center for Rural Health Policy Analysis 
has been supported by the following sources:
      The Federal Office of Rural Health Policy, Health Resources and 
Services Administration, U.S. Department of Health and Human Services 
(ongoing cooperative agreement to the Center, funding the project Rural 
Health Value, evaluation work).
      The Leona M and Harry B. Helmsley Charitable Trust (supporting 
evaluation of telehealth).
      The Robert Wood Johnson Foundation (work related to health 
reform in 2009).
      Office of Rural Health, Veterans' Health Administration.
    The information, conclusions and opinions expressed in this 
testimony are those of the author and no endorsement by any of the 
funders is intended or should be inferred.

                                 ______
                                 
     Questions Submitted for the Record to Keith J. Mueller, Ph.D.
               Question Submitted by Hon. Orrin G. Hatch
    Question. Given your extensive research into rural delivery system 
reforms, can you talk in more detail about why rural providers are not 
robustly participating in new value based payment models? What specific 
legislative changes do you think Congress and the administration should 
consider to help rural and frontier communities tailor advanced payment 
models that meet their unique circumstances?

           meeting requirements for numbers of persons served
    Answer. Issue: New payment models that share financial risk, or 
that are part of demonstration programs to be evaluated, can require 
large minimum populations to assure fiscal viability. Examples include 
the ACO program minimum of 5,000 Medicare beneficiaries and the 
Accountable Health Communities demonstration minimum of 53,000 Medicaid 
enrollees. Rural healthcare organizations would not typically meet 
those thresholds, necessitating time to form, or participate in, larger 
system arrangements (e.g., national ACOs, regional AHCs). Some rural 
providers may assume the requirement cannot be met and not pursue the 
payment model.

    Resolution: New programs could allow time, either through a 
prolonged period to enter a program that has cycle, or through multiple 
cycles, for providers to develop the relationships needed to create 
aggregations of participating beneficiaries/
enrollees. Another approach would be to allow experimentation with 
smaller numbers of participants, adjusting some of the particular 
model's parameters accordingly (e.g., calculations of shared financial 
risk and reward). This approach, for example, is built into the ACO 
program, albeit with the minimum remaining at 5,000 enrollees. New 
payment programs could be designed to explicitly allow for new 
aggregations of providers to participate, as the case for small 
physician practices forming virtual groups in the Merit-based Incentive 
Payment System (MIPS).

          limited capacity in rural health-care organizations 
                    to change to new payment designs
    Issue: Value-based payment models require expensive and 
sophisticated retooling of provider infrastructure and operations. 
Large urban systems have the resources to do so, and to weather short-
term losses. Rural providers do not have the resources, nor the 
financial reserves, to rapidly or dramatically change.

    Resolution: One recommendation is to help build rural system 
capacity, to build integrated care systems that are responsive to new 
payment models. Several specific approaches could be used (first three 
are taken from the RUPRI Health Panel November 2015 brief, Medicare 
value-based Payment Reform, www.rupri.org/areas-of-work/health-policy/
#paneldochealth):

          Provide low-cost capital to rural providers demonstrating 
        need for such assistance;
          Provide technical assistance for transitions to value-based 
        care;
          Support development and implementation of population health 
        data management platforms and skills; and
          Build in up-front payment in long term programs, such as the 
        ACO Investment Model which attracted rural participants to that 
        program.

    A general approach is for payers, including Medicare, to provide 
(internally or through contracted entities) direct assistance in early 
phases of implementing new payment designs, as CMS is doing in the 
Quality Payment Program. Since the challenges facing small rural 
health-care organizations are both financial capacity (funding for 
investment and start-up costs) and analytical capacity to adjust to new 
reporting requirements and payment formulae, there are opportunities 
for modest investments in grants and loans to generate substantial 
return through system transformation in rural places. Specifically, 
programs in CMS and HRSA could be used to provide direct technical 
assistance and support development of tools and strategies rural 
providers could use to adopt new payment models.
                   specifics of payment model design
    Issue: Fundamentally payment models need not be different for rural 
and urban providers; payment based on value would be seeking the same 
results in any practice environment. However, as recognized in the 
preceding comments, the starting points for implementing improved 
payment systems based on value rather than volume are not the same. 
There need to be considerations of rural circumstances in design and 
implementation of new systems, including accounting for transitioning 
out of payment systems designed for rural circumstances (e.g., cost-
based payment and volume adjustments) and adjusting for patient mix 
(including low volume).

    Resolution: These considerations are taken from the RUPRI Health 
Panel's January 2018 paper, ``Taking Stock: Policy Opportunities for 
Advancing Rural Health.''

          Payment policies to rural providers under tightly defined 
        criteria could include adjustments for higher per person or per 
        episode fixed costs associated with maintaining local access 
        when patient volumes are not sufficient to generate necessary 
        revenue streams supporting all fixed costs.
          Value-based payment presumes integrated health-care delivery 
        systems taking full advantage of patient information (including 
        population health data). Rural providers will need to develop 
        new capacities to participate in those systems, making rural 
        investments in broadband and technical workforce development 
        essential.
          Alternative payment delivery models could be tested in rural 
        communities using demonstration and pilot programs. These could 
        be based on existing demonstrations, such as AHCs, but modified 
        to take full advantage of rural community circumstances (e.g., 
        primary care-based delivery system, limited number of 
        community-based service entities) and encourage new 
        developments (e.g., linking to regional providers).

                                 ______
                                 
                Question Submitted by Hon. Rob Portman 
                       and Hon. Michael F. Bennet
    Question. We have previously introduced legislation to encourage 
providers to participate in alternative payment models and facilitate 
care coordination, including the Medicare PLUS Act (S. 2498 in the 
114th Congress) and the Medicare Care Coordination Improvement Act (S. 
2051 in the 115th Congress). When we consider coordinating care for 
patients in rural settings, what administrative burdens do you face? 
What can Congress do to ensure that value-based care is effective in 
rural areas?
                         administrative burdens
    Answer. A major burden I hear of often from rural providers is one 
of reporting multiple measures to multiple payers to meet requirements 
for full payment. The RUPRI Health Panel recommended in its November 
2015 Policy Brief ``Medicare Value-Based Payment Reform'' that Medicare 
payment and performance assessment policies be aligned with Medicaid 
and commercial payers. Initiatives such as the all-payer global budget 
demonstrations in Pennsylvania and Maryland are consistent with that 
recommendation. Measurement development led by the National Quality 
Forum, supported by Federal agencies and commercial payers, is also 
helpful. Any further payment reform development, legislative and 
regulatory, should maintain the focus on streamlining reporting 
requirements across payers. A second burden is that of transaction 
costs associated with developing relationships to support coordinated 
care. Particularly for small rural provider in cost-based payment 
systems, time spent to build new relationships is time not reimbursed. 
Either modest investments in the initial set-up costs (through 
something similar to the AIM program in the ACO arena) or making them 
``allowable costs'' would be helpful.
                     deploying additional resources
    Care coordination requires coordinating professionals, processes, 
and relationships. If the professionals to provide care coordination 
are not present in a rural area, it is challenging for rural health 
systems to hire and develop them de novo. And if the care coordination 
professionals are not present, the requisite processes and 
relationships to make care coordination successful are not present 
either. Therefore, this health-care worker needs to be considered when 
developing workforce policies and incentives to create positions and 
recruit persons to rural areas. Other investments will also be helpful 
to the spread of care coordination in rural settings: new population 
health and financial risk management technology and infrastructure, a 
primary-care focused health care workforce supported by new 
professionals (e.g., community paramedics and community health 
workers), EHRs that are designed to be interoperable and serve improved 
patient care (and community health), and data provided by all payers 
(including CMS) that directly assists providers to improve care and 
community health. Public policy can directly accelerate the adoption of 
these value-laden inputs.

                 Questions Submitted by Hon. Ron Wyden
                            rural workforce
    Question. As discussed during the hearing, the shortage of primary 
and specialty care providers is a critical issue facing rural 
communities across the country. In Oregon, 25.9 percent of residents 
live in a health professional shortage area. Difficulty recruiting and 
retaining physicians and other members of the care team can result in 
longer patient wait times and reduced access to care for those living 
in rural communities.

    What concrete policy ideas would you suggest this committee pursue 
to help attract more providers to rural America?
                          provider recruitment
    Answer. We know from research literature the factors that optimize 
the likelihood that healthcare professionals will choose rural 
communities as practice sites--their own community roots, training in 
rural areas, completing residencies in rural areas, desires based on 
culture and lifestyle of both the healthcare professional and 
significant other, attraction (or lack thereof) of the practice 
environment, and income expectations (intentionally mentioned last). 
Given those research findings, the following policy ideas warrant 
pursuit (most originate in the RUPRI Health Panel's Taking Stock 
document, which includes supporting narrative):

          Decentralize training programs into rural environments 
        through improvements in CMS GME funding.
          Target GME funding toward rural health care needs, including 
        primary care in addition to alignment with other national 
        health priorities.
          Target Federal funding of non-GME training programs to 
        national health priorities.
          (Not from Taking Stock) Support ``pipeline programs'' that 
        are comprehensive approaches to recruiting rural students into 
        the health professions (broadly defined) and extend through all 
        of their training, including rural training tracks and rural 
        residency training.
          (Not from Taking Stock) Support connectivity between rural 
        practices and regional (urban-based) services through 
        investments in interoperable health information systems and 
        telemedicine.
                           provider retention
    Retaining providers that are in rural communities is the other side 
of the same coin that included recruiting them. Elements in a 
successful retention strategy include:

          Payment policies that create comparability across locations.
          Payment policies that support non-physicians and patient 
        support providers, needed in a person-centered health home in 
        rural communities (from Taking Stock).
          Opportunities for rural health-care professionals to 
        participate in new payment models such as Comprehensive Primary 
        Care Initiatives (including CPC+ ), MIPs, and advanced 
        alternative payment models.
                     rural beneficiary health needs
    Question. Rural communities tend to be older, sicker, and lower 
income compared to their urban counterparts. When rural hospitals are 
forced to close their doors, Medicare beneficiaries living in the 
surrounding areas often have limited health care options. The 
prevalence of multiple chronic conditions among those living in rural 
areas heightens the need to ensure all Medicare beneficiaries have 
access to high quality care-regardless of where they live.

    In your view, where should this committee focus its efforts to 
ensure that Medicare beneficiaries living in rural areas (especially 
those with multiple chronic conditions) have access to high quality 
care?

    What Medicare policy changes would be most impactful in the short 
term and long term?

           engaging rural health and human services providers
    Answer. Many of the improvements in assuring high quality are 
linked to changes in payment (value-based payment designs), encouraging 
new methods of organizing services (patient-centered medical homes, 
accountable health communities), and spreading innovation in clinical 
practice and population health (including healthy lifestyle programs). 
A critical rural consideration is to be sure that innovations are 
designed and implemented in ways that include rural provider and rural 
community organization participation. Policy specifics to follow this 
principle include:

          Instituting evaluation/assessment processes that adjust for 
        the small volume of rural providers (e.g., statistically 
        ``borrowing'' power by aggregating over time or across 
        geographies);
          Allowing sufficient time for rural providers and 
        organizations to transition from current practices and payment 
        models to new ones;
          Providing technical assistance to small scale organizations 
        (provider and cornmunity-based);
          Taking steps to incorporate new payment adjustments such as 
        chronic care management fees into existing payment design, as 
        has been done for RHCs and FQHCs; and
          Changes in payment that both advance quality and generate 
        savings should be sensitive to rural circumstances (e.g., 
        extremely low and sometimes negative margins) that require time 
        and assistance to mollify.

               extending services to rural beneficiaries
    Making the highest quality care accessible to rural beneficiaries 
means ensuring access to affordable integrated services in total care 
plans--subspecialty care coordinated with all needs and special 
circumstances. This requires communications flow, including medical 
records, and access to consultants, across distance (not the urban 
model of a multispecialty group or accessing additional providers in 
close proximity). Additionally, rural beneficiaries benefit from 
integration across clinical providers and community-based organizations 
focused on quality of life for beneficiaries. Specific policy 
considerations include (from RUPRI Health Panel documents response from 
Keith Mueller, Ph.D. (University of Iowa, RUPRI), page 5, including 
Advancing the Transition to a High Performance Rural Health System, 
Care Coordination in Rural Communities, and the Taking Stock document 
referenced earlier):

          Using the leverage of grant and demonstration programs to 
        facilitate joint governance structures across community-based 
        organizations and health care organizations, such as models in 
        Minnesota focused on rewards for addressing total cost of care;
          Supporting new technology, including systems that achieve 
        interoperability of clinical and health records across 
        organizations;
          Providing stable long-term funding supporting locally-
        appropriate public health prevention programs; and
          Incentivizing integrating preventive and clinical services.
                               telehealth
    Question. Building on the proven success of telehealth in the rural 
setting, Congress passed the CHRONIC Care Act earlier this year, which 
expanded access to telehealth in Medicare to allow individuals 
receiving dialysis services at home to do their monthly check-ins with 
their doctors via telehealth, to ensure individuals who may be having a 
stroke receive the right treatment at the right time, to allow Medicare 
Advantage plans to include additional telehealth services, and to give 
certain ACOs more flexibility to provide telehealth services.

    In your view, what, if any, Medicare payment barriers to adoption 
and utilization of telehealth services remain in the rural setting 
today?

    Answer. First, when telehealth requires participation of multiple 
(usually two) providers, both need to receive payment. A barrier to 
that occurring can be a calculation of budget neutrality that does not 
account for increased value which would include patient engagement. 
Second, When Medicare payment is very low but the administrative burden 
to collect is high, we may not see telehealth utilization in the claims 
data because providers are opting not to file.

    Question. To the extent that barriers remain, what Medicare policy 
changes would you suggest the committee consider to address them?

    Answer. Rather than policy change, policy makers may consider 
research regarding the use of telehealth in global payment and 
capitated systems; e.g., CMS's Maryland demonstration and large closed 
HMOs. These payment systems obviate the overuse risk in telehealth and 
may elucidate appropriate uses.

                               rural acos

    Question. Aligning a fragmented delivery system can be particularly 
challenging in rural areas, where there is often a shortage of health 
care professionals, limited financial capital available, and a patient 
population composed of older and sicker patients. Although several 
rural Accountable Care Organizations (ACOs) have records of success, 
many rural providers still find the prospect of joining an ACO 
daunting. Creating opportunities for rural providers to participate in 
value-based payment models, such as ACOs, is critical to transitioning 
to a health care system that rewards value instead of simply volume of 
services provided.

    What characteristics have allowed some rural ACOs to succeed?

    Are there certain ``lessons learned'' from these success stories 
that may be helpful to rural providers interested in participating in a 
rural ACO?
                characteristics of successful rural acos
    Answer. The RUPRI Center for Rural Health Policy Analysis has been 
studying the creation and operations of rural Medicare ACOs since the 
program began. Much of the historical information about the presence of 
ACOs in rural places was in my written testimony. Rural experiences are 
variations on the themes emerging from studies of all Medicare ACOs 
(which tend to have an urban bias because of the disproportionate 
presence in urban areas, at least until the AIM program and national 
aggregators helped boost rural participation in recent years). Our 
current study of high performing rural ACOs (defined using quality 
scores and shared savings results) is finding these seven 
characteristics to be important:

          Prior experience with multi-organizational collaborations; 
        especially important for rural ACOs with independent hospital 
        and physician practice participation;
          Prior experience with the specific organizations in the ACO;
          Strategic managerial and clinical leadership;
          Shared governance structure; providers from multiple sites 
        on the governing board;
          Engagement in care coordination for targeted patients (based 
        on diagnosis);
          Improvement in continuum of care, including adding non-acute 
        services and partnering with local social service agencies and 
        pharmacies; and
          Use of advanced analytics and access to the requisite data.
   lessons learned and implications for aco action and public policy
     For rural providers considering participating in ACOs, they should 
map out a strategic plan/approach that generates the characteristics 
listed above, either by drawing on their own history or by setting a 
long enough time line to develop them. They can consider affiliations 
with other providers, either within a rural region (such as the 
aggregation of Critical Access Hospitals in an Illinois ACO), with a 
regional system (such as UnityPoint in the Midwest), or working with a 
national aggregator such as Caravan Health. All are examples of 
achieving the scale needed to support some of the factors of success, 
particularly data collection and analytics, care coordination scaled to 
achieve savings, and managing care across the entire continuum to 
improve quality and lower total expenditures. General considerations 
for the Medicare Shared Savings Program include:

          Thus far, only about 25% of ACOs have received shared 
        savings. And the cost to establish and ACO is significant. 
        Thus, a rural provider requires financial reserves and 
        progressive leadership to establish an ACO. At least for now, 
        the purpose of forming or joining an ACO is not to realize 
        profit, but to obtain data for more informed managerial 
        decisions and gain experience in population health and 
        financial risk management.
          The CMMI AIM program has been successful in expanding the 
        program. Developing the ``next AIM program'' might encourage 
        additional rural provider participation in ACOs.
          ACOs should be considered an iterative step toward value-
        based payment (ACOs are still built on a fee-for-service 
        platform). ACOs are ``training wheels'' for bundled payment, 
        primary car capitation, global payment, or other systems not 
        yet designed.
                    transition from volume to value
    Question. The passage of the bipartisan Medicare Access and CHIP 
Reauthorization Act of 2015 (MACRA) was a milestone in Congress's 
efforts to repeal the flawed SOR and move our health-care system from 
one that rewards volume to one that rewards value. In many cases, 
however, rural providers report that participating in value-based 
payment models is a significant challenge for them, particularly when 
it comes to taking on financial risk for patient health outcomes and 
population health. In order to successfully transition our health care 
system to one that rewards value, it is critical to ensure there are 
meaningful opportunities for rural providers to participate in a value-
based payment system.

    What barriers exist today that discourage rural providers from 
participating in value-based payment models?

    What, if any, Medicare policy changes would help ensure that rural 
providers and communities are not left behind in the transition to 
value-based payment?
                                barriers
    Answer. While there are hurdles to participate in several of the 
models being tested, at least some rural providers are engaged in 
nearly all of them. The Rural Health Value project provides a catalog 
of the programs that includes, for each of them, identification of 
rural participation, Catalog of Vallue-Based Initiatives for Rural 
Providers. General hurdles facing rural providers are described as 
follows:

          Except for ACOs, demonstrations readily appropriate for 
        rural providers have been limited. Understandably, researchers 
        desire high volumes to test change. But more creativity is 
        needed to consolidate demonstration data so multiple rural 
        provider systems can participate in demonstrations and gain 
        experience in value-based payment models.
          Locally, rural providers are discouraged from participating 
        in value-based payment models because limited operating margins 
        and reserves cannot allow financial risk; that is, the cost of 
        infrastructure development and operational change and the risk 
        of revenue loss in a new model. Large health systems have the 
        infrastructure and resources to affect change and tolerate 
        short-term losses. Not so with many rural providers, as 
        manifest by recent rural hospital closures.

    More specifically, the hurdles are illustrated by the challenges 
facing physicians wanting to participate in the Merit-Based Incentive 
Payment System (MIPS). They must first understand intricacies of a 
highly complex system. Since most cannot hope to do so on their own, 
they either incur an additional expense for outside consultants, or 
take the time to work with one of the CMS regional technical assistance 
providers. Second they will need to be sure their reporting 
systemscreate the data required to calculate payment. Third, they will 
want to incorporate appropriate changes in their practices, yet another 
investment of time (which is time lost to reimbursable services) and 
perhaps direct cost.
                             policy changes
    I start this response with a recognition that CMS has taken an 
important step to improve rural participation in developing and 
publishing its Rural Health Strategy that includes five objectives: 
``(1) apply a rural lens to CMS programs and policies; (2) improve 
access to care through provider engagement and support; (3) advance 
telehealth and telemedicine; (4) empower patients in rural communities 
to make decisions about their health care; and (5) leverage 
partnerships to achieve the goals of the DCMS Rural Health Strategy'' 
(http://go.cms.gov/ruralhealth). Providing ruralspecific technical 
assistance in programs such as CPC+ and MIPS are actions underway that 
will be helpful. There are also specific actions that would be helpful:

          Rural-specific value-based payment demonstrations;
          Extended transition from volume-based to value-based 
        payment;
          Finite transition to allow proper future planning;
          Rural-appropriate performance measures;
          Revamped medical education system that prioritizes primary 
        care; and
          Mandatory EHR compatibility.

                                 ______
                                 
              Question Submitted by Hon. Debbie Stabenow 
                      and Hon. Benjamin L. Cardin
                              dental care
    Question. Lack of oral health care is a significant public health 
problem in the United States. Significant health professional shortages 
and lack of access to dentistry impacts rural and underserved 
communities disproportionately. We know that our seniors are negatively 
impacted by the lack of a dental benefit in Medicare. We also know that 
children, families and people with disabilities who rely on Medicaid 
and CHIP, programs which offer coverage for pediatric dental care and 
sometimes care for adults, often struggle to find providers to see 
them. Nowhere is the need for comprehensive dental coverage and access 
to providers more profound than in our rural and underserved 
communities. We have an opportunity to address the needs of our rural 
and underserved communities by improving our health care system by 
incorporating dental care more holistically through better coverage in 
Medicare, Medicaid and CHIP, utilizing telemedicine, and assessing 
provider and workforce gaps that can and should be filled in these 
communities. Dr. Mueller, what is the most important thing that we, as 
the Senate Finance Committee, can do to improve dental care and 
coverage for people living in rural and underserved communities?

    Answer. Given the preponderance of Medicare coverage through the 
traditional program in rural (as compared to higher MA enrollment in 
urban areas), include routine dental care as a traditional Medicare 
benefit. For beneficiaries receiving dental coverage as a result of 
dual eligibility, assuring that benefit continues unless until this is 
a traditional Medicare benefit is an important policy consideration.

                                 ______
                                 
               Question Submitted by Hon. Debbie Stabenow
                           maternity coverage
    Question. We've heard from families and health-care providers in 
Michigan who are concerned about access to maternity coverage in rural 
areas. Close to 500,000 women give birth each year in rural hospitals 
and often face additional barriers and complications. For example, 
women in rural areas report higher rates of obesity, deaths from heart 
disease, and child-birth related hemorrhages. In addition, more than 
half of women in rural areas must travel at least half an hour to 
receive obstetric care, which can lead to decreased screening and an 
increase in birth-related incidents.

    Since 2004, a large number of rural obstetric units have closed, 
and only increased the distances that mothers must travel in order to 
receive maternity and delivery care. Unfortunately, the percent of 
rural counties in the United States without hospital obstetric units 
increased by about 50% during the past decade.

    Do you have experience with loss of obstetric care for women within 
your respective fields?

    What steps should be taken to ensure that the proper range of 
maternal care services are being offered through innovative rural 
health models?

    Answer. I do not have direct experience with loss of obstetric 
care, given my role as a health policy analyst in a College of Public 
Health. Colleagues at the University of Minnesota Rural Health Research 
Center have completed and published a national study of access to 
hospital-based obstetric services that is gloomy at best (see their 
article in the Journal of the American Medical Association: https://
iamanetwork.com/journals/jama/fullarticle/2674780). They followed that 
with an op-ed column in the Washington Post (https://
www.washingtonpost.com/opinions/rural-americas-disappearing-maternity-
care/2017/11/08/11a664d6-97e6-11e7-b569-
3360011663b4_story.html?utm_term=.003094e99c6f) that offered these 
policy suggestions:

          Designate maternity-care shortage areas; and
          Expand workforce programs to include maternity services.

                                 ______
                                 
             Question Submitted by Hon. Benjamin L. Cardin
                              dental care
    Question. In your work you encourage the integration of the 
delivery system to better focus on preventing and managing chronic 
conditions. This approach requires us to effectively utilize midlevel 
providers, like physician assistants and nurse practitioners. As I'm 
sure you know, there is substantial evidence showing that oral health 
is a critical component of overall health-and poor oral health can have 
significant health consequences and lead to chronic conditions. There 
has been some movement around the county to integrate oral and medical 
health care to improve health outcomes. How would midlevel health and 
dental providers be most effectively used in an integrated delivery 
system?

    Answer. General response: As in medical care, dental care is best 
provided by a team of professionals, each operating at the ``top'' of 
his or her license, training, and experience--all interdependent, not 
independent. Government payers should pay dental providers at 
appropriate rates, but should consider expanding the role of midlevel 
dental providers to care for routine prevention (e.g., exam, cleaning, 
and varnish) and treatment (fillings and uncomplicated extractions). 
Dental care proximate to primary care (as in many FQHCs) serves 
patients well.

    Specific cases: I recommend two documents that contain data 
regarding integrating mid-level dental practitioners in health teams. 
One is from the Kaiser Family Foundation and includes definitions of 
mid-level providers and case studies of their contributions: https://
www.wkkf.org/-/media/pdfs/dental-therapy/mid-level-dental-
providers.pdf?. The other is an early evaluation (2014) of the 
Minnesota legislation creating a new classification, dental therapist, 
which found improved access to dental services for rural residents: 
http://www.health.state.mn.us/divs/orhpc/workforce/dt/dtlegisrpt.pdf.

                                 ______
                                 
 Prepared Statement of Karen M. Murphy, Ph.D., R.N., Chief Innovation 
    Officer and Founding Director, Glenn Steele Institute of Health 
                         Innovation, Geisinger
    Chairman Hatch, Ranking Member Wyden, and members of the committee, 
thank you for inviting me to testify today about rural hospitals. To 
provide context for my perspective, I would like to share my 
background. I started my career as a registered nurse in a community 
hospital in northeastern Pennsylvania. I held various positions at the 
hospital, ultimately serving as the president and chief executive 
officer. Following my time at the hospital I spent 2 years at the 
Center for Medicare and Medicaid Innovation where I led the State 
Innovation Models Initiative. I then served for 2\1/2\ years in 
Governor Tom Wolf's cabinet as Secretary of Health. In 2017, I joined 
Geisinger as chief innovation officer and founding director of the 
Steele Institute for Health Innovation. It was during my time with the 
State that I led the Pennsylvania Rural Health Initiative. Today, I'd 
like to share the development and evolution of this innovative payment 
and delivery model for rural hospitals.

    I began my tenure as Secretary of Health assessing the status of 
the health care delivery systems in Pennsylvania. I was struck by the 
financial instability of the rural hospitals. An overwhelming majority 
of the 67 rural hospitals were not in a position to weather any 
financial challenge and had not invested in their facilities for many 
years. I found from my research that rural hospitals in other states 
faced the same challenges at those in Pennsylvania.

    Today, rural hospitals provide essential health care services for 
57 million people across the country, but achieving financial stability 
is difficult for most hospitals.\1\ The reasons for the instability are 
multifaceted. Nationally, the number of inpatient admissions is 
declining, a trend that is also prevalent in rural hospitals. Rural 
hospitals also lack the financial and human resources to offer complex, 
highly specialized inpatient care that is required for most admissions 
today. In addition, reimbursement for rural hospitals remains 
predominantly fee for service, with public payers contributing a 
sizable percentage of the hospitals' revenue. The combination of 
declining inpatient admissions, resulting in decreased reimbursement, 
and a payer mix that yields a lower price per service has greatly 
contributed to the current crisis in rural hospitals.
---------------------------------------------------------------------------
    \1\ Gugliotta G. ``Rural hospitals, beset by financial problems 
struggle to survive.'' Washington Post. https://www.washingtonpost.com/
national/health-science/rural-hospitals-beset-by-financial-problems-
struggle-to-survive/2015/03/15/d81af3ac-c9b2-11e4-b2a1-
bed1aaea2816_story
.html. Published March 15, 2015.

    The most recent statistics indicate that over the past 7 years, 83 
of 2,244 rural hospitals in the United States have closed.\2\ One 
analysis suggests that without intervention, an estimated 673 rural 
hospitals in the United States may also close over the next 5 years.\3\ 
Individuals residing in rural communities tend to have poorer health 
outcomes compared with residents of urban areas. For example, opioid 
overdose deaths and the incidence of obesity, cancer, and 
cardiovascular disease are also more predominant in rural 
communities.\4\
---------------------------------------------------------------------------
    \2\ The Cecil G. Sheps Center for Health Services Research, 
University of North Carolina at Chapel Hill. ``83 Rural hospital 
closures: January 2010-present.'' http://www.
shepscenter.unc.edu/programs-projects/rural-health/rural-hospital-
closures.
    \3\ ``More than 200 rural hospitals are close to closure, iVantage 
study claims.'' Healthcare Finance. http://
www.healthcarefinancenews.com/news/more-200-rural-hospitals-are-close-
closure-ivantage-study-claims. Published February 16, 2016. Accessed 
December 16, 2017.
    \4\ Garcia M, Faul M, Massetti G, et al. ``Reducing potentially 
excess deaths from the five leading causes of death in the rural United 
States.'' MMWR Surveillance Summ. 2017;66(2):1-7.

    Historically, Federal and State governments have made unsuccessful 
attempts to stabilize rural hospitals by providing additional payments. 
Because the subsidies were largely based on fee-for-service and 
---------------------------------------------------------------------------
inpatient admissions, they provided little benefit.

    After having worked on the Maryland All-Payer Model while at CMMI 
and seeing the impressive results, we decided to design a similar model 
for rural hospitals in Pennsylvania.

    Pennsylvania has the third largest rural population in the United 
States,\5\ and 67 of 169 hospitals are in rural communities. More than 
58 percent of the hospitals have mounting financial pressures resulting 
in break even or negative operating margins.\6\
---------------------------------------------------------------------------
    \5\ U.S. Census Bureau. 2010 Census urban and rural classification 
and urban area criteria. https://www.census.gov/geo/reference/ua/urban-
rural-2010.html.
    \6\ Pennsylvania Health Care Cost Containment Council. ``Financial 
analysis 2016: general acute care hospitals: an annual report on the 
financial health of Pennsylvania hospitals.'' http://www.phc4.org/
reports/fin/16/docs/fin2016report_volumeone.pdf. Published April 2017.

    We worked collaboratively with CMMI on designing the model. The 
design period was launched in January of 2017. The objectives of the 
model are to provide a path to improving health and health care 
delivery in rural communities. Rural health transformation promotes 
transition to higher quality, integrated, and value-based care. The 
model changes the way participating hospitals will be reimbursed by 
replacing the current fee-for-service system with a multi-payer global 
budget based on hospitals' historic net revenue. Like Maryland, the 
payment model in Pennsylvania is designed to include Medicare, 
Medicaid, and commercial payers. However, it was necessary to develop a 
new methodology since Maryland has the authority to establish hospital 
---------------------------------------------------------------------------
rates. Pennsylvania does not.

    The model moves rural hospitals from focusing on inpatient-centric 
reactive health-care services to a greater focus on outpatient-centric 
health-care services, with an emphasis on population health and care 
management. It replaces the current fee-for-service system with little 
emphasis on quality and safety to a payment model that includes direct 
incentives to improve quality and safety and eliminate sub-scale 
service lines.

    Rural hospitals are encouraged to move from traditional care 
delivery model rendered directly by onsite health care providers to 
innovative care delivery models enabled by technologies such as tele-
health, video conferencing, remote monitoring, and diagnostic scanning. 
The vision is that rural hospitals will invest in care coordination 
such as reaching out to patients who frequently use emergency services 
and connecting them with a primary care provider or guiding patients 
after hospital discharge to make sure they follow up with a physician. 
It also includes population health and preventative care services such 
as chronic disease prevention programs and behavioral health 
initiatives, including those targeting drug abuse and addiction, and 
the expansion of medical health homes to include medication-assisted 
treatment programs. Participating hospitals will have the ability to 
invest in social services that address community issues that lead to 
detrimental health outcomes--such as parenting classes and connections 
to social services for eligible benefits such as WIC. The model will be 
evaluated measuring improvements of health status and health care 
delivery in the participating rural communities.

    Based on the global budget, participating hospitals are expected to 
develop a transformation plan that could outline an innovative approach 
to improving health and health care delivery. The hospitals are 
encouraged to work with community agencies, including United Way, Area 
Agencies on Aging, and drug and alcohol treatment centers, to develop 
services based on their communities' needs. To provide participating 
hospitals with transformation support, Pennsylvania plans to create a 
Rural Health Redesign Center (RHRC). CMS has entered a cooperative 
agreement to provide Pennsylvania up to $25 million over 5 years to 
support the RHRC. The RHRC will provide a way to deploy capabilities to 
support all participating hospitals.

    Pennsylvania is planning to engage six hospitals in the initial 
performance year, gradually expanding participation to include 30 rural 
hospitals across the State by the third performance year. At Geisinger, 
we are a participant in the initial phase. Dr. David Feinberg, 
Geisinger CEO, has been a staunch supporter of the initiative since its 
inception. The model builds on Geisinger's vision for building a health 
care delivery system that focuses on improving health and value 
creation for each community we serve. We are looking forward to working 
with the State on this important initiative.

    The financial challenges of rural hospitals today are the result of 
a changing health care industry. Even though rural hospitals may not 
offer the same services as they did in the past, it is possible that 
they can be leveraged to improve the health of those residing in rural 
communities. This model, if it achieves better quality and lower costs, 
could potentially be scaled as a model for the Nation for rural health-
care delivery.

    Next week, I will be speaking at a Global Budgeting Summit at Johns 
Hopkins University. Twenty States have registered to participate. The 
Federal Government has the opportunity to engage additional States in 
the Pennsylvania Rural Health Model. Implementing the model across 
diverse States gives the opportunity for it to evolve. Adding 
additional resources to the Rural Health Redesign Center would bring 
efficiency and an ability to disseminate best practices in rural health 
transformation across the United States.

    Thank you for your interest in aiding rural hospitals. Rural 
communities deserve access to health care. We must continue to identify 
innovative approaches that offer a pathway to that goal.

                                 ______
                                 
    Chairman Hatch, Ranking member Wyden, and members of the committee, 
thank you for inviting me to testify today about rural hospitals. To 
provide context for my perspective, I would like to share my 
background. I started my career as a registered nurse in the Intensive 
Care Unit in a community hospital in northeastern Pennsylvania. I held 
various positions at the hospital, ultimately serving as the president 
and chief executive officer. Following my time at the hospital I spent 
2 years at the Center for Medicare and Medicaid Innovation (CMMI) where 
I led the State Innovation Models Initiative. I then served for 2\1/2\ 
years in Governor Tom Wolf's cabinet as Secretary of Health, before 
joining Geisinger as chief innovation officer and founding director of 
the Steele Institute for Health Innovation. It was during my time with 
the State that I led the Pennsylvania Rural Health Initiative. Today, 
I'd like to share the development and evolution of this innovative 
payment and delivery model for rural hospitals.

    As a cabinet member, I recognized that I had limited time in my 
role and wanted to be impactful. I began my tenure assessing the status 
of the health care delivery systems in Pennsylvania. I learned that, 
for the most part, hospitals in Philadelphia and Pittsburgh were doing 
well and did not need my help. However, I was struck by the financial 
instability of the vast majority of 67 rural hospitals. Their number of 
days cash-on-hand was very low, and their facilities' age-of-plant was 
well above benchmarks. This meant that the hospitals had little ability 
to weather any financial challenge and had not adequately invested in 
facilities for many years.

    As I began to research rural hospitals in other states, I found 
that the challenges faced by rural hospitals across the country 
mirrored those in Pennsylvania.

    Today, rural hospitals provide essential health care services for 
57 million people across the country. However, the ability to achieve 
financial stability is difficult for most hospitals.\1\ The reasons for 
the instability are multifaceted. Nationally, inpatient admissions are 
declining, a trend that is also prevalent in rural hospitals. Rural 
hospitals also lack the financial and human resources to offer complex, 
highly specialized inpatient care required for most admissions today. 
In addition, reimbursement for rural hospitals remains predominantly 
fee-for-service, with public payers contributing a sizable percentage 
of the hospitals' revenue. The combination of declining inpatient 
admissions resulting in decreased reimbursement and a payer mix that 
yields a lower price per service has been a large contributor to the 
current crisis in rural hospitals.
---------------------------------------------------------------------------
    \1\ Gugliotta G. ``Rural hospitals, beset by financial problems 
struggle to survive.'' Washington Post. https://www.washingtonpost.com/
national/health-science/rural-hospitals-beset-by-financial-problems-
struggle-to-survive/2015/03/15/d81af3ac-c9b2-11e4-b2a1-
bed1aaea2816_story.
html. Published March 15, 2015.

    Over the past 7 years, 83 of 2,244 rural hospitals in the United 
States have closed.\2\ One analysis suggests that without intervention, 
an estimated 673 rural hospitals in the United States may also close 
over the next 5 years.\3\ Preserving health care in rural communities 
is imperative people living in rural communities tend to have poorer 
health outcomes compared with residents of urban areas. For example, 
opioid overdose deaths and the incidence of obesity, cancer, and 
cardiovascular disease are also more predominant in rural 
communities.\4\ Given the financial pressure under their current fee-
for-service reimbursement structure, rural hospitals are frequently 
unable to address the health of their communities. Economic instability 
is also more prevalent in rural communities. Poverty rates are higher. 
Hospitals are frequently the largest employer affecting the entire 
economy in the rural community.
---------------------------------------------------------------------------
    \2\ The Cecil G. Sheps Center for Health Services Research, 
University of North Carolina at Chapel Hill. ``83 Rural hospital 
closures: January 2010-present.'' http://www.
shepscenter.unc.edu/programs-projects/rural-health/rural-hospital-
closures.
    \3\ ``More than 200 rural hospitals are close to closure, iVantage 
study claims.'' Healthcare Finance. http://
www.healthcarefinancenews.com/news/more-200-rural-hospitals-are-close-
closure-ivantage-study-claims. Published February 16, 2016. Accessed 
December 16, 2017.
    \4\ Garcia M, Faul M, Massetti G, et al., ``Reducing potentially 
excess deaths from the five leading causes of death in the rural United 
States.'' MMWR Surveillance Summ. 2017;66(2):1-7.

    While at CMMI I had the opportunity to work on the Maryland All-
Payer Model. With this model, hospitals are reimbursed by a global 
budget based. The hospitals are accountable for the total cost and 
quality of care. Maryland began global budgeting for rural hospitals in 
2010 with great success. Maryland extended the model to include all 
hospitals in January 2014 and has yielded positive results over the 
past 4 years. That provided the foundation of the Pennsylvania Rural 
---------------------------------------------------------------------------
Health Initiative.

    Pennsylvania has the third largest rural population in the United 
States,\5\ and 67 of 169 hospitals are in rural communities. More than 
58 percent of the hospitals have mounting financial pressures resulting 
in break even or negative operating margins.\6\ Pennsylvania recognized 
the health and socioeconomic imperative involving rural communities. We 
estimated that over 27,000 people were employed by rural hospitals.
---------------------------------------------------------------------------
    \5\ U.S. Census Bureau. 2010 Census urban and rural classification 
and urban area criteria. https://www.census.gov/geo/reference/ua/urban-
rural-2010.html.
    \6\ Pennsylvania Health Care Cost Containment Council. ``Financial 
analysis 2016: general acute care hospitals: an annual report on the 
financial health of Pennsylvania hospitals.'' http://www.phc4.org/
reports/fin/16/docs/fin2016report_volumeone.pdf. Published April 2017.

    We began the work on the Pennsylvania initiative in the spring of 
2015 and presented the initial concept to CMMI in the fall of 2015. We 
worked collaboratively with CMMI on refining the model. The design 
period was launched in January of 2017. The objectives of the model are 
to provide a path to improving health and health care delivery in rural 
communities. The model changes the way participating hospitals will be 
reimbursed by replacing the current fee-for-service system with a 
multi-payer global budget based on hospitals' historic net revenue. 
Like Maryland, the payment model in Pennsylvania is designed to include 
Medicare, Medicaid, and commercial payers. However, it was necessary to 
develop a new methodology since Maryland has the authority to establish 
---------------------------------------------------------------------------
hospital rates. Pennsylvania does not.

    The model provides that the hospital budget will be prospectively 
calculated, and each month the hospital will be paid \1/12\ of the 
total budget amount. This approach is expected to provide rural 
hospitals with a predictable revenue stream. Most importantly, it could 
support the transformation of delivering health care services. The 
global budget is intended to incentivize rural hospitals to retain the 
established revenue base, regardless of hospital use. To achieve this, 
payers are expected to invest in the health of the population residing 
in rural communities. Annual adjustments are planned to account for 
changes in market share for the commercial payers.

    Based on the global budget, participating hospitals are expected to 
develop a transformation plan that could outline an innovative approach 
to improving health and health-care delivery. The hospitals are 
encouraged to work with community agencies, including United Way, Area 
Agencies on Aging, and drug and alcohol treatment centers, to develop 
services based on the communities' needs. Hospitals may choose to 
reconfigure or eliminate substandard or underused inpatient service 
lines and invest in community-facing interventions. Expanded care 
coordination, growth in behavioral health services with an emphasis on 
the opioid crisis, and increased access to preventive services, such as 
colonoscopy and mammography, are examples of strategies that rural 
hospitals can execute to improve community health.

    To support participating hospitals' transformation, Pennsylvania 
plans to create a Rural Health Redesign Center (RHRC). CMS has entered 
a cooperative agreement to provide Pennsylvania up to $25 million over 
5 years to support the RHRC. The RHRC will provide a way to deploy 
scaled capabilities to support all participating hospitals. The RHRC 
will perform the following key functions throughout the performance 
period of the model:

          Model Oversight: Provide oversight, approve Global Budgets 
        and transformation plans. Advise on and approve changes to 
        operational and payment mechanisms, and approve reasonable 
        exceptions to agreed-upon payment algorithms and rules through 
        an approved procedure.

          Global Budget Administration: Run algorithms for the defined 
        payment model logic to determine Global Budget amounts, 
        adjustments, and payer proportions.

          Data Analytics: Analyze and report to support model-specific 
        goals. Provide stakeholders with regular reports to inform 
        decision-making. Securely collect and store data from payers 
        and providers. Clean data for performance reporting and budget 
        calculation.

          Technical Assistance: Provide strategic and operational 
        technical assistance to support care delivery transformation. 
        Convene hospitals to share best practices. Change management.

          Quality Assurance: Provide an annual assessment of 
        compliance with transformation plan and Global Budget targets. 
        Recommend corrective action plans where needed. Contract with 
        an independent outcome evaluation group to provide board and 
        CEO with rigorous evaluation of model's progress against 
        population health, quality of care, and cost targets. Engage 
        stakeholders through an advisory panel for input on program 
        policy and outcomes.

    In addition, Pennsylvania has established savings goals for 
Medicare. Over the next 5 years, participating rural hospitals are 
expected to implement strategies that could save an estimated minimum 
of $35 million to Medicare over the life of the model. The plan 
stipulates that in the first 2 years, rural hospitals retain 100 
percent of the realized savings. In the third year, the hospitals will 
retain 75 percent of the savings. In subsequent years, the payers and 
hospitals are expected to share an equal portion of the savings. 
Pennsylvania has also agreed to demonstrate improvement in access to 
health services, quality of care, and population health outcomes.

    Pennsylvania is planning to engage six hospitals in the initial 
performance year, gradually expanding participation to include 30 rural 
hospitals across the State by the third performance year.

    However, this initiative has clear challenges. While Maryland has 
experienced success using global budgets, as previously pointed out, a 
notable distinction is that Maryland is using its regulatory authority 
to establish inpatient hospital rates for all payers. Demonstrating 
success using multi-payer global payments in a non-rate setting State 
will be tested in the Pennsylvania model. In addition, the size of the 
State and the large number of commercial and Medicaid-managed care 
organizations will pose challenges. Also, the goal of the program is to 
stabilize the financial status of rural hospitals but at the same time 
reduce the cost to payers. Reconciling these two goals will be a 
challenge.

    The lessons learned in developing this model could assist other 
states in this journey. The model requires strong support from the 
governor, State and Federal legislators. In Pennsylvania, Governor Wolf 
was engaged early in the process and identified the model as one of his 
priorities. In Pennsylvania, the model engaged several State agencies 
in addition to the Department of Health. The Department of Agriculture, 
Department of Human Services and the Insurance Department all 
contributed to the work. The support of the Governor was critical in 
achieving an effective collaboration across State agencies.

    States may require enabling legislation to execute the model. In 
Pennsylvania, State legislators were briefed early in the development 
of the model. The Department also engaged Senator Casey's office and 
the U.S. Secretary of Agriculture, Tom Vilsak, throughout the design of 
the initiative.

    This model is complex, requiring sophisticated data analytics and 
technical assistance. State agencies ordinarily do not have those 
internal resources or capabilities, and will require consultants with 
expertise in payment models and health-care transformation to support 
the work.

    Pennsylvania also worked with experts in Maryland in the design. 
The former Secretary of Health, Dr. Josh Sharfstein, and the Executive 
Director of the HRSC in Maryland, Donna Kinzer, were tremendous 
resources to Pennsylvania. Maryland's vast experience can be helpful in 
other states in designing global budgets.

    The Pennsylvania Hospital Association was extremely helpful in 
supporting the model. They assisted the State in engaging hospital CEOs 
early in the process and throughout the design process. States will be 
required to collaborate with their State hospital association.

    Engage rural hospitals early in the process is also essential. This 
model requires that each participating hospital have a CEO and Board of 
Directors with a vision and commitment for transformation. Hospitals 
need adequate time to develop effective transformation plans. The 
transition from fee-for-service reimbursement to a global budget 
requires a completely new paradigm moving from volume to value.

    At Geisinger, we are a participant in the initial six hospitals. 
Dr. David Feinberg, Geisinger CEO, has been a staunch supporter of the 
initiative since its inception. The model builds on Geisinger's vision 
for building a health-care delivery system that focuses on improving 
health and value creation for each community we serve. We are looking 
forward to working with the State on this important initiative.

    CMS and Pennsylvania have demonstrated a strong interest in 
stabilizing health care in rural communities. Previous attempts to 
stabilize rural hospital by Federal and State governments providing 
additional payments have been unsuccessful. These subsidies were 
largely based on fee-for-service and inpatient admissions, and 
therefore, provided little benefit.

    The financial challenges of rural hospitals today are the result of 
a changing health care industry. Even though rural hospitals may not 
offer the same services as the past, it is possible they can be 
leveraged to improve the health of those residing in rural communities. 
This model, if it achieves better quality and lower costs, could 
potentially be scaled as a model for the Nation for rural health-care 
delivery.

    Next week, I will be speaking at a Global Budgeting Summit at Johns 
Hopkins University. Twenty States have registered to participate. The 
Federal Government has the opportunity to engage additional States in 
the Pennsylvania Rural Health Model. Implementing the test across 
diverse States gives the opportunity for the model to evolve. 
Additional resources to the Rural Health Redesign Center would bring 
efficiency and an ability to disseminate best practices in rural health 
transformation across the United States.

    Thank you for your interest in aiding rural hospitals. Rural 
communities deserve access to health care. We must continue to identify 
innovative approaches that offer a pathway to that goal.

                                 ______
                                 
   Questions Submitted for the Record to Karen M. Murphy, Ph.D., R.N.
               Questions Submitted by Hon. Orrin G. Hatch
    Question. During the hearing I asked you if there is any concern, 
under Pennsylvania's new multi-payer global budget model, that rural 
hospitals might lose incentives to be efficient in providing health 
care services. Specifically, I asked if you think participating rural 
hospitals will figure out ways to lower costs and improve health 
outcomes if they already know what they will get paid for procedures 
under the global budget. You responded that this behavioral assumption 
has been accounted for as a monitoring component within the model's 
methodology. Additionally, you mentioned a transformational plan that 
is in place to monitor metrics on a number of the model's assumptions 
and impacts. Can you tell me a little bit more about the 
transformational plan that you mentioned? What is it, how does it work, 
and how will CMS, State officials, participating hospitals and 
providers use it to analyze data and make adjustments as the model is 
implemented?

    Answer. Rural hospitals are expected to develop a transformation 
plan that outlines an innovative approach to improving health and 
health care delivery. The hospitals will be encouraged to work with 
community agencies to develop services based on the communities needs. 
Hospitals may choose to reconfigure or eliminate substandard or 
underused inpatient service lines and invest in community-facing 
interventions. Expanded care coordination, growth in behavioral health 
services with an emphasis on the opioid crisis, and increased access to 
preventive services, such as colonoscopy and mammography, are examples 
of strategies that rural hospitals can execute to improve community 
health.

    To provide participating hospitals with transformation support, 
Pennsylvania plans to create a Rural Health Redesign Center (RHRC). CMS 
has entered a cooperative agreement to provide Pennsylvania up to $25 
million over 5 years to support the RHRC. The RHRC is expected to 
provide technical assistance to rural hospitals including review and 
approval of the hospitals' global budgets and transformation plans, as 
well as data collection, analytics, and practice transformation 
support.

    Transformation plans will be approved by CMS and the RHRC prior to 
implementation. The RHRC will monitor the model performance and make 
adjustments as necessary.

    Question. There is a lot of excitement around the Pennsylvania 
Rural Health Model. It clearly holds great promise. I am pleased to see 
CMS working with States to design innovative rural health care payment 
strategies. Can you explain what exactly happens if the rural hospitals 
participating in the Pennsylvania Rural Health Model have costs greater 
than their global budget allows? Is this also accounted for as part of 
the transformation plan?

    To clarify, the payment model is based on historical net revenue. 
Theoretically the hospital's cost structure should be accounted for as 
a part of the transformation plan. There could be a scenario where a 
hospital recognized more volume than projected resulting in higher 
cost. In that case the global budget for the following year would be 
adjusted accordingly.

                                 ______
                                 
               Question Submitted by Hon. Michael B. Enzi
    Question. Medicare's Sole Community Hospital designation is 
important to many Wyoming hospitals, but to qualify, a potential sole 
community hospital must be located 35 miles away from the nearest 
hospital in most cases, with the exclusion of Critical Access 
Hospitals. How does excluding Critical Access Hospitals from the 
geographic limit affect how the sole community hospital designation is 
targeted?

    Answer. I defer to Ms. Thompson.

                                 ______
                                 
                Question Submitted by Hon. Rob Portman 
                       and Hon. Michael F. Bennet
    Question. We have previously introduced legislation to encourage 
providers to participate in alternative payment models and facilitate 
care coordination, including the Medicare PLUS Act (S. 2498 in the 
114th Congress) and the Medicare Care Coordination Improvement Act (S. 
2051 in the 115th Congress). When we consider coordinating care for 
patients in rural settings, what administrative burdens do you face? 
What can Congress do to ensure that value-based care is effective in 
rural areas?

    Answer. Heretofore it has been difficult for hospitals in rural 
settings to participate in alternative payment models. Most of the 
innovative payment models to date require large numbers of providers 
and patients. Rural hospitals tend to have fewer providers on their 
medical staff. In addition, rural hospitals tend to have relatively 
small administrative staff as compared to their urban counterparts. 
Innovative payment models require infrastructure to design, implement 
and test. The best approach to expand value based care in rural 
communities is to continue exploring several different options for 
rural hospitals transformation with the understanding that rural 
hospitals will require more financial support and technical assistance 
as compared to urban providers.

                                 ______
                                 
                 Questions Submitted by Hon. Ron Wyden
                    pennsylvania rural health model
    Question. The Pennsylvania Rural Health Model is an exciting new 
model that will test whether the predictability of a global budget will 
allow rural hospitals to invest more in quality and focus on preventive 
care.

    As Pennsylvania's Secretary of Health, what issues did you identify 
as unique to rural areas that informed the design of the global payer 
model?

    Answer. There were several influencing factors that prompted 
Pennsylvania to design the global payer model. We noted that a large 
number of rural hospitals were financially challenged. It was apparent 
that reasons causing the financial instability were not going to change 
and threatened the survivability of rural hospitals across the State. 
They included:

          The number of inpatient admissions is declining nationally, 
        a trend that is also prevalent in rural hospitals;
          Rural hospitals frequently lack the financial and human 
        resources to offer complex, highly specialized inpatient care 
        that is required for most admissions today;
          Reimbursement for rural hospitals remains predominantly fee-
        for-service with public payers contributing a sizable 
        percentage of the hospitals' revenue; and
          The combination of declining inpatient admissions resulting 
        in decreased reimbursement and a payer mix that yields a lower 
        price per service is exacerbating an already unstable business 
        model.

    Question. When considering other global payer models, such as 
Maryland's, what aspects needed modification to accommodate the 
specific needs of rural hospitals and allow them to focus on quality 
and prevention?

    Answer. While Maryland has experienced success using global 
budgets, a notable distinction was that the State is a rate setting 
State that can use its regulatory authority to establish inpatient and 
outpatient rates for all hospitals. Pennsylvania does not have the same 
regulatory authority so it was required to develop a new methodology 
for the payment model. The model is based on each hospital's historical 
net revenue.

    Question. How did you ensure the structure of the global payer 
model addressed the unique financial and operational needs of rural 
hospitals in Pennsylvania?

    Answer. During the design process, we worked with rural hospital 
CEOs, the Hospital Association of Pennsylvania, as well as rural health 
associations to be certain we were addressing the unique needs of rural 
hospitals.
                            rural workforce
    Question. As discussed during the hearing, the shortage of primary 
and specialty care providers is a critical issue facing rural 
communities across the country. In Oregon, 25.9 percent of residents 
live in a health professional shortage area. Difficulty recruiting and 
retaining physicians and other members of the care team can result in 
longer patient wait times and reduced access to care for those living 
in rural communities.

    What concrete policy ideas would you suggest this committee pursue 
to help attract more providers to rural America?

    Answer. It is necessary to approach recruitment to rural 
communities differently. It will be very difficult to fulfill the 
physician and health-care workforce using traditional strategies. When 
I was in Pennsylvania I considered developing a ``Rural Health 
Workforce.'' The design would be to offer loan repayment and salary for 
short term service in rural communities, such as two-week service 
blocks. The community would provide housing for the physicians rotating 
in the community. My thoughts were to leverage providers in the large 
academic medical centers to recruit primary care and advanced nurse 
practitioners. It would require many providers and strong care 
coordination. The model has the potential to increase access to needed 
providers in rural communities.
                     rural beneficiary health needs
    Question. Rural communities tend to be older, sicker, and lower 
income compared to their urban counterparts. When rural hospitals are 
forced to close their doors, Medicare beneficiaries living in the 
surrounding areas often have limited health-care options. The 
prevalence of multiple chronic conditions among those living in rural 
areas heightens the need to ensure all Medicare beneficiaries have 
access to high quality care--regardless of where they live.

    In your view, where should this committee focus its efforts to 
ensure that Medicare beneficiaries living in rural areas (especially 
those with multiple chronic conditions) have access to high quality 
care?

    Answer. I think the focus should be on developing innovative 
payment and delivery models that meet the needs of rural communities. 
Also, investments in technology such as virtual care to larger urban 
centers is important.

    Question. What Medicare policy changes would be most impactful in 
the short term and long term?

    Answer. CMS should change supplemental payments for rural hospitals 
away from those that are inpatient centric to a more population health 
based payment.

                                 ______
                                 
              Question Submitted by Hon. Debbie Stabenow 
                      and Hon. Benjamin L. Cardin
                              dental care
    Question. Lack of oral health care is a significant public health 
problem in the United States. Significant health professional shortages 
and lack of access to dentistry impacts rural and underserved 
communities disproportionately. We know that our seniors are negatively 
impacted by the lack of a dental benefit in Medicare. We also know that 
children, families and people with disabilities who rely on Medicaid 
and CHIP, programs which offer coverage for pediatric dental care and 
sometimes care for adults, often struggle to find providers to see 
them. Nowhere is the need for comprehensive dental coverage and access 
to providers more profound than in our rural and underserved 
communities. We have an opportunity to address the needs of our rural 
and underserved communities by improving our health care system by 
incorporating dental care more holistically through better coverage in 
Medicare, Medicaid and CHIP, utilizing telemedicine, and assessing 
provider and workforce gaps that can and should be filled in these 
communities. Ms. Thompson, Ms. Martin, Ms. Murphy, Mr. Pink, and Dr. 
Mueller, what is the most important thing that we, as the Senate 
Finance Committee, can do to improve dental care and coverage for 
people living in rural and underserved communities?

    Answer. As previously described, I think we should approach 
recruitment to rural communities differently. It will be very difficult 
to fulfill the physician and health-care workforce using traditional 
strategies. When I was in Pennsylvania I considered developing a 
``Rural Health Workforce.'' The design would be to offer loan repayment 
and salary for short term service in rural communities. The community 
would provide housing for the physicians rotating in the community. My 
thoughts were to leverage the large academic medical centers to recruit 
primary care and advanced nurse practitioners. It would require a large 
number of providers and strong care coordination. This approach has the 
potential to also work in dental care.

                                 ______
                                 
               Question Submitted by Hon. Debbie Stabenow
                           maternity coverage
    Question. We've heard from families and health care providers in 
Michigan who are concerned about access to maternity coverage in rural 
areas. Close to 500,000 women give birth each year in rural hospitals 
and often face additional barriers and complications. For example, 
women in rural areas report higher rates of obesity, deaths from heart 
disease, and child-birth related hemorrhages. In addition, more than 
half of women in rural areas must travel at least half an hour to 
receive obstetric care, which can lead to decreased screening and an 
increase in birth related incidents.

    Since 2004, a large number of rural obstetric units have closed, 
and only increased the distances that mothers must travel in order to 
receive maternity and delivery care. Unfortunately, the percent of 
rural counties in the United States without hospital obstetric units 
increased by about 50 percent during the past decade.

    Do you have experience with loss of obstetric care for women within 
your respective fields?

    Answer. I do not.

    Question. What steps should be taken to ensure that the proper 
range of maternal care services is being offered through innovative 
rural health models?

    Answer. Studies have demonstrated that quality outcomes in 
obstetrical services are improved when they are performed in centers 
that perform a large number of deliveries. In other words, the higher 
the volume the better the outcomes. Rural birthing centers tend to 
perform a lower number of deliveries. While I do not believe that all 
rural hospitals should have obstetrical services, I do think that 
utilizing virtual care for prenatal visits, lessening the need for 
women to travel while receiving high quality care from urban centers.

                                 ______
                                 
             Questions Submitted by Hon. Benjamin L. Cardin
                              telemedicine
    Question. Although many may think of Maryland as an urban hub with 
its DC suburbs and large cities, there are parts of my State, both on 
the Eastern Shore and on the western side of the State, that are either 
very rural or medically underserved. My constituents who live in these 
parts of the State, must often drive long distances to get the health 
care they need. One way to increase access to quality health services 
to rural and underserved communities, is by offering treatment through 
telehealth technology. Ms. Murphy, how do you see the role of 
telehealth continuing to grow in health-care delivery, and how can it 
be better utilized to increase care for Medicare beneficiaries?

    Answer. I see virtual care such as telemedicine and remote 
monitoring as enabling strategies to improve access to care for those 
residing in rural communities.
                   chronic kidney disease and medigap
    Question. For many Medicare beneficiaries living with kidney 
failure, particularly those living in rural or underserved areas, 
accessing affordable care for their complex and chronic condition is a 
constant financial challenge. Over 92,000 dialysis patients live in 
states with no access to Medigap. This often leaves them unable to 
afford Medicare Part B's 20 percent cost sharing, which for a patient 
with kidney failure can often amount to tens of thousands of dollars of 
out-of-pocket costs each year. Ms. Murphy, have you had challenges with 
Medicare beneficiaries who don't have access to Medigap coverage 
getting the care they need? For example Medicare beneficiaries or 
patients with ESRD under 65?

    Answer. I have not had experience in this area.

    Question. Could you speak to the challenges Medicare beneficiaries 
face when they don't have access to Medigap plans and the benefits for 
Medicare beneficiaries who do have access to Medigap plans?

    Answer. Studies have demonstrated that seniors with Medigap 
policies have higher utilization rates as compared to those that do not 
have Medigap policies. Given the high cost of health care it is fair to 
assume that Medicare beneficiaries without Medigap coverage would be 
less likely to access health-care services.

                                 ______
                                 
            Questions Submitted by Hon. Robert P. Casey, Jr.
    Question. In your written testimony, you discuss the innovation of 
the Pennsylvania Rural Health Model and the ways in which this model 
can support the transformation of the health care service delivery. 
Could you expand on the ways Pennsylvania incorporated new or existing 
telehealth services into this new model of care and payment?

    Answer. As we designed the model we envisioned that hospitals in 
rural communities could leverage telehealth to improve access to health 
care. Rural hospitals were encouraged to collaborate with larger urban 
hospitals to provide the services Jacking in their respective 
communities.

    Question. In your written testimony you stated that ``the 
challenges faced by rural hospitals across the country mirrored those 
in Pennsylvania.'' Could you expand on your thoughts about the 
viability of using the Pennsylvania Rural Health Model as the basis for 
an initiative that other States may use to develop a global budget 
model that is specific to their State?

    Answer. Numerous States have expressed interest in the Pennsylvania 
Rural Health Initiative. It would be beneficial to expand the 
initiative to include other States. A larger sample size would allow 
for the opportunity to refine and improve the model to meet the needs 
of rural hospitals. In addition, there would be lessons learned that 
potentially could lead to using global budgets more broadly.

    What are ways the Federal Government can be involved in and be 
supportive of successfully developing and implementing these innovative 
models?

    CMMI has the expertise and infrastructure to test innovative 
payment and delivery models. Continued support of CMMI will be crucial 
in expanding value-based payment models.

                                 ______
                                 
  Prepared Statement of George H. Pink, Ph.D., Deputy Director, North 
 Carolina Rural Health Research Program; Senior Research Fellow, Cecil 
G. Sheps Center for Health Services Research; and Humana Distinguished 
Professor, Gillings School of Global Public Health, University of North 
                                Carolina
    Chairman Hatch, Ranking Member Wyden, and members of the committee, 
thank you for the opportunity to testify today on behalf of my 
colleagues at the North Carolina Rural Health Research Program and the 
Gillings School of Global Public Health at The University of North 
Carolina at Chapel Hill. We research problems in rural health care 
delivery and are funded primarily by the Federal Office of Rural Health 
Policy.

    I am here to discuss what we know about rural hospital closures, 
and I will start with an all too common story. Coalinga Regional 
Medical Center in Coalinga, CA is a 24-bed acute care hospital with 200 
employees. On May 1st, it announced that after 18 months of losses 
totaling $4.5 million, it is insolvent and will close all services in 
June. The closure will leave residents in the rural Fresno County city 
of 17 thousand people without an emergency room. The nearest hospital 
is Adventist Health in Hanford, which is over 40 miles away. Coalinga 
will be the second hospital in the San Joaquin Valley to close in the 
past 6 months. Tulare Regional Medical Center, a 112-bed hospital, 
closed 6 months ago. Across the country, 125 rural hospitals have 
closed since 2005, 83 since 2010.

    Why is this happening? Long-term unprofitability is an important 
factor. Years of losing money results in little cash, debt payments 
that can't be made, charity care and bad debt that can't be covered, 
older facilities, and outdated technology.

    Why do they lose money? Small rural hospitals serve patients who 
are older, sicker, poorer, and more likely to be un- or under-insured. 
They staff emergency rooms, often in communities with small populations 
and low patient volumes. Combine this with reimbursement reductions, 
professional shortages, and many other challenges--you can see why I 
prefer being a professor to a rural hospital executive.

    What happens after a closure? Some convert to another type of 
health care facility, but more than one half no longer provide any 
health care services--they are now parking lots, apartments, or empty 
buildings. Patients travel an average of 12.5 miles to the next closest 
hospital, but many travel 25 miles or more. For the old, poor, and 
disabled who cannot afford or do not have access to reliable 
transportation, these distances can be very real barriers to obtaining 
needed care.

    Who is most affected? We have investigated communities served by 
rural hospitals at high risk of financial distress because they may be 
the next facilities to close. These communities have significantly 
higher percentages of people who are black, unemployed, lacking a high 
school education, and who report being obese and having fair to poor 
health; in other words, vulnerable people. If the hospitals that serve 
these communities reduce services or ultimately close, already 
vulnerable people will be at increased risk.

    What can be done? We can try to improve what we have by exploring 
ways to better target Medicare payments at rural hospitals in greatest 
need and where closure would have the greatest adverse consequences on 
the communities.

    Preferably, we should develop something new. At meetings around the 
country, the most common frustration I hear is the lack of a model to 
replace a distressed or closed hospital. We have acute care hospitals 
with emergency rooms at one end and primary care clinics at the other 
end, but we need something in-between. There is no shortage of 
innovative ideas--eight to ten new rural models have been proposed by 
various organizations. The profound challenges facing providers that 
serve rural communities are not going away: we need to step up the pace 
of innovation--faster evaluation and implementation of new models, and 
development of the Medicare policies and regulations that will allow 
and sustain them.

    Thank you again for the opportunity to discuss these issues with 
you today, particularly because during the past 35 years, some of the 
most innovative and effective developments in rural health policy have 
emerged from the Finance Committee.

                                 ______
                                 
  Prepared Statement of George H. Pink, Ph.D., Deputy Director, North 
 Carolina Rural Health Research Program; Senior Research Fellow, Cecil 
G. Sheps Center for Health Services Research; and Humana Distinguished 
Professor, Gillings School of Global Public Health; and G. Mark Holmes, 
Director, North Carolina Rural Health Research Program; Director, Cecil 
 G. Sheps Center for Health Services Research; and Professor, Gillings 
      School of Global Public Health, University of North Carolina

    Chairman Hatch, Ranking Member Wyden, and members of the committee, 
thank you for the opportunity to testify today on behalf of my 
colleagues at the North Carolina Rural Health Research Program (NC 
RHRP) and the Gillings School of Global Public Habout our research into 
financial distress and closure of rural hospitals.

    The NC RHRP at the Cecil G. Sheps Center for Health Services 
Research is built upon a 44-year history of rural health research at 
The University of North Carolina at Chapel Hill and draws on the 
experience of a wide variety of scholars and researchers, analysts, 
managers, and health service providers associated with the Center. NC 
RHRP studies problems in rural health care delivery through basic 
research, policy-relevant analyses, geographic and graphical 
presentation of data, and the dissemination of information to 
organizations and individuals who can use the information for policy or 
administrative purposes to address complex social issues affecting 
rural populations. We are funded primarily by the Federal Office of 
Rural Health Policy (FORHP) in the Health Resources and Services 
Administration.

    Our testimony summarizes our research on rural hospital closures 
and the financial distress of rural hospitals. To explain, we will 
focus on the following four categories: rural hospital closures between 
2005-18, causes of financial distress and closure, characteristics of 
communities served by hospitals at high-risk of financial distress, and 
potential strategies that might be considered.

                rural hospital closures between 2005-18
    We define rural hospital closures as rural hospitals (including all 
Critical Access Hospitals) that close their inpatient service or move 
their services fifteen or more miles away from the current location. 
The definition is important because of the variation in circumstances 
that might be considered open or closed.

    Rural hospital closures are sometimes difficult to identify because 
they may close and re-open, be part of a merger, a move, a disaster, 
etc. For example, they may close temporarily due to hurricane damage or 
they may close their emergency department, but keep inpatient care 
open. Our primary method of discovering closed hospitals is through 
media outlets. Applying this definition helps us keep an accurate and 
defensible count as not every hospital administrator sees their 
situation as a closure.

    Figure 1 shows that since January 2005, 125 rural hospitals have 
closed (83 since January 2010).\1\ These closures increased annually 
until 2016, but have started to slow.
---------------------------------------------------------------------------
    \1\ ``Rural Hospital Closures.'' 2014; http://
www.shepscenter.unc.edu/programs-projects/rural-health/rural-hospital-
closures/. 
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

    Rural hospitals are often the largest or second largest employer in 
their communities, so the closure of the only hospital in the county 
can have significant negative economic effects on a rural community.\2\ 
After the closure of inpatient services, alternative health care 
delivery models offer the potential to retain local access to some 
health care services as well as soften the economic impact of closure 
on the community. Of the 125 closed hospitals, some have converted to 
outpatient/primary care clinics (18.1%), urgent or emergency care 
(21.7%), or skilled nursing facilities (6%), but more than half either 
converted to non-health care use (54.2%), such as condominiums, or were 
abandoned.
---------------------------------------------------------------------------
    \2\ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1702512/.

    Most closures and ``abandoned'' rural hospitals are in the South 
(60%), where poverty rates are higher and people are generally less 
healthy and less likely to have health insurance (private or 
public).\3\ Southern States have also been less likely to expand 
Medicaid. Ten out of 18 States that have not expanded Medicaid are 
southern States.\4\,\5\ It is difficult to accurately 
determine whether it is the expansion decision per se that has led to 
higher closure rates, or whether States that have not expanded Medicaid 
have other factors leading to higher closure rates; this is an 
important question on which many researchers are currently working.
---------------------------------------------------------------------------
    \3\ Garfield R, Damico A. ``The Coverage Gap: Uninsured Poor Adults 
in States That Do Not Expand Medicaid.'' Kaiser Family Foundation. 
November 1, 2017. https://www.kff.org/medicaid/issue-brief/the-
coverage-gap-uninsured-poor-adults-in-states-that-do-not-expand-
medicaid/.
    \4\ ``Current Status of State Medicaid Expansion Decisions.'' 
Kaiser Family Foundation. https://www.kff.org/health-reform/slide/
current-status-of-the-medicaid-expansion-decision/.
    \5\ Rural Health Information Hub. ``Rural Health Disparities: What 
regions of the country experience high levels of rural health 
disparities?'' November 14, 2017. https://www.
ruralhealthinfo.org/topics/rural-health-disparities.

    Figure 2 shows that patients in affected communities are probably 
traveling at least 5 to 30 miles to access inpatient care (12.5 miles 
on average); however, 43% of the closed hospitals are more than 15 
miles to the nearest hospital, and 15% are more than 20 miles.\6\ The 
additional travel burden is of concern because residents of rural 
communities are less likely to have reliable transportation (due to 
age, health conditions, and income) than urban residents.\7\
---------------------------------------------------------------------------
    \6\ Clawar M, Thompson K, Pink G. ``Range Matters: Rural Averages 
Can Conceal Important Information.'' (January 2018). NC Rural Health 
Research and Policy Analysis Program. UNC-Chapel Hill. http://
www.shepscenter.unc.edu/download/15861/.
    \7\ ``Rural Health Snapshot 2017.'' (May 2017). NC Rural Health 
Research and Policy Analysis Program. UNC-Chapel Hill.http://
www.shepscenter.unc.edu/download/14853/. 
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                causes of financial distress and closure
    The causes of financial distress and closure of rural hospitals are 
numerous and complex. We have developed a model to predict financial 
distress among rural hospitals. After exploring a large number of 
potential causes, we found that four types of factors predict financial 
distress: (1) financial performance and profitability; (2) proportion 
of Medicare and Medicaid in the payer mix; (3) hospital ownership and 
size, and (4) characteristics of the market served by the hospital, 
including competition, economic condition, and market size.

    Among these factors, profitability is particularly important. 
Nationally, urban hospitals were twice as profitable as rural hospitals 
in 2016: the U.S. median profit margin for urban hospitals was 5.51% 
which was more than double the margins for Critical Access Hospitals 
(2.56%) and other types of rural hospitals (2.01%). There was also 
substantial geographic variation in profitability: among census 
regions, Critical Access Hospitals in the South and other types of 
rural hospitals in the Northeast were less profitable than hospitals in 
other regions.

    Figure 3 shows that, in 2016, 31 percent of all acute care 
hospitals (1,375/4,471) were unprofitable, and the majority of 
unprofitable hospitals were rural: 847 unprofitable rural hospitals 
versus 528 unprofitable urban hospitals.\8\
---------------------------------------------------------------------------
    \8\ GH Pink, K Thompson, HA Howard, GM Holmes. ``Geographic 
Variation in the 2016 Profitability of Urban and Rural Hospitals.'' NC 
Rural Health Research Program Findings Brief. March 2018. 
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

  *Note: Other Rural Hospitals are Medicare Dependent Hospitals, Sole 
 Community Hospitals, and rural PPS hospitals (as well as not CAHs and 
                               not urban)

    There was also substantial geographic variation in the number of 
unprofitable hospitals: among census regions, the greatest number of 
unprofitable hospitals were ``other rural hospitals'' in the South, 
urban hospitals in the South, and Critical Access Hospitals in the 
Midwest. There are many reasons for geographic variation in the 
profitability of urban and rural hospitals: for example, compared to 
urban hospitals, rural hospitals serve older, poorer, and sicker 
communities where higher percentages of patients are covered through 
public insurance programs, if they are covered at all. Most rural 
hospitals are located in the South, the region with the highest rates 
of poverty, and in the Midwest, the region with the lowest rates of 
poverty. Regardless of the reasons, unprofitable hospitals are at 
greater risk of closing and warrant elevated concern by policy makers 
and those concerned with access to hospital care by rural residents.
         characteristics of communities served by hospitals at 
                    high risk of financial distress
    We used profitability and the other three factors to develop a 
model to predict financial distress of rural hospitals.\9\ Among 2,177 
rural hospitals in 2015, 9 percent (197 hospitals) were classified at 
high risk of financial distress and 16 percent (339 hospitals) at 
medium-high risk. Most high-risk hospitals are located in the South: 
States with the largest percentages of rural hospitals at high risk 
were Oklahoma (31%, n=24), Tennessee (25%, n=13), Florida (25%, n=6), 
Virginia (24%, n=7), and Alabama (23%, n=10).
---------------------------------------------------------------------------
    \9\ GM Holmes, BG Kaufman, GH Pink. ``Predicting Financial Distress 
in Rural Hospitals.'' Journal of Rural Health 33 (2017) 239-249. 
[GRAPHIC] [TIFF OMITTED] T2418.008

    One finding of particular concern was a racial disparity among 
communities served by hospitals at high-risk of financial distress 
compared to those served by hospitals not at high risk. Communities 
served by rural hospitals at high risk of financial distress had a 
significantly higher percentage of non-Hispanic black residents (16% 
vs. 7%), while those served by rural hospitals not at high risk had a 
higher percentage of non-Hispanic white residents (84% vs. 75%). 
Communities served by rural hospitals at high risk of financial 
distress had a significantly higher percentage of residents who did not 
graduate high school and who were unemployed. Finally, communities 
served by rural hospitals at high risk of financial distress had a 
significantly higher percentage of residents who reported having fair 
to poor health, who were obese, who smoked, and who had increased years 
---------------------------------------------------------------------------
of potential of life lost (premature mortality).

    Hospitals at high risk of financial distress serve a more 
vulnerable population than those not at high risk. Because hospitals at 
high risk of financial distress are more likely to close or curtail 
services, these vulnerable populations are at increased risk of reduced 
access to hospital services, exacerbation of health disparities, and 
loss of hospital and other types of local employment.
        potential strategies to address financial distress and 
                       closure of rural hospitals
    Given the factors above and the fact that during the past 35 years 
some of the most innovative and effective developments in rural health 
policy have emerged from the Finance Committee, we hope the committee 
will consider our two suggested approaches to address financial 
distress and closures.

    1.  Improve what exists--Assess whether Medicare payment 
designations could be better targeted. Over the past 25 years, Congress 
has created special payment classifications and adjustments to assist 
rural hospitals, including Critical Access Hospital, Sole Community 
Hospital (SCH), Medicare Dependent Hospital, Rural Referral Center, 
Medicare Disproportionate Share Hospital and low-volume hospital 
adjustment. These programs are important to many rural hospitals; 
however, some of them might be refined to better target rural hospitals 
at high risk of financial distress. For example, the SCH program 
provides payment enhancements to safety-net hospitals that are often 
the only source of such services for many rural communities. In our 
initial study we found that there would be significant financial 
consequences to hospitals if the SCH program did not exist, However, we 
also found that the hospitals that benefited the least from the SCH 
program were in the South,\10\ the region with the greatest prevalence 
of rural hospitals at high risk of financial distress and closures.\11\ 
In our subsequent study, we found that hospitals that benefited from 
the SCH program were: (1) located in markets with greater total 
population, lower unemployment and poverty rates, and higher high 
school graduation rates; (2) located in counties with lower percentages 
of people who are obese, have fair/poor self-rated health, and have no 
health insurance, as well as a lower number of potential years of life 
lost, and; (3) more profitable (higher total and operating margins), 
larger (greater net patient revenue), more efficient (higher occupancy 
rate), and employed more FTE staff per bed.\12\ These findings raise 
the question of whether the SCH program could be better targeted by 
reassessing eligibility criteria, conditions of participation, or the 
payment method. This could be done for other Medicare hospital payment 
classifications and other types of providers, such as ambulances and 
home health.
---------------------------------------------------------------------------
    \10\ SCHs in the South would be less affected by cessation of the 
SCH program because more are already paid at the IPPS rate (because 
their hospital-specific rates are lower than the Federal IPPS rate).
    \11\ SR Thomas, R Randolph, GM Holmes, GH Pink. ``The Financial 
Importance of the Sole Community Hospital Payment Designation.'' NC 
Rural Health Research Program Findings Brief. November 2016.
    \12\ SR Thomas, GM Holmes, GH Pink. ``Differences in Community 
Characteristics of Sole Community Hospitals.'' NC Rural Health Research 
Program Findings Brief. November 2017.

    2.  Develop something new--Select some models for demonstration and 
accelerate evaluation of current demonstration projects. The Centers 
for Medicare and Medicaid Services' Innovation Center has several rural 
demonstration projects, including the Rural Community Hospital 
Demonstration, the Frontier Community Health Integration Project and 
the Pennsylvania Rural Health Model. The Medicare Payment Advisory 
Commission has proposed a 24/7 emergency department model and a clinic 
and ambulance model for communities that may have insufficient 
inpatient volume.\13\ The American Hospital Association Task Force on 
Ensuring Access in Vulnerable Communities Emerging Strategies to Ensure 
Access to Health Care Service identified several rural models.\14\ The 
National Rural Health Association has proposed the Community Outpatient 
Hospital as a model to ensure emergency access to care for rural 
patients.\15\ The Kansas Hospital Association is promoting ``Primary 
Health Centers'' to shift small rural hospitals away from a focus on 
admissions to more outpatient and transitional services.\16\ The Oregon 
Rural Health Reform Initiative is an effort to sustain rural hospitals 
financially by transitioning them away from a cost-based reimbursement 
model.\17\ Thus there is no shortage of innovative ideas that could 
lead to demonstration projects and proposed models that may hold the 
ultimate solutions for enhancing access to care in rural communities. 
The profound challenges facing providers that serve rural communities 
are getting worse: we believe that innovation needs to be accelerated--
testing of new models, simpler approval processes, faster evaluation 
and implementation, and development of new Medicare payment methods, 
Conditions of Participation, and regulations that will allow and 
sustain new models of rural care and Medicaid as foundational elements 
of demonstration models.
---------------------------------------------------------------------------
    \13\ ``Improving Efficiency and Preserving Access to Emergency Care 
in Rural Areas.'' Chapter 7 in Report to Congress: Medicare and the 
Health Delivery System. Medicare Payment Advisory Commission. June 
2016.
    \14\ https://www.aha.org/system/files/content/16/ensuring-access-
taskforce-exec-summary.pdf.
    \15\ https://www.ruralhealthweb.org/advocate/save-rural-hospitals.
    \16\ Kansas Hospital Association Rural Health Visioning Technical 
Advisory Group. March 2015. ``Sustaining Rural Health Care in Kansas: 
The Development of Alternative Models.'' Topeka, Kansas. Kansas 
Hospital Association.
    \17\ http://www.oregon.gov/oha/pages/rhri.aspx.
---------------------------------------------------------------------------
                               conclusion
    In conclusion: (1) Rural hospital closures are likely to continue 
and will probably occur more frequently in disadvantaged communities; 
(2) the causes of financial distress and closure are complex and the 
number of rural hospitals at high risk of financial distress is 
growing; and (3) assessment of whether Medicare payment designations 
could be better targeted and acceleration of innovation and testing of 
more new models are recommended strategies.

    Many communities across the United States are concerned about the 
ability of their hospitals to continue providing health care to their 
residents. Rural hospitals at high risk of financial distress and 
closure are not well positioned to meet the challenges of the new 
realities in the health care delivery system. Major payment reform and 
industry restructuring will put pressures on hospitals of all types, 
but especially on financially weak organizations. Thus, it will be 
critical to assess carefully how these changes are affecting rural 
hospitals, the care they deliver, the populations they serve, as well 
as how existing and potential policies might impact hospitals.

                                 ______
                                 
      Questions Submitted for the Record to George H. Pink, Ph.D.
               Questions Submitted by Hon. Orrin G. Hatch
    Question. Since Critical Access Hospitals are reimbursed on a cost 
basis, which covers their expenses to provide services to Medicare 
beneficiaries, do you believe that some of these facilities' 
reimbursement challenges stem from the lack of commercial 
reimbursement? Can you explain in more detail why only certain Critical 
Access Hospitals are financially distressed and losing money?

    Answer. Yes, most Critical Access Hospitals (and other rural 
hospitals as well) have payer mixes with a lower percentage of 
commercial insurance and a higher percentage of Medicare, Medicaid, and 
uncompensated care (bad debt and charity care) in comparison with urban 
hospitals. One study found:


 
                                                   Rural        Urban
                                                 Hospitals    Hospitals
 
Medicare                                                52%          41%
Medicaid                                                15%          18%
Commercial                                              24%          31%
Selfpay and other                                        9%          10%
 
Source: M Hall and MF Owings, ``Changing Patterns in Hospitalization and
  Inpatient Surgery of Rural and Urban Residents,'' National Center for
  Health Statistics, 2015 National Conference on Health Statistics.

    Although CAHs were originally reimbursed 101 percent of costs for 
Medicare beneficiaries, many continue to struggle under the 2-percent 
reduction imposed by sequestration (101 percent minus 2-percent 
sequester for actual value of 99 percent of cost). Cost-based 
reimbursement is a buffer against volume decline or cost increases, but 
it doesn't provide profit to cover high fixed costs that are not 
covered by rates paid by non-Medicare payers.

    A particular payer mix challenge that we have investigated is 
uncompensated care. In a recent study, we found that between 2014-16, 
the median uncompensated care as a percent of operating expense was 
highest for smaller hospitals. Specifically, it was highest for 
hospitals with less than $10 million in net patient revenue and next 
highest for hospitals with $10-$20 million in net patient revenue, 
almost all of which are CAHs. Furthermore, between 2015 and 2016, 
uncompensated care increased for hospitals with less than $20 million 
in net patient revenue and decreased for hospitals with more than $20 
million in net patient revenue.

    Higher levels of uncompensated care reduce profitability and 
increase the risk of financial distress among CAHs and other rural 
hospitals.

    The causes of financial distress of CAHs and other rural hospitals 
are numerous and complex. We have developed a model to predict 
financial distress among rural hospitals. After exploring a large 
number of potential causes, we found that four types of factors predict 
financial distress: (1) financial performance and profitability; (2) 
proportion of Medicare and Medicaid in the payer mix; (3) hospital 
ownership and size, and; (4) characteristics of the market served by 
the hospital, including competition, economic condition, and market 
size (see GM Holmes, BG Kaufman, and GH Pink, ``Predicting Financial 
Distress in Rural Hospitals,'' Journal of Rural Health 33 (2017) 239-
249).
[GRAPHIC] [TIFF OMITTED] T2418.009

    Among these factors, profitability is particularly important. 
Nationally, urban hospitals were twice as profitable as rural hospitals 
in 2016: the U.S. median profit margin for urban hospitals was 5.51 
percent, which was more than double the margins for Critical Access 
Hospitals (2.56 percent) and other types of rural hospitals (2.01 
percent).
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

    There are many reasons why CAHs and other rural hospitals are more 
unprofitable than urban hospitals. Low patient volumes, workforce 
shortages, and lack of access to capital are pervasive. Rural hospitals 
serve older, poorer, and sicker communities where higher percentages of 
patients are covered through public insurance programs, if they are 
covered at all. Regardless of the reasons, unprofitable hospitals are 
at greater risk of closing and warrant elevated concern by policy 
makers and those concerned with access to hospital care for rural 
residents.

    Question. According to your testimony, small rural hospitals that 
are paid under Medicare's traditional inpatient payment system also 
face financial stress. What would be an appropriate Medicare margin for 
these rural hospitals to make?

    Answer. This is a difficult question to answer. In its March 2018 
Report to the Congress, MedPAC reported that, in 2016, rural IPPS 
hospitals (excluding CAHs) had a -7.4 percent overall Medicare margin, 
which was 2.4 percentage points higher than the -9.8 percent margin for 
urban hospitals. Some of this difference could be accounted for by 
Medicare disproportionate hospital (DSH) payments: the adjustment 
formula is capped for <500-bed rural hospitals but there is no cap for 
>100-bed urban hospitals. MedPAC concludes that, ``While Medicare 
payments do not cover the full costs (fixed and variable) of the 
average hospital, they are approximately 8 percent higher than the 
marginal cost of adding additional Medicare patients. Therefore, 
hospitals with excess capacity have an incentive to serve more Medicare 
patients.'' Although most rural hospitals have excess capacity and want 
to serve more Medicare patients, this is a challenge in communities 
with stable or declining numbers, and high proportions of Medicare 
beneficiaries who are poor, disabled, and without access to 
transportation. Nevertheless, some would say that -7.4 percent is an 
appropriate Medicare margin for rural IPPS hospitals.

    In contrast, recent articles in the practitioner literature claim 
that declining Medicare margins are resulting in layoffs and reductions 
in services, particularly in rural markets where there hasn't been an 
influx of new employers offering commercial coverage (Dickson V, 
``Slumping Medicare margins put hospitals on precarious cliff,'' Modern 
Healthcare, November 25, 2017). Another article claims that unless 
hospitals contain losses from treating Medicare patients, their 
financial futures are in jeopardy (Goldsmith J and Bajner R, ``5 Ways 
U.S. Hospitals Can Handle Financial Losses From Medicare Patients,'' 
Harvard Business Review, November 15, 2017). This would suggest that 
current Medicare margins for rural IPPS hospitals are too low.

    So what is an appropriate Medicare margin? At the risk of sounding 
like an economist, on the one hand, it can be argued that Medicare 
should cover its own costs in which case 0 percent is an appropriate 
Medicare margin. On the other hand, it could be argued that cost 
shifting is appropriate and desirable, and the Medicare Trust Fund 
cannot afford to absorb price increases that would result in an average 
Medicare margin of 0 percent. One thing is certain, if the gap between 
Medicare rates and commercial rates continues to grow, this will be a 
problem. As MedPAC states, ``the disparity in incentive to see Medicare 
patients and commercially insured patients will have to be addressed . 
. . or eventually the difference between commercial rates and Medicare 
rates will grow so large that some hospitals will have an incentive to 
focus primarily on patients with commercial insurance'' (March 2018 
Report to the Congress, page 117).

                                 ______
                                 
              Questions Submitted by Hon. Michael B. Enzi
    Question. There has been a lot of focus on Critical Access 
Hospitals, and rightfully so, but how is patient care delivered and 
reimbursed in hospitals that are close to meeting the CAH designation 
but not quite there, like Campbell County Health in my hometown of 
Gillette?

    Answer. Over the past 25 years, Congress has created special 
payment classifications and adjustments to assist rural hospitals, 
including Critical Access Hospital, Sole Community Hospital (SCH), 
Medicare Dependent Hospital, Rural Referral Center, Medicare 
Disproportionate Share Hospital and low-volume hospital adjustment. (A 
good summary of these designations can be found at https://
www.ruralhealth
info.org/topics/hospitals#designations.)

    Campbell County Health includes Campbell County Memorial Hospital, 
a 90-bed acute care hospital that is designated a Sole Community 
Hospital (SCH). Congress created the SCH program to support small rural 
hospitals for which ``by reason of factors such as isolated location, 
weather conditions, travel conditions, or absence of other hospitals, 
is the sole source of inpatient hospital services reasonably available 
in a geographic area to Medicare beneficiaries.'' A hospital qualifies 
as a SCH by meeting the following criteria:

    (1)  It is located at least 35 miles from a similar hospital; or
    (2)  It is between 25 and 35 miles from a similar hospital, and 
meets one of the following criteria: (a) no more than 25 percent of its 
total inpatients or 25 percent of Medicare inpatients admitted are also 
admitted to similar hospitals within a 35-mile radius; or (b) it has 
fewer than 50 acute care beds and would admit at least 75 percent of 
inpatients from the service area were it not for patients requiring 
specialized care that the hospital does not offer; or
    (3)  It is between 15 and 25 miles from other similar hospitals 
that are inaccessible for at least 30 days in each of two out of three 
years due to topography or weather; or
    (4)  Travel time to the nearest hospital is at least 45 minutes 
because of distance, posted speed limits, or predictable weather.

    A SCH is often the only source of hospital care for isolated rural 
residents. As such, Medicare SCH classification helps to keep these 
institutions financially viable through certain payment enhancements 
and protections to the hospital. For inpatient services, Sole Community 
Hospitals receive the higher of payments under (1) the Inpatient 
Prospective Payment System (IPPS) or (2) an updated hospital-specific 
rate (HSR), which are payments based on their costs in a base year 
(1982, 1987, 1996, or 2006) updated to the current year and adjusted 
for changes in their case mix. Since 2006, SCHs also receive an 
additional adjustment set at 7.1 percent above the Outpatient 
Prospective Payment System (OPPS) rate for outpatient services. 
Additionally, SCHs can qualify for adjustments due to decreases in 
inpatient volume and participation in the Hospital Value-Based 
Purchasing Program, Hospital Readmissions Reduction Program, and 
Hospital-Acquired Condition program.

    Senator Enzi may find the following comparative information for 
Campbell County Memorial Hospital and other hospitals in Wyoming to be 
of interest.

Comparison of Campbell County Memorial Hospital to all Wyoming Hospitals
                  PMedicare Cost Reports Ending in 2016
------------------------------------------------------------------------
                                          Critical    Other
                               Campbell    Access     Rural      Urban
                                County   Hospitals  Hospitals  Hospitals
                                Value      in WY      in WY      in WY
                                           Median     Median     Median
------------------------------------------------------------------------
Profitability
    Operating margin              -7.4%      -3.0%       5.1%       2.8%
    Total margin                   3.7%       0.4%       8.9%       2.8%
    Cash flow margin               2.7%       1.8%      12.4%       6.8%
    Return on equity               2.8%       1.5%       6.8%       1.1%
 
Liquidity
    Current ratio                   1.9        3.5        2.9        2.6
    Days cash on hand               202         81        118        238
    Days in gross accounts           45         57         49         56
     receivable
    Days in net accounts             85         55         62         59
     receivable
 
Capital structure
    Equity financing                73%        68%        89%        82%
    Debt service coverage           4.7        7.4        6.5        2.4
    Long-term debt to               21%        18%         6%        13%
     capitalization
Revenue
    Medicare inpatient payer        35%        71%        42%        51%
     mix
    Medicare outpatient             17%        41%        26%        30%
     payer mix
    Outpatient revenue to           74%        67%        66%        39%
     total revenue
    Patient deductions              48%        31%        48%        60%
    Medicare outpatient cost       0.40       0.57       0.40       0.26
     to charge
 
Cost
    Average age of plant            N/A        9.9        9.5        8.2
    FTEs per adjusted bed          12.1       11.4        8.4        6.5
    Average salary per FTE      $58,364    $63,123    $67,422    $79,072
    Salaries to net patient       40.6%      55.5%      38.8%      37.2%
     revenue
    Uncompensated care to          6.4%       7.3%       5.8%       6.9%
     total operating expense
 
Utilization
    Acute averarge daily             19          3         17         91
     census
 
    Number of hospital cost                     16          7          3
     reports
------------------------------------------------------------------------

    For further information about Sole Community Hospitals, we have 
recently produced two findings briefs:

        S Thomas, K Thompson, and GH Pink, ``The Community Experience 
        of Sole Community Hospitals,'' NC Rural Health Research Program 
        Findings Brief, June 2017.

        S Thomas, K Thompson, and GH Pink, ``The Financial Experience 
        of Sole Community Hospitals,'' NC Rural Health Research Program 
        Findings Brief, November 2016.

                                 ______
                                 
                 Questions Submitted by Hon. Ron Wyden
                            rural workforce
    Question. As discussed during the hearing, the shortage of primary 
and specialty care providers is a critical issue facing rural 
communities across the country. In Oregon, 25.9 percent of residents 
live in a health professional shortage area. Difficulty recruiting and 
retaining physicians and other members of the care team can result in 
longer patient wait times and reduced access to care for those living 
in rural communities.

    What concrete policy ideas would you suggest this committee pursue 
to help attract more providers to rural America?

    Answer. Despite considerable evidence that health professionals 
trained in rural sites are more likely to practice in rural 
communities, health workforce training remains concentrated in urban 
settings. The Federal Government spends $14.5 billion annually on 
graduate medical education (GME), but only about 1 percent goes to 
rural settings (GAO 2018). Federal GME investments were set by the 
Balanced Budget Act of 1997 and are not targeted toward specialties, 
health-care settings and geographic regions of the country facing 
shortages (Mullan et al 2013; Fraher et al 2017). The National Academy 
of Medicine (NAM) has made numerous recommendations that could be 
enacted by Congress including: 1. modernizing Federal GME payments to 
reward performance, ensure accountability, and incentivize innovation; 
2. creating a GME Policy Council in the Office of the Secretary in DHHS 
and a GME Center within CMS; and 3. using a portion of existing GME 
funds to develop and evaluate innovative GME programs, determine and 
validate appropriate GME performance measures, pilot alternative GME 
payment methods, and award new Medicare-funded GME training positions 
in priority disciplines and geographic areas.

    While Medicare spending makes up 71 percent of Federal GME funds, 
Congress funds the Teaching Health Center (THC) Program at about $76 
million annually. Evaluations have shown that physicians who complete 
THC residencies are more likely to work in underserved communities 
(Bazemore et al. 2015; Talib et al. 2018). The THC program could be 
expanded and funded on a permanent basis, rather than having to rely on 
an annual appropriation from Congress. Congress could also expand 
programs like the Rural Training Tracks (RTT). Current regulations 
require new RTTs to be affiliated with an urban program that has never 
had Medicare-supported residents. While Congress can't change this 
regulation, it could create and expand funding for a similar program 
that does not have this stipulation but does require additional 
training slots to be placed in rural areas.

    Federally qualified health centers (FQHCs), rural health centers 
(RHCs) and Critical Access Hospitals (CAHs) where rural training often 
occurs, are often financially fragile. Adding students to these sites 
places even greater strains on the organizations. CAHs are considered 
non-hospital providers under Medicare funding which means that any time 
a resident spends in a CAH results in a loss of Medicare funding for 
the parent residency program. One solution would be to classify CAHs 
similarly to RHCs and FQHCs so that resident time spent in those 
facilities would not result in a loss of Medicare funding for the 
parent trainingprogram. Congress could also provide supplemental 
funding to CAHs, FQHCs and RHCs that provide residency training to 
incent more sites to take on trainees.

    In contrast to the $14.5 billion pent annually on GME for 
physicians, the Federal Government spends very little on clinical 
training for Nurse Practitioners (NPs) and other advanced practice 
nurse practitioners (APRNs). Yet NPs play in an increasingly important 
role in meeting the primary care needs of rural communities. In 2016, 
Nurse Practitioners (NPs) constituted 25.2 percent of providers in 
rural practices, up from 17.6 percent in 2008 (Barnes et al. 2018). A 
recent evaluation of a CMS demonstration project funding Graduate Nurse 
Education (GNE) for AP RNs increased the number of NPs available to 
deliver primary care in community-based settings and primary care 
(Aiken et al 2018). Funding/or the GNE program could be increased and 
targeted toward rural hospitals, rural health clinics, and FQHCs.

    For a handout summarizing research on redesigning GME to better 
meet population health needs, follow this link: http://
www.shepscenter.unc.edu/workforce_product/research-on-redesigning-
graduate-medical-education-to-better-meet-population-health-needs/. 
This handout was also shared with the House Committee on Veterans 
Affairs in June 2018.

References

    Barnes H, Richards MR, McHugh MD, Martsolf G. ``Rural and Nonrural 
Primary Care Physicians Increasingly Rely on Nurse Practitioners.'' 
Health Affairs. 2018;37(6); 908-9/4.

    Bazemore A, Wingrove BS, Petterson S, Peterson L, Raffoul M, 
Phillips RL. ``Graduates of Teaching Health Centers Are More Likely to 
Enter Practice in the Primary Care Safety Net.'' American Family 
Physician. 2015; 92(10): 868-868.

    Fraher E, Knapton A, Holmes GM. ``A Methodology for Using Workforce 
Data to Decide Which Specialties and States to Target for GME 
Expansion.'' Health Services Research. 2017 Feb; 52 Suppl 1: 508-528.

    Government Accountability Office, U.S. Department of Health and 
Human Services. ``HHS Needs Better Information to Comprehensively 
Evaluate Graduate Medical Education Funding.'' GA0-18-240: Published: 
March 9, 2018. Publicly Released: March 29, 2018.

    Institute of Medicine (IOM). 2014. ``Graduate Medical Education 
That Meets the Nation's Health Needs.'' Washington, DC: The National 
Academies Press.

    Mullan F, Chen C, and Steinmetz E. 2013. ``The Geography of 
Graduate Medical Education: Imbalances Signal Need for New Distribution 
Policies.'' Health Affairs (Project Hope) 32(11): 1914-21.

    Talib Z, Jewers MM, Strasser JH, Popiel DK, Goldberg DG, Chen C, 
Kepley H, Mullan F, Regenstein M. ``Primary Care Residents in Teaching 
Health Centers: Their Intentions to Practice in Underserved Settings 
After Residency Training.'' 2018; 93(1): 98-103.
                     rural beneficiary health needs
    Question. Rural communities tend to be older, sicker, and lower 
income compared to their urban counterparts. When rural hospitals are 
forced to close their doors, Medicare beneficiaries living in the 
surrounding areas often have limited health care options. The 
prevalence of multiple chronic conditions among those living in rural 
areas heightens the need to ensure all Medicare beneficiaries have 
access to high quality care--regardless of where they live.

    In your view, where should this committee focus its efforts to 
ensure that Medicare beneficiaries living in rural areas (especially 
those with multiple chronic conditions) have access to high quality 
care?

    Answer. The Finance Committee took important steps toward 
addressing chronic disease management with the passage of last year's 
CHRONIC legislation that created new and important flexibility within 
the Medicare Advantage program. An open question is whether the 
benefits from the CHRONIC legislation could be expanded to rural 
Medicare FFS beneficiaries who have multiple chronic conditions. For 
example, it might be possible to pay providers a per member per month 
fee for care given to FFS Medicare beneficiaries with multiple chronic 
diseases. This might give small and rural practices more freedom to 
focus on the unique needs of this population in a non-risk bearing 
payment environment. This could also be done in a budget neutral manner 
for small practices in geographic isolated areas to limit the costs and 
focus on areas of greatest need.

    Recommendation: Investigate the feasibility of paying providers a 
per member per month fee for care given to FFS Medicare beneficiaries 
with multiple chronic diseases.

    Question. What Medicare policy changes would be most impactful in 
the short term and long term?

    Answer. In the short run, the committee could better target 
Medicare payments at rural hospitals in greatest need--and where 
closure would have the greatest adverse consequences on the 
communities. Among rural hospitals types, PPS hospitals with 26-50 beds 
(known as ``tweener'' hospitals because they are too large to quality 
for CAH status but still relatively small hospitals) and Medicare 
Dependent Hospitals have the lowest profitability compared to other 
hospitals, Most of these hospitals are located in more rural areas with 
a higher percentage of elderly (SR Thomas, GM Holmes, GH Pink, 2012-14, 
``Profitability of Urban and Rural Hospitals by Medicare Payment 
Classification,'' NC Rural Health Research Program Findings Brief March 
2016).

    In the longer run, we believe that the best solution is to develop 
and implement new models of rural health care. There is no shortage of 
innovative ideas that could lead to demonstration projects and proposed 
models that may hold the ultimate solutions for enhancing access to 
care in rural communities. We believe that the future of rural health 
care is new and innovative health-care delivery and payment models that 
allow for low patient volumes, recognize fixed costs of maintaining 
access to emergency care, use rural relevant quality measures, and are 
flexible enough to meet the specific needs of local rural residents. 
The profound challenges facing providers that serve rural communities 
are not going away.

    Recommendation: Step up the pace of innovation--faster evaluation 
and implementation of new models, and development of the Medicare 
policies and regulations that will allow and sustain them.

                                 ______
                                 
              Questions Submitted by Hon. Debbie Stabenow
                   rural access to mental health care
    Question. Many areas of the United States have little or no access 
to psychiatrists to meet the demand for mental health and opioid 
treatment services. Recent studies show that 60 percent of all counties 
in this Nation--including fully 80 percent of rural counties--do not 
have a single psychiatrist to treat residents with mental illnesses. 
Based upon HRSA Mental Health Professional Shortage Area data, just 590 
psychiatrists serve more than 27 million Americans--most of whom live 
in rural areas.

    In your testimony, you discussed the role of telemedicine in 
expanding access to health care in rural parts of the country.

    Do you think these technologies can be employed to enhance the 
delivery of mental health and substance abuse treatment services as 
well?

    Answer. Telehealth, particularly in mental health, has great 
potential. Although the volume is growing, it is a very small part of 
Medicare service volume: ``The use of telehealth services under the PFS 
has grown rapidly in recent years, but remains low. In 2016, 108,000 
beneficiaries (0.3 percent of FFS beneficiaries) accounted for over 
300,000 telehealth visits totaling $27 million. These services were 
most commonly used for basic physician office and mental health 
services. Use was concentrated among a small group of clinicians and 
beneficiaries'' (MedPAC, March 2018, Report to the Congress, page 
xxvii).

    The use of telehealth for mental health and substance abuse 
treatment could expand if: (1) financial incentives were aligned with 
this objective--a distant specialist is paid a professional fee for 
telehealth services by FFS Medicare, but a small rural hospital or 
clinic receives a $25 facility fee that frequently does not cover its 
cost, and rural providers offer the services because it benefits their 
patients and keeps care local, but they do this in the absence of a 
financial incentive; and (2) the distinction between originating sites 
and distant sites was eliminated, which would allow Rural Health 
Clinics and FQHCs to provide as well as receive telehealth services.

    Recommendation: Assess the adequacy of the facility fee paid to 
rural hospitals and clinics for telehealth services, and consider 
elimination of originating versus distant sites.

    Question. Senator Barrasso and I introduced the Seniors Mental 
Health Access Improvement Act, S. 1879, which would add licensed mental 
health counselors and marriage and family therapists to the Medicare 
program.

    While telehealth offers great potential, is there more we can do to 
take advantage of mental health professionals already on the ground in 
rural America?

    Answer. Access to licensed mental health counselors and marriage 
and family therapists by Medicare beneficiaries continues to be an 
important issue in rural health. Forty years ago, Rural Health Clinics 
were the first test sites for the use of nurse practitioners and 
physician assistants. RHCs could serve the same role for licensed 
mental health counselors and marriage and family therapists. RHCs would 
provide a well-defined and limited setting to assess the impact and to 
determine whether these providers should be added to the list of 
eligible Medicare providers.

    Recommendation: Consider testing the impact of increased access to 
mental health counselors and marriage and family therapists in Rural 
Health Clinics.

    The WWAMI Rural Health Research Center is a leader in this area of 
research. Recent publications related to your questions include:

    Andrilla CHA, Coulthard C, Larson EH, Patterson DG, Garberson LA, 
``Geographic Variation in the Supply of Selected Behavioral Health 
Providers,'' American Journal of Preventive Medicine Volume 54, Issue 
6, Supplement 3, pages S199-S207.

    Andrilla CHA, Garberson LA, Patterson DG, Larson EH, ``The supply 
and distribution of the behavioral health workforce in America: A 
State-level analysis,'' Seattle, WA: WWAMI Rural Health Research 
Center, University of Washington, July 10, 2017.

    Andrilla CHA, Coulthard C, Larson EH, ``Changes in the supply of 
physicians with a DEA DATA Waiver to prescribe buprenorphine for opioid 
use disorder,'' Seattle, WA: WWAMI Rural Health Research Center, 
University of Washington Data Brief #J62, May 1, 2017.
                           maternity coverage
    Question. We've heard from families and health-care providers in 
Michigan who are concerned about access to maternity coverage in rural 
areas. Close to 500,000 women give birth each year in rural hospitals 
and often face additional barriers and complications. For example, 
women in rural areas report higher rates of obesity, deaths from heart 
disease, and childbirth-related hemorrhages. In addition, more than 
half of women in rural areas must travel at least half an hour to 
receive obstetric care, which can lead to decreased screening and an 
increase in birth related incidents.

    Since 2004, a large number of rural obstetric units have closed, 
and only increased the distances that mothers must travel in order to 
receive maternity and delivery care. Unfortunately, the percent of 
rural counties in the United States without hospital obstetric units 
increased by about 50 percent during the past decade.

    Do you have experience with loss of obstetric care for women within 
your respective fields?

    Answer. Loss of obstetrics services has been a prominent issue in 
North Carolina. Blue Ridge Regional Hospital in Spruce Pine closed its 
labor and delivery unit on September 30th. Angel Medical Center in 
Franklin shut down its maternity ward in July 2017. For residents in 
these mountain communities, the next closest hospital with a maternity 
ward is 20 or more miles away. In the summer, the drive is 30 minutes 
but the roads through the mountains during labor pose a major concern 
during winter. The peaks in this region are the highest in the eastern 
United States (C Pearson and F Taylor, ``Mountain maternity wards 
closing, WNC women's lives on the line,'' Carolina Public Press, 
September 25, 2017).

    Question. What steps should be taken to ensure that the proper 
range of maternal care services are being offered through innovative 
rural health models?

    Answer. A frequently reported reason for closure of obstetrics by a 
rural hospital is insufficient volume for a financially viable service. 
In rural areas with more than one hospital, the aggregate obstetrics 
volume may be financially viable if it is centralized in one facility. 
Incentives could be provided by states to develop regional networks of 
obstetrical care, perhaps through existing or new Medicaid waiver 
authority. Networks could include hospitals and other providers that 
focus on pre-natal care, coordinated case management, and high-risk 
pregnancies and deliveries. Tele-fetal monitoring could provide backup 
specialty coverage and support for some networks. In comparison to a 
single facility, a regional network of obstetrical care could have more 
success in recruitment and retention of OB-GYN physicians and nurses 
and in bearing the high liability costs for rural family practice 
physicians (for example, Federally Qualified Health Centers provide 
liability to their providers through the Federal Tort Claims Act or 
FTCA).

    Recommendation: Explore the feasibility of regional networks of 
obstetrical care.

    The University of Minnesota Rural Health Research Center is a 
leader in this area of research. Recent publications related to your 
questions include:

    http://rhrc.umn.edu/2018/03/association-between-loss-of-hospital-
based-obstetric-services-and-birth-outcomes-in-rural-counties-in-the-
united-states/.

    http://rhrc.umn.edu/2017/09/access-to-obstetric-services-in-rural-
counties-still-declining-with-9-percent-losing-services-2004-14/.

    http://rhrc.umn.edu/2017/04/state-variability-in-access-to-
hospital-based-obstetric-services-in-rural-u-s-counties/.

    http://rhrc.umn.edu/2017/04/closure-of-hospital-ob-services/.

                                 ______
                                 
              Question Submitted by Hon. Debbie Stabenow 
                      and Hon. Benjamin L. Cardin
                              dental care
    Question. Lack of oral health care is a significant public health 
problem in the United States. Significant health professional shortages 
and lack of access to dentistry impacts rural and underserved 
communities disproportionately. We know that our seniors are negatively 
impacted by the lack of a dental benefit in Medicare. We also know that 
children, families and people with disabilities who rely on Medicaid 
and CHIP, programs which offer coverage for pediatric dental care and 
sometimes care for adults, often struggle to find providers to see 
them. Nowhere is the need for comprehensive dental coverage and access 
to providers more profound than in our rural and underserved 
communities. We have an opportunity to address the needs of our rural 
and underserved communities by improving our health care system by 
incorporating dental care more holistically through better coverage in 
Medicare, Medicaid and CHIP, utilizing telemedicine, and assessing 
provider and workforce gaps that can and should be filled in these 
communities. Dr. Pink, what is the most important thing that we, as the 
Senate Finance Committee, can do to improve dental care and coverage 
for people living in rural and underserved communities?

    Answer. The Senators' question very effectively summarizes the 
challenges rural and underserved communities face as they seek to 
improve their population's oral health. The inclusion of dental 
benefits in Medicare and creating incentives for all States to expand 
Medicaid dental coverage for adults would have the potential for making 
the greaLest impact on the oral health of rural communities, which have 
higher rates of poverty and relatively larger numbers of the elderly. 
Additionally, providing reimbursement through public benefit programs 
(Medicare, Medicaid and CHIP) to a diverse, interdisciplinary work 
force, practicing at the top of their scope of practice in a patient-
centered model, would help to address worliforce shortages and improve 
quality and oral health outcomes.

                                 ______
                                 
  Prepared Statement of Susan K. Thompson, M.S., B.S.N., R.N., Senior 
 Vice President, Integration and Optimization, UnityPoint Health; and 
          Chief Executive Officer, UnityPoint Accountable Care
    Chairman Hatch, Ranking Member Wyden, and honorable members of the 
committee, on behalf of UnityPoint Health and UnityPoint Accountable 
Care, thank you for the opportunity to submit written testimony as a 
supplement to the oral testimony provided on May 24, 2018 at the 
``Rural Health Care in America: Challenges and Opportunities'' hearing. 
By way of background, I am pleased to submit the following comments to 
further illustrate health-care challenges experienced in rural Iowa, 
along with greater detail regarding potential solutions highlighted in 
my oral testimony.
                               background
UNITYPOINT HEALTH
    UnityPoint Health' is one of the Nation's most 
integrated health systems. Through relationships with more than 280 
physician clinics 280 physician clinics, 38 hospitals in metropolitan 
and rural communities and home care services throughout its 9 regions, 
UnityPoint Health provides care throughout Iowa, western Illinois and 
southern Wisconsin.

    UnityPoint Health entities employ more than 30,000 physicians, 
providers, clinicians and staff. Each year, through more than 5.4 
million patient visits, UnityPoint Health, UnityPoint Clinic and 
UnityPoint at Home provide a full range of coordinated care to patients 
and families. With projected annual revenues of $4.08 billion, 
UnityPoint Health is the Nation's 13th largest nonprofit health system 
and the fourth largest nondenominational health system in America.
UNITYPOINT ACCOUNTABLE CARE
    Iowa Health Accountable Care, L.C., doing business as UnityPoint 
Accountable Care, L.C., is an Iowa limited liability company that 
brings together a diverse group of health-care providers, including 
hospitals, physicians, and home health entities. As part of UnityPoint 
Health, UnityPoint Accountable Care is one of the largest Accountable 
Care Organizations (ACO) in the Nation, with a growing network 
including 47 hospitals and more than 7,750 Iowa, Illinois, Wisconsin 
and Missouri physicians and providers and more than 85 skilled nursing 
facilities. In 2017, UnityPoint Accountable Care provider networks 
provided care for more than 200,000 lives in governmental and 
commercial insurance value-based arrangements. UnityPoint Accountable 
Care is one of the largest participants in the Centers for Medicare and 
Medicaid Services' (CMS) Next Generation ACO Model and is a leader in 
industry transformation.

    In my oral testimony before the committee, I referenced the 
experiences of UnityPoint Health-Trinity Regional Medical Center (TRMC) 
in Fort Dodge, IA, and those of the five Critical Access Hospitals 
(CAH) it partners with in the UnityPoint Health-Fort Dodge region--both 
in regard to designations under rural payment rules and TRMC's 
participation as the Trinity Pioneer ACO--are responsible for the total 
cost of care of attributed Medicare beneficiaries.
UNITYPOINT HEALTH--FORT DODGE (TRINITY HEALTH SYSTEMS)
    Trinity Health Systems, also known as the UnityPoint Health--Fort 
Dodge region, covers an eight-county area in North Central Iowa with a 
population of approximately 137,000. The region includes 27 primary and 
specialty care clinics, home care services, a Community Mental Health 
Center and its flagship hospital, TRMC. In addition, the region 
includes partnerships with five ``affiliate'' CAHs.

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

UNITYPOINT HEALTH--TRINITY REGIONAL MEDICAL CENTER
    TRMC, located in Fort Dodge, IA, is a licensed, non-profit 
hospital. In addition, TRMC is a safety-net hospital, designated by the 
CMS as a sole community hospital and a rural referral center. Most 
recently, TRMC converted from a Prospective Payment System (PPS) 
hospital to a ``tweener'' status hospital by reducing its inpatient 
beds to below 50. This conversion allowed TRMC to become eligible to 
participate in the CMS Rural Demonstration Program for the year 
2018.\1\
---------------------------------------------------------------------------
    \1\ Centers for Medicare and Medicaid Services. (2017, April 17). 
Rural Community Hospital Demonstration [Press release]. https://
www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2017-Fact-Sheet-
items/2017-04-17.html.

    TRMC employs over 1,000 health-care professionals, technicians, and 
individuals with a medical staff of approximately 90 providers. In 
2016, TRMC served 3,460 patients, with 51.9 percent having Medicare as 
a primary payor.
CRITICAL ACCESS HOSPITAL PARTNERS
    As referenced above, TRMC provides management services to five CAHs 
in its eight-county service area. These hospitals include Buena Vista 
Regional Medical Center (Storm Lake, IA); Humboldt County Memorial 
Hospital (Humboldt, IA); Loring Hospital (Sac City, IA); Pocahontas 
Community Hospital (Pocahontas, IA); and Stewart Memorial Community 
Hospital (Lake City, IA). With a common electronic health record (EHR) 
platform shared between these entities, the CAHs serve as important 
extensions of the region's care continuum.
TRINITY PIONEER ACO
    In 2011, several health-care entities, including TRMC and Trimark 
Physicians Group (now part of UnityPoint Clinic, the primary and 
specialty care arm of UnityPoint Health), came together to create the 
Trinity Pioneer ACO. Originally 1 of 32 planned organizations using the 
Center for Medicare and Medicaid Innovation Center's (CMS Innovation 
Center) Pioneer ACO Model, its success took it to the final stages, 
positioning it as one of the final 19 Pioneer ACOs. It is important to 
note that the five CAHs referenced in the previous section provide care 
to some of the Medicare beneficiaries attributed to the Trinity Pioneer 
ACO; however, the hospitals themselves were not participating entities 
in the ACO.

    Despite the small size of TRMC, the hospital and its region have 
been an early adopter of value-based service delivery. As a CMS Pioneer 
ACO Model participant, TRMC wholeheartedly embraced delivery system 
reform efforts to move from service volume to population value. This 
entails a shift in investment away from inpatient care towards 
preventive and primary care with an emphasis on greater access to care 
in outpatient settings. The Trinity Pioneer ACO was able to produce two 
years of savings under the model while demonstrating strong performance 
in quality and patient experience,\2\,\3\ all of which 
earned national recognition from the U.S. Department of Health and 
Human Services (HHS), including an onsite visit from then HHS Secretary 
Sylvia Burwell, who commented that, ``I'm here today to visit one of 
the great models of people accelerating change that the rest of the 
Nation needs to do.''\4\
---------------------------------------------------------------------------
    \2\ Pioneer ACO Model Performance Year 3 (2014) Quality and 
Financial Results. https://innovation.cms.gov/Files/x/pioneeraco-fncl-
py3.pdf.
    \3\ ``Evaluation of CMMI Accountable Care Organization Initiatives: 
Pioneer ACO Evaluation Findings From Performance Years One and Two.'' 
March 10, 2015. (2015, March 10). https://innovation.cms.gov/Files/
reports/PioneerACOEvalRpt2.pdf
    \4\ ``Burwell Touts UnityPoint Health ACO'' (2016, July 15). The 
Messenger. http://www.messengernews.net/news/local-news/2016/07/
burwell-touts-unitypoint-health-aco/

    Due in part to its success in the Pioneer ACO Model, the Trinity 
Pioneer ACO has since migrated to the CMS Innovation Center's Next 
Generation ACO Model under UnityPoint Accountable Care. Participation 
in this model makes many of the UnityPoint Health--Fort Dodge region's 
physicians and providers eligible for Advanced Alternative Payment 
Model (AAPM) status under the Medicare Access and CHIP Reauthorization 
Act of 2015 (MACRA).
THE DICHOTOMY CREATED BY OPPOSITE INCENTIVES FOR PROVIDERS IN RURAL 
        MARKETS IS A CHALLENGE
    It is through this work that the challenges facing rural 
communities, hospitals and providers have become so palpably clear to 
us. While the success of the Trinity Pioneer ACO came by meeting 
quality metrics and lowering the total cost of care, its CAH partners 
were then and are still operating under a cost-based reimbursement 
model. The CAH designation is designed to reduce the financial 
vulnerability of rural hospitals and improve access to care by keeping 
services in rural communities. To accomplish this goal, CAHs receive 
certain benefits, such as cost-based reimbursement for Medicare 
services. Through this model, CMS reimburses CAHs for their 
``allowable'' costs; that is, costs that CMS deems core to the business 
of operating a hospital.\5\ This cost-based reimbursement model creates 
a different and often contradictory incentive to that which is in place 
under value-based models, including the Pioneer ACO and Next Generation 
ACO Models, among others.
---------------------------------------------------------------------------
    \5\ Critical Access Hospitals Payment System. (2017, October). 
http://medpac.gov/docs/default-source/payment-basics/
medpac_payment_basics_17_cah_final09a311adfa9c665e80adff0000
9edf9c.pdf?sfvrsn=0.

    This dichotomy that exists between those who operate under total 
cost of care programs like ACOs, Medicare Advantage (MA) plans and 
bundled payments, and their rural CAH counterparts, who operate under a 
cost-based reimbursement model is not optimal. The population health 
movement, and more generally the movement to managed care in both the 
Medicare and Medicaid programs, and further encouraged by the construct 
of MACRA have left rural providers behind. Policy must be adjusted to 
encourage our rural partners to engage more deeply in value-based 
models, of which are outlined in the sections below.
           access to health-care services continues to be a 
              significant challenge for rural communities
    The second challenge highlighted in my oral testimony is the most 
daunting: access to health-care services in rural areas. Bringing 
quality care to rural Americans comes at a cost. The cost is distinct 
from the actual provision of the medical service. These additional, 
unique costs relate to the time and distance from major service 
centers, lack of comprehensive community services, and health-care 
workforce dead zones.
POTENTIAL SOLUTIONS FOR THE CHALLENGES IDENTIFIED
       i. redesign rural reimbursement in a manner which divides 
          the medical spend from the cost of providing access

    We propose payment for health-care delivery services in rural areas 
include a value-based component tied to quality medical outcomes and 
expenditures, and that a separate and distinct payment structure is 
developed for the portion of cost-based reimbursement that pays for the 
costs associated with access in rural areas.

    In Iowa, 82 of our 117 hospitals are identified as CAH.\6\ Given 
the geographic density of these rural health-care entities, there is 
potential to develop and implement a new rural health-care delivery 
model that evaluates a cluster of hospitals in a defined geographic 
area of the State (for example, CAHs in a 30-mile area or a defined 
number of counties) that focus on select areas of care. Or, if these 
hospitals, in order to retain their cost-based structure, develop local 
integrated delivery systems that would then be aligned to an AAPM. 
These local delivery systems would be required to include either a 
minimum percentage or a defined number of aligned lives of the AAPM. As 
part of the local integrated delivery system, the CAHs would be 
required to offer a defined set of services, such as extended hours for 
primary care and mental health services (either face-to-face or through 
telehealth), 24/7 emergency department care and immediate connections 
to community-based social services that can address the needs of 
patients such as transportation, housing or food insecurity, among 
others. If these minimum criteria are met, the participating CAHs in 
the local integrated delivery system would keep their cost-based 
reimbursement. If CAHs unable to demonstrate success in the model, 
policy for modifying the cost-based reimbursement might be considered.
---------------------------------------------------------------------------
    \6\ Rural Health for Iowa Introduction--Rural Health Information 
Hub. https://www.rural
healthinfo.org/states/iowa.
---------------------------------------------------------------------------
Policy Recommendations:
    1.  Design ACO benchmarks to accommodate for the additional cost of 
bringing access to rural markets.

    2.  Access to care payments should be left out of ACO benchmark 
calculations.

    3.  While access to care payments between rural and urban centers 
need to differ, rural providers need to be held to the same quality of 
care standards as urban providers for areas within their scope of 
expertise.
           ii. create rural designations that are meaningful 
                      to modern day rural america
    Policy Recommendation: Congress should create new designations for 
Rural Emergency Rooms and Rural Access Centers. Specifically:

          Rural hospitals should be redefined in to specified 
        categories based on average daily census. An example 
        categorization could define the hospitals as: (1) Small Rural 
        (average daily census of five or fewer patients); (2) Rural 
        (average daily census of six to 25 patients); and (3) 
        ``Tweener'' (average daily census of 26 to 49 patients).

              ``Small Rural'' hospitals would receive cost-
        based reimbursement for outpatient services in exchange for 
        discontinuing acute inpatient services while maintaining 24/7 
        emergency department services.

              ``Rural'' hospitals would continue to receive 
        cost-based reimbursement if they are participating in an ACO, 
        MA plan, or other value-based model that includes a component 
        of downside risk.

              ``Tweener'' hospitals would receive 
        ``permanent,'' ongoing cost-based reimbursement for inpatient 
        services if they are participating in an ACO, MA plan, or other 
        value-based model that includes downside risk. In turn, these 
        tweener hospitals should become a rural health ``aggregator,'' 
        serving as a convener by which the populations served by the 
        tweener and local ``Small Rural'' and ``Rural'' hospitals 
        patient populations could form a rural ACO or other value-based 
        arrangement.

    Support bills like the Rural Emergency Acute Care Hospital (REACH) 
Act \7\ that allow rural hospitals to transition to new designations 
designed to meet modern needs. The Act would allow CAHs and PPS 
hospitals with 50 or fewer beds to convert to Rural Emergency Hospitals 
and continue providing necessary emergency and observation services. 
Rural Emergency Hospitals would receive enhanced reimbursement rates of 
110 percent of reasonable costs, and enhanced reimbursement for the 
transportation of patients to acute care hospitals in neighboring 
communities.
---------------------------------------------------------------------------
    \7\ Rural Emergency Acute Care Act, S. 1130, 115th Cong. (2017-
2018). https://www.
congress.gov/bill/115th-congress/senate-bill/1130/
text?q=%7B%22search%22%3A%5B%22
%5C%22Rural+Emergency+Acute+Care+Hospital+Act%5C%22%22%5D%7D&r=1.
---------------------------------------------------------------------------
        iii. adjust the medicare advantage program to tie rural 
            health regions into population health resources
    Policy Recommendation: Encourage the CMS Innovation Center to 
develop pilots that test MA programs designed to work in rural markets 
like Iowa. We see great potential for MA to bring the benefits of 
population health methods to rural areas.

    An MA/ACO Hybrid Model could leverage the successes of and lessons 
learned from high-performing, two-sided risk Medicare ACOs to shift 
from volume-based payments to a model designed to promote the delivery 
of higher quality care to rural Medicare beneficiaries. The underlying 
shared savings model for ACOs is not sustainable and ACO reimbursement 
still relies on a Fee-For-Service foundation. Although the MA Model has 
been increasing its national market penetration, regional market 
penetration varies significantly and rural States have been slow 
adopters due in part to stringent network adequacy rules and Medigap 
plans that perpetuate Traditional Medicare.

    Models submitted to the CMS Innovation Center that facilitate rural 
enrollment into MA Organizations (with integrated provider partners) 
and give regulatory flexibility to integrate clinically-nuanced ACO 
approaches into their benefit design, should be tested. It may be upon 
the chassis of MA plans that rural markets have the ability to tap into 
additional workforce, population health resource and connection to 
specialty care.
    iv. fully utilize telehealth as an extender of in-person visits
    Policy Recommendation: Congress has recently dramatically increased 
the telehealth services that are available through the Medicare 
program. We are appreciative of this movement, and encourage Congress 
to continue the loosening of restrictions surrounding when telehealth 
services are covered by the program.
              v. freestanding ambulatory surgery centers 
                   are threatening rural health care
    Medicare covers surgical procedures provided in freestanding or 
hospital-operated ambulatory surgical centers (ASC). ASCs are distinct 
facilities that furnish ambulatory surgery; the most common procedures 
in 2015 were cataract removal with lens insertion, upper 
gastrointestinal endoscopy, colonoscopy, and nerve procedures. 
According to preliminary estimates from the CMS, Medicare payments to 
ASCs were $4.4 billion in 2016, including both program spending and 
beneficiary cost sharing.

    With recent reports that routine surgeries performed outside of 
hospitals in ASCs have led to 260 deaths since 2013, continued concerns 
about the lack of connection between ASCs and hospitals exist. As part 
of a national study on ASCs, Kaiser Health News and USA Today found 
that, while Medicare requires ASCs to have processes in place with 
local hospitals in the event that emergencies arise, the geographic 
location between a rural ASC and the nearest hospital can have fatal 
impact on patients in need of emergent post-surgical care provided in 
the rural ASC setting.\8\
---------------------------------------------------------------------------
    \8\ Jewett, C., Alesia, M., and USA Today Network. (2018, April 
24). ``As Surgery Centers Boom, Patients Are Paying With Their Lives.'' 
https://khn.org/news/medicare-certified-surgery-centers-are-expanding-
but-deaths-question-safety/https://khn.org/news/medicare-certified-
surgery-centers-are-expanding-but-deaths-question-safety/.

    In January 2008, Medicare began paying for facility services 
provided in ASCs-- such as nursing, recovery care, anesthetics, drugs, 
and other supplies--using a new payment system that is primarily linked 
to the Hospital Outpatient Prospective Payment System (OPPS). Under the 
OPPS, Medicare pays for the related physician services--surgery and 
anesthesia--under the physician fee schedule. Like the OPPS, the ASC 
payment system sets payments for procedures using a set of relative 
weights, a conversion factor (or base payment amount), and adjustments 
for geographic differences in input prices. Beneficiaries are 
---------------------------------------------------------------------------
responsible for paying 20 percent of the ASC payment rate.

    Policy Recommendation: Prohibit freestanding ASCs from establishing 
residence in rural markets.
                               in closing
    Health-care entities are the backbone of our many of our rural 
communities. They care for their residents from birth to death and 
should remain the resource for health-care emergencies, connection to a 
broader array of health-care services, and wellness epicenters. We need 
our rural health-care delivery systems to be viable and we need them to 
make the transition to the rural health access centers we know they can 
become.

    Thank you for the opportunity to share these views.

                                 ______
                                 
Questions Submitted for the Record to Susan K. Thompson, M.S., B.S.N., 
                                  R.N.
               Questions Submitted by Hon. Orrin G. Hatch
    Question. As one of a very small number of Next Generation ACO 
participants located in a rural market, how have you been successful in 
getting your attributed Medicare patients to stay within your ACO 
network? Because UnityPoint seems to be an outlier success story in 
this regard, can you please talk a little bit more about how your 
organization has been able to thrive in an advanced ACO program while 
other rural providers struggle to participate even in the non-risk 
bearing Track One payment structure?

    Answer. A key to maintaining attribution was learned from our 
participation in the Center for Medicare and Medicaid Innovation 
Center's (CMS Innovation Center) Pioneer ACO Model-beneficiaries will 
stay where they have a reliable and personal relationship with their 
primary care provider. We attribute our success in large part to 
creating a provider culture. To drive and support their patients within 
a network or system of organized care, providers must understand the 
role of the ACO and find value (e.g., access, communication, 
consistency) for their patients. Our Trinity Pioneer ACO intensively 
outreached to providers for a year ahead of ACO participation.

    Yet even with this success in provider outreach, beneficiary 
``stickiness'' is a continuing challenge as our attributed 
beneficiaries still receive greater than 40 percent of their care from 
providers outside our ACO. This margin is due to unlimited beneficiary 
choice within the Medicare program. As structured, there is little 
incentive for beneficiaries to consider cost or quality when selecting 
a provider. While the Next Generation ACO is testing benefit 
enhancements, such as discounted co-pays, to encourage beneficiaries to 
stay within the ACO for services, these efforts are still being tested 
but do not appear to completely address this challenge.

    In terms of our success, program features that have been helpful 
include prospective attribution, sheer cohort size and ACO composition. 
Simply knowing the beneficiaries that an ACO is accountable for in 
advance within the Pioneer ACO Model and Next Generation ACO programs 
has enabled us to target interventions to improve the health of those 
with specific needs. We have been able to deploy predictive analytics 
and decision support tools to identify individuals with high and rising 
risks and effectively manage care. Retrospective attribution, common in 
most Medicare Shared Savings Program (MSSP) contracts, is subject to 
beneficiary churn on a quarterly basis \1\ and creates a moving target 
for population health initiatives. By combining our Medicare ACO 
programs, we were able to spread downside risk across a large cohort of 
attributed lives. Without sufficient size,\2\ rural providers are 
exposed to uncertain financial risk--as the number of attributed lives 
grows, the random variation in financial results increasingly 
stabilizes. Our providers were also more willing to participate because 
tertiary hospitals were ACO Participants, providing an anchor for 
services and infrastructure and a large-scale partner to share in risk. 
For operational features that contributed to our success, we would 
refer you to the response to Senator Wyden in regards to ``Rural 
ACOs.''
---------------------------------------------------------------------------
    \1\ Under the UnityPoint Accountable Care MSSP program, our churn 
rate was as high as 25 percent per quarter. It was common for a patient 
attributed in Q1, to lose attribution in Q2 and then to be attributed 
back in Q3.
    \2\ The roughly 400 ACOs with fewer than 20,000 lives routinely 
experience savings and losses of 10 percent to 20 percent simply due to 
statistical variation in health-care spending. Barr, L, Loengard, A., 
Hastings, L., and Gronniger, T. ``Payment Reform in Transition-Scaling 
ACOs for Success,'' Health Affairs Blog, May 11, 2018. Accessed at 
https://www.healthaffairs.org/do/10.1377/hblog20180507.812014/full/.

    We agree that many rural providers struggle to make the leap to 
value. Current AAPM model design has not targeted rural providers, and 
current models have uncertain advantages, require infrastructure 
investments, and have changing participation rules. Even though 
UnityPoint Health is a seasoned early adopter, when we look to the 
future, it is uncertain--the Next Generation ACO is a CMS Innovation 
Center demonstration and will eventually sunset. In exploring options 
for our rural health-care network, a preferred solution seems to blend 
ACO provider-driven programming with the payment stability of Medicare 
Advantage (MA). This blended ACO-MA model also appears to address many 
of the barriers to AAPMs for rural providers with the added benefit 
---------------------------------------------------------------------------
that it removes the Federal Government from health-care administration.

    Question. Can you ever perceive of a time in the future where ACOs 
located and operating in rural and frontier parts of the country will 
be able to take on two-sided risk?

    Answer. We believe this is possible with the right model and 
appropriate size. The current shared savings model is predicated on an 
urban design, and rural providers are not measured on par with their 
urban counterparts for the same amount of clinical and care management 
effort. While traditional ACOs in their current form may not provide 
appropriate vehicles for rural providers with limited scale, provider-
sponsored Medicare Advantage plans with broad geographic reach could 
provide a more viable model. In addition, rural reimbursement is often 
different than urban reimbursement and needs to be considered in model 
design to ensure financial incentives are appropriately aligned on the 
journey to value.

                                 ______
                                 
              Questions Submitted by Hon. Michael B. Enzi
    Question. In your testimony, you proposed a ``separate and distinct 
payment structure [be] developed for the portion of cost-based 
reimbursement that pays for the costs associated with access in rural 
areas.'' Please provide a copy of this proposal or specific outline 
that explains your views on what costs are associated with access in 
rural areas, haw such casts should be reimbursed, and what criteria 
rural hospitals should have to meet in order to participate in such a 
payment system.

    Answer. Ultimately, there needs to be a balance between 
incentivizing rural providers to reduce the overall cost of care, 
investing in healthcare resources needed to improve quality in extreme 
rural areas and providing satisfactory access to Medicare beneficiaries 
in rural geographies. This concept of a separate ``cost of access'' has 
been percolating since our participation in the Pioneer ACO Model to 
address regional population health initiatives involving a multi-county 
service area that encompassed a sole community hospital and five 
Critical Access Hospitals (CAHs). At issue was that approximately 65% 
of Medicare beneficiaries attributed to the Trinity Pioneer ACO lived 
in communities served by cost-based CAHs. The rewards for cost-based 
reimbursement were, and still are, firmly rooted in inpatient versus 
ambulatory and community-based costs. While the ACO or other regional 
delivery system could lower utilization/cost of care in an individual 
CAH, its interim rates under the cost-reimbursement structure simply 
readjusted the following year to correct for the lower volume, and 
subsequently Medicare reimbursed more on a ``per day'' basis. Over 
time, CAHs always received their costs. In addition, the CAH 
reimbursement created a disincentive for other cost-saving measures; 
for instance, many transitional services fall outside allowable CAH 
reimbursement calculations. The CAH reimbursement structure was, and 
is, generally at odds with value-based care. By separating the ``cost 
of access'' from the ``cost of care,'' reimbursement incentives and 
high-value care can be aligned in rural areas.

    The ``cost of care'' concept is the equivalent of traditional 
medical care and could be reimbursed through Medicare Fee-For-Service 
rate schedules. Like all health-care facilities, small/rural hospitals 
should be held accountable for reducing the cost of care while 
maintaining quality standards. A value-based payment program could be 
implemented for cost of care services with the potential to be rewarded 
through a shared savings or other quality program. ``Cost of access'' 
refers to services that maintain/improve access for beneficiaries in 
rural areas that are proven to lower the total cost of care. These 
items should be encouraged. Examples of access costs include care 
coordination teams, palliative care, telehealth, homecare, hospice, 
eVisits, and urgent care clinics. These cost items could be reimbursed 
using an incremental rate founded on cost-based reimbursement and 
proposed adjustments could be made via cost reports or similar 
mechanisms. We acknowledge that actuarial modeling would need to occur 
to offer greater formula/adjustment details.

    As envisioned, an add-on earned for rural access could be applied 
to any value-based program. It would allow rural providers and 
facilities to participate in value-based programs for their ``cost of 
care'' component while still receiving proportional cost-based 
reimbursement to promote ``cost of access'' infrastructure.

    Question. Medicare's Sole Community Hospital designation is 
important to many Wyoming hospitals, but to qualify, a potential sole 
community hospital must be located 35 miles away from the nearest 
hospital in most cases, with the exclusion of Critical Access 
Hospitals. How does excluding Critical Access Hospitals from the 
geographic limit affect how the sole community hospital designation is 
targeted?

    Answer. The Sole Community Hospital (SCH) designation and its 
reimbursement structure bolster the fragile margins of these hospitals. 
In comparison to SCHs, CAHs are not ``like hospitals'' and offer 
markedly different services per their Conditions of Participation. In 
Iowa, there are seven SCHs, including two associated with UnityPoint 
Health. lf the SCH 35-mile geographic limit were revised to include 
CAHs, this change would effectively remove all Iowa hospitals from 
receiving a SCH designation. Instead of a change in mileage criteria, 
Congress must create incentives that encourage regional care 
coordination, access and delivery to strengthen the collective ability 
of health-care providers and facilities to meet the needs of their 
rural communities.

                                 ______
                                 
                Question Submitted by Hon. Ron Portman 
                       and Hon. Michael F. Bennet
    Question. We have previously introduced legislation to encourage 
providers to participate in alternative payment models and facilitate 
care coordination, including the Medicare PLUS Act (S. 2498 in the 
114th Congress) and the Medicare Care Coordination Improvement Act (S. 
2051 in the 115th Congress). When we consider coordinating care for 
patients in rural settings, what administrative burdens do you face? 
What can Congress do to ensure that value-based care is effective in 
rural areas?

    Answer. Thank you for introducing these pieces of legislation. 
UnityPoint Health has previously suggested Stark Law exceptions and 
Anti-Kickback Statute safe harbor provisions for providers 
participating in value-based payment network arrangements. As Advanced 
Alternative Payment Models (AAPMs) are developed, each requires a 
separate analysis and raises individual compliance concerns. For an 
industry that is generally risk adverse, this creates further 
hesitation to innovate and move from volume to value payments. To 
promote further adoption of risk-bearing models, Stark Law exceptions 
and/or Anti-Kickback Statute safe harbor provisions would be an 
appreciated first step. In addition, UnityPoint Health has also 
suggested that Medicare Advantage models be accepted as an AAPM under 
the Quality Payment Program. Participation in MA models should be 
considered under the Medicare-only participation threshold without the 
need for a separate determination under the All-Payer participation 
threshold. With participation thresholds set to increase in both 2019 
and 2021, the ability to count MA models towards both revenue and 
patient count thresholds without the paperwork submissions required 
under the All-Payer Determination would encourage continued movement to 
value.

    In addition, the present payment structure for health-care delivery 
services in rural areas does not incentivize the movement from volume 
to value. We would suggest a redesign of rural reimbursement in a 
manner which divides the medical spend from the cost of providing 
access. A value-based component could then be tied to quality medical 
outcomes and expenditures, and a separate and distinct payment 
structure could be developed for the portion of cost-based 
reimbursement that pays for the costs associated with access in rural 
areas.

                                 ______
                                 
                 Questions Submitted by Hon. Ron Wyden
                            rural workforce
    Question. As discussed during the hearing, the shortage of primary 
and specialty care providers is a critical issue facing rural 
communities across the country. In Oregon, 25.9 percent of residents 
live in a health professional shortage area. Difficulty recruiting and 
retaining physicians and other members of the care team can result in 
longer patient wait times and reduced access to care far those living 
in rural communities.

    What concrete policy ideas would you suggest this committee pursue 
to help attract more providers to rural America?

    Answer. We would suggest this committee strengthen rural training 
programs, permit top of licensure practice, and expand telehealth as 
tool to reduce provider isolation.

    While rewarding, rural practice is not a lifestyle that fits all, 
and missteps in recruitment efforts are costly and disruptive to 
patient continuity of care. This committee should focus efforts on 
targeting students/employees that have a heightened affinity to rural 
practice. My experience in rural Iowa has mirrored studies that show 
that physicians who grow up in rural areas are more likely to pursue 
careers there and further that medical students who graduate from rural 
residency programs are more likely to practice in rural areas as 
opposed to those who graduate from urban programs. Expansion of rural 
residency programs, Area Health Education Centers in rural areas, or 
other training programs located in rural settings would enhance 
recruitment and retention in rural locales generally. Academic 
institutions in rural areas or with targeted outreach to rural students 
should likewise be incentivized.

    Aside from physicians, shortages exist for other health-care 
professionals. As detailed in the response to Senators Stabenow and 
Cardin's question on dental care, workforce strategies should encompass 
a comprehensive look at health care as a whole. One example is nursing, 
another profession with shortages that would benefit from targeted 
rural residency programs. As an integrated health system, UnityPoint 
Health has nursing vacancies in acute care settings (covering all 
departments), ambulatory settings and home health environments. A 
residency that offered rotations in various care settings, not just 
hospital departments, would enable nurses to test different settings 
prior to making a career decision.

    Provider shortages can be combated and rural recruitment assisted 
by allowing providers and healthcare professionals to practice at top 
of license. There are a number of Federal law and regulations which 
supersede State licensure requirements. For example, Iowa, in addition 
to several other States, allows for independent practice by an Advanced 
Registered Nurse Practitioner (ARNP). Iowa hospitals, particularly CAHs 
and those located in rural areas, have increasingly turned to advanced 
practice providers for an onsite presence in providing services in 
Emergency Departments. The Emergency Medical Treatment and Active labor 
Act (EMTALA) permits emergency care to be provided by advanced practice 
providers within the scope of the license as determined by the States; 
however, the EMTALA statute and corresponding regulations supersede 
State licensure with respect to certifying patient transfers. In 
particular, EMTALA requires consultation between an ARNP and a doctor 
of medicine or osteopathy to certify the transfer of a patient. This 
consultation requirement must occur in every case regardless of ARNP 
knowledge and experience. This requirement does not allow independent 
practice, imposes an undue delay in providing care, and has financial 
implications for hospitals that are already operating on tight margins. 
We request that EMTALA be revised to allow certification of patient 
transfers to follow State scope of practice laws.

    Recruitment in rural areas is challenged by geographic silos and 
the perception that a provider is alone. We would recommend the 
acceleration of more robust investment opportunities in support of an 
advanced telehealth infrastructure. Telehealth can be a powerful tool 
to create a provider support community for consults and educational 
opportunities.
                     rural beneficiary health needs
    Question. Rural communities tend to be alder, sicker, and lower 
income compared to their urban counterparts. When rural hospitals are 
forced to close their doors, Medicare beneficiaries living in the 
surrounding areas often have limited health-care options. The 
prevalence of multiple chronic conditions among those living in rural 
areas heightens the need to ensure all Medicare beneficiaries have 
access to high-quality care--regardless of where they live.

    In your view, where should this committee focus its efforts to 
ensure that Medicare beneficiaries living in rural areas (especially 
those with multiple chronic conditions) have access to high quality 
care?

    Answer. We agree that rural residents have a higher prevalence of 
multiple chronic conditions. To address this, we encourage this 
committee to focus its efforts on enabling rural residents to age in 
place. Strategies that can improve quality of life for our seniors are 
palliative care, leveraging community resources, use of telemedicine, 
and quality post-acute alternatives. Please note that these supports 
all fall within the suggested reimbursement category of ``cost of 
access'' for rural facilities as described in our response to Senator 
Enzi.

    Palliative care--Palliative care is intended to increase the 
ability of seriously ill patients to remain within their homes for as 
long as they are comfortable. Palliative care is provided by an 
interdisciplinary team (specialized physicians, nurses, social workers 
and others, such as chaplains) and the team treats pain and other 
symptoms; provides time intensive communication; supports complex 
medical decision making; ensures practical, spiritual and psychological 
support; and co-manages care across settings. While UnityPoint Health 
has demonstrated that this team-based care reduces costs,\3\ Medicare 
reimbursement structures provide limited support.
---------------------------------------------------------------------------
    \3\ At UnityPoint Health, we conducted a longitudinal study to 
estimate the financial impact of palliative care consults and 
subsequent enrollment in the palliative care programs. Administrative 
accounting and claim files were reviewed for 1,973 patients consulted 
between October of 2011 and September of 2012. We analyzed the use and 
cost of hospital service 6 months prior to the palliative care consult 
and 6 months following the consult, for these same patients as they 
were continuously monitored. It was found that there were 1,401 less 
Emergency Department visits and hospitalizations (a 54-percent 
decrease). This amounted to $4,312,458 savings in associated variable 
direct cost in this acute setting (a 47-percent decrease).

    Community resources--Many health issues are the result of or 
exacerbated by other life circumstances. Care coordination is often a 
challenge borne out of social determinants of health--lack of 
transportation, limited food and pharmacy options, reduced funds for 
medication, and low health literacy. Health-care professionals must 
leverage its community agencies as appropriate to provide wrap-around 
services, including public health, Area Agencies on Aging, community 
action agencies, food pantries, schools, social service agencies, 
mental health agencies, skilled nursing facilities, faith-based 
organizations, and United Way agencies. As an example, the ``Stepping 
On'' falls prevention programming is a recent collaboration with Area 
Agency on Aging in Fort Dodge, IA. As part of this effort, our ACO 
clinics offer falls assessments to retain older residents within their 
homes. Although the resources and relative capacity of community 
partners will vary among regions, when they are available, they should 
be leveraged. The care coordination function is vital and should be 
---------------------------------------------------------------------------
reimbursed and expanded by Medicare.

    Telemedicine--Although addressed in other responses, telemedicine 
is a tool that allows patients to remain in place--whether at a skilled 
nursing facility and receiving a palliative care consult via a tablet, 
whether at home with equipment to monitor a pace maker rhythm, whether 
at the Emergency Department receiving a neurology consult, whether at 
the community mental health center receiving a psychiatry visit, or at 
home with a home health aide sending an image to a wound care 
specialist. These services bring care to the patient, and reimbursement 
policy should remove geographic and originating site restrictions.

    Skilled Nursing Facility support--Our Medicare ACO has participated 
in the SNF 3-day rule waiver. Beneficiaries, if medically appropriate, 
may receive skilled nursing care and/or rehabilitative services at SNFs 
without prior hospitalization or a 3-day inpatient admission. This 
waiver requires that participating SNFs meet and maintain quality 
standards and has resulted in heightened SNF collaboration. SNFs 
participate in group shared learning meetings, develop shared 
population health policies/goals for items such as avoidable 
readmissions or Emergency Department visits, and collect data and 
monitor progress. On an individual basis, outreach and training is 
provided to SNF staff to increase/maintain competency. Outreach and 
tools have included Adaptive Design (rapid cycle improvement), SBAR 
(order and communication processes), INTERACT HI tools (care pathways), 
and IPOST (advanced care conversations). This benefit enhancement has 
resulted in cost avoidance, \4\ and these waivers should continue to be 
available to providers engaged in value-based arrangements.
---------------------------------------------------------------------------
    \4\ Trinity Pioneer ACO reduced average SNF length of stay by 
almost a week.

    Question. What Medicare policy changes would be most impactful in 
---------------------------------------------------------------------------
the short term and long term?

    Answer. In the short term, this committee should consider enhancing 
claims data that are available to providers who engage in population 
health initiatives.

    For AAPM Participants, a more robust system should be instituted to 
share Medicare claims data for attributed patients. This should include 
an option to receive both raw claims-level data and claims summary 
data. In addition, we would encourage HIPAA flexibility to facilitate 
improved service delivery:

          Access to substance abuse records by treating providers.

          Permit sharing of patient medical information between 
        managed care plans and associated providers.

          Permit sharing of patient medical information within a 
        clinically integrated care setting. HIPAA currently restricts 
        the sharing of a patient's medical information for ``health-
        care operations.''

    On a larger scale, we support the development of all-payer claims 
databases that would collect information from all private and public 
payers to promote transparency and increase the quality of health care 
provided to the patients we serve. In this effort, we would encourage 
Congress and CMS to take a lead role in creating data standardization 
and governance rules for these databases with input and feedback from 
stakeholders. As a multistate health-care organization, we cannot 
overstate the importance of having a single standard across States, 
instead of complying with one-off solutions in each State. When 
treating complex patients, comprehensive information on disease 
incidence, treatment costs and health outcomes is essential to inform 
and evaluate population health initiatives, but it is not readily 
available.

    In the long term, we encourage this committee to address drug 
pricing to reduce the total cost of care. The spiraling costs of price 
of prescription drugs needs to be addressed by Congress to curtail 
Medicare spending. We are encouraged by the recent Request for 
Information from Health and Human Services on drug pricing, and would 
comment that for many rural residents drug costs compete with meeting 
other daily needs.
                               telehealth
    Question. Building on the proven success of telehealth in the rural 
setting, Congress passed the CHRONIC Care Act earlier this year, which 
expanded access to telehealth in Medicare to allow individuals 
receiving dialysis services at home to do their monthly check-ins with 
their doctors via telehealth, to ensure individuals who may be having a 
stroke receive the right treatment at the right time, to allow Medicare 
Advantage plans to include additional telehealth services, and to give 
certain ACOs more flexibility to provide telehealth services.

    In your view, what, if any, Medicare payment barriers to adoption 
and utilization of telehealth services remain in the rural setting 
today?

    Answer. Medicare payment is definitely a barrier to telehealth 
adoption and utilization not only in rural areas but generally. The 
first barrier relates to policy generally and the fear of over-
utilization of telehealth services for unnecessary services. This fear 
persists despite tack of supporting evidence to demonstrate 
overutilization. Due to this fear, telehealth law has been plagued by 
burdensome documentation requirements, provider and site of care 
limitations, and eligible service restrictions. We would suggest that 
Congress empower two-sided risk AAPMs to fully test telehealth by 
permitting reimbursement for these services without provider or site of 
service restrictions. Two-sided risk AAPMs would have no incentive to 
overutilize telehealth and presumably develop appropriate and 
innovative use studies that promote high value (reducing cost while 
maintaining quality).

    The rural geographic limitation is in itself a barrier to wider 
adoption in rural areas. Organizations and providers frequently focus 
resources and efforts required to start a new telehealth service (e.g., 
technology, training and implementation of an electronic medical record 
setup) in areas with greater numbers of patients. While it would seem 
that urban areas would be ripe for telehealth, Medicare's rural 
reimbursement policy has excluded the nearly eighty percent of Medicare 
beneficiaries that live in a Metropolitan Statistical Area. As a 
result, the market is dissuaded from implementing telehealth solutions 
generally due to relatively small percentage of the population eligible 
for reimbursement. If the rural geographic restriction were eliminated, 
it is likely that more health-care organizations, providers and 
specialists would adopt and provide telehealth services, thus 
increasing the availability of services to rural areas from the larger 
pool of providers delivering services.

    Question. To the extent that barriers remain, what Medicare policy 
changes would you suggest the committee consider to address them?

    Answer. State licensure is a significant barrier to telehealth 
delivery. Similar to the recent Department of Veteran's Administration 
rule, we would request that licensed health-care providers be 
authorized to treat beneficiaries through telehealth irrespective of 
the State, or of the location in a State, of the health-care provider 
or the beneficiary. This would not expand the scope of practice for 
health-care providers beyond what is statutorily defined in the laws 
and practice acts of the health-care provider's State of licensure, 
including and restrictions regarding the provider's authority to 
prescribe and administer controlled substances. We would call out the 
VA's rationale that ``Just as it is critical to ensure there are 
qualified health-care providers onsite at all VA medical facilities, VA 
must ensure that all beneficiaries, specifically including 
beneficiaries in remote, rural, or medically underserved areas, have 
the greatest possible access to mental health care, specialty care, and 
general clinical care.'' \5\ The same need applies to rural residents 
universally, regardless of veteran status.
---------------------------------------------------------------------------
    \5\ ``Authority of Health Care Providers to Practice Telehealth,'' 
Federal Register, Vol. 83, No. 92, Friday, May 11, 2018, https://
www.federalregister.gov/documents/2018/05/11/2018-10114/authority-of-
health-care-providers-to-practice-telehealth.

    Additionally, we would recommend that arrangements for two-sided 
risk AAPMs be provided operational flexibility. For instance, 
UnityPoint Accountable Care is currently participating in the Next 
Generation ACO and, through a benefit enhancement, has the ability to 
receive reimbursement for services provided through telehealth in urban 
areas and to patients in their homes. While the telehealth benefit 
enhancement has allowed additional case uses, it is limited to 
providers on our Next Generation ACO ``Preferred Provider'' list. Since 
telehealth leverages providers from multiple geographic areas and 
sometimes other States, many of the providers delivering care through 
telehealth belong to a different ACO and therefore we are unable to 
leverage these telehealth services. Additionally, it is 
administratively burdensome to match the provider and beneficiary 
before the visit (to confirm coverage) and then confirming the visit 
occurred as scheduled. Utilization of the telehealth benefit 
enhancement would increase and enable a better demonstration of its 
potential by lifting requirements for a preferred provider list and 
matching of providers to beneficiaries.
                               rural acos
    Question. Aligning a fragmented delivery system can be particularly 
challenging in rural areas, where there is often a shortage of health 
care professionals, limited financial capital available, and a patient 
population composed of older and sicker patients. Although several 
rural Accountable Care Organizations (ACOs) have records of success, 
many rural providers still find the prospect of joining an ACO 
daunting. Creating opportunities for rural providers to participate in 
value-based payment models, such as ACOs, is critical to transitioning 
to a health care system that rewards value instead of simply volume of 
services provided.

    What characteristics have allowed some rural ACOs to succeed?

    Answer. The ACO model was initially established as a provider-
driven solution to bridge the fragmented delivery system. We would like 
to take this opportunity to share characteristics from our Trinity 
Pioneer ACO, the most rural of the Pioneer Participants, which enabled 
our success and allowed us to achieve two years of savings over the 
course of our three-year contract.

          Hub medical practice with a strong relationship 
        with a local hospital. In our case, the medical practice had a 
        strong primary care presence, although the practice was multi-
        specialty. The relationship between the ambulatory and acute 
        care settings does not have to be an ownership relationship, 
        but location proximity is important. Some of our clinics are 
        actually co-located on the hospital site.

          Structure for providers. This references the 
        existence of a broader physician community. The governance and 
        committee structure facilitated provider engagement in the ACO 
        model and monitored progress and areas of opportunity.

          Responsibility for all aspects of care. There was 
        engagement in all settings of care across the continuum--
        inpatient, outpatient, home health, behavioral health and 
        skilled nursing facilities. Silos of care were broken down to 
        provide holistic services.

          Services coming to patients, unless medically 
        indicated. For an elderly population with multiple chronic 
        conditions, services were largely provided locally when 
        possible. For the most part, transportation was not a barrier, 
        as specialty care and tests were mainly provided at the medical 
        hub and hospital.

          Well-defined tertiary hospital in the ACO with 
        ``skin in the game.'' Since inpatient care is often the most 
        expensive service, hospitals that do not share an accountable 
        role can easily negate otherwise high-value care through longer 
        lengths of stay and/or additional tests. For the Trinity 
        Pioneer ACO, Trinity Regional Medical Center served as the 
        program Participant with primary responsibility for shared 
        losses and savings. This hospital is a sole community hospital 
        and rural referral center and has management arrangements with 
        five area CAHs within an eight-county service area.

          Palliative care. This type of care is focused on 
        providing patients with relief from the symptoms, pain and 
        stress of a serious illness--whatever the diagnosis--and can be 
        provided in conjunction with curative treatment. Overall, this 
        service prioritizes patient goals of care and quality of life 
        issues and resulted in reduced emergency department visits, 
        readmission rates and lengths of stay. The Trinity Regional 
        Medical Center was an early adopter of this service line and 
        its role was greatly expanded under the ACO.

          Post-acute care. In recognition of the frequent 
        transitions of care to Skilled Nursing Facilities (SNFs) and 
        the ACO's 3-day waiver, the Trinity Pioneer ACO established a 
        post-acute preferred provider network. The network provided a 
        forum for shared learning and to disseminate training to 
        augment the confidence and skill level of SNF staff in caring 
        for medically needy patients. Participating SNFs were able to 
        maintain or increase quality scores, and communications with 
        acute care and ambulatory providers were enhanced.

          Community consortiums. To keep patients in the 
        community and address social determinants of health, public 
        health and social services agencies were leveraged. For 
        instance, the public health agency provided certain 
        vaccinations and performed environmental assessments for bed 
        bug infestations.

    Question. Are there certain ``lessons learned'' from these success 
stories that may be helpful to rural providers interested in 
participating in a rural ACO?

    Answer. While the attributes of our very small rural ACO are listed 
above, the lessons learned relate to our providers and their support 
team who operationalized our accountable care experiment.

          Outreach, outreach, and more outreach--Get out 
        well in advance of planned participation and build expectations 
        for the work ahead. Rural providers want to know what is in it 
        for the patient. While there will be learning along the way, 
        start the dialogue early. Since providers and the supporting 
        team will be on the front lines, they will be the best 
        advocates for the work. The more preparation time, the better 
        the comfort level with the work; however, once launched 
        outreach and communication must be ongoing and frequent. It is 
        important to keep the team apprised of progress as well as 
        opportunities for improvement.

          Provider incentives need to be meaningful--Rural 
        providers do not have the patient volume to permit anything 
        other than going all in. Incentive packages need to be 
        straightforward and coupled with quality performance. If done 
        correctly, these incentives will serve as the platform to have 
        purposeful conversations about the anticipated work and 
        outcomes. Shared savings distribution should recognize 
        individual contribution at specific levels. To make the amount 
        meaningful, the Trinity Pioneer ACO banked all Medicare 
        incentive program monies into one pot for distribution in the 
        following year.

          Electronic Health Record (EHR) use--If a common 
        EHR platform is not used, there must be a plan for sharing 
        medical records in real time. While an EHR investment is an 
        expense, it assists with timely care and drives population 
        health initiatives.
                    transition from volume to value
    Question. The passage of the bipartisan Medicare Access and CHIP 
Reauthorization Act of 2015 (MACRA) was a milestone in Congress's 
efforts to repeal the flawed SGR and move our health care system from 
one that rewards volume to one that rewards value. In many cases, 
however, rural providers report that participating in value-based 
payment models is a significant challenge for them, particularly when 
it comes to taking on financial risk for patient health outcomes and 
population health. In order to successfully transition our health care 
system to one that rewards value, it is critical to ensure there are 
meaningful opportunities for rural providers to participate in a value-
based payment system.

    What barriers exist today that discourage rural providers from 
participating in value-based payment models?

    Answer. As mentioned in my oral and written testimony, the present 
reimbursement structure does not encourage rural provider 
participation. It is a hard sell to convince rural hospitals to forego 
the security of cost-based reimbursement or a cost report adjustment to 
accept a value-based arrangement. To engage rural America1 tailored 
opportunities in the value space are needed. While UnltyPoint Health 
has hospitals that are participating in the Rural Community Hospital 
Demonstration program and we are encouraged by the Pennsylvania Rural 
Health Model, these models are too few and the development of more 
rural options should be accelerated. Suggestions for models are 
provided in response to the question below.

    For rural practitioners, CMS has expanded the exemption of rural 
low-
volume providers from Merit-based Incentive Payment System (MIPS) 
participation, even on a reporting-only basis. This expansion excuses 
rural providers from transitioning to Rural Health Care in America: 
Challenges and Opportunities value. Then should providers desire to 
participate, current AAPM models are poor fits and providers often lack 
EHR and analytic sophistication. Specifically, current AAPM models are 
subject to uncertain and even arbitrary financial results when 
attributed populations are small. This is compounded by the absence of 
an overall hierarchy of AAPMs, making it unclear how these programs 
overlap or interact. For instance, beneficiary attribution to episodic 
care models should not trump attribution to overall population health 
initiatives (like ACOs), which jeopardize already relatively small 
attributed populations. In addition, rural providers often do not have 
the financial up-front resources to make investments in needed 
population health infrastructure for quality reporting, data sharing 
and analysis.

    Question. What, if any, Medicare policy changes would help ensure 
that rural providers and communities are not left behind in the 
transition to value-based payment?

    Answer. Prior to suggesting policy for specific reimbursement 
structures or incentives that could be explored to promote access and 
value in rural areas, we would encourage Congress to use a wide lens. 
This country cannot continue to promote siloed and isolated care. 
Rather, we would urge Congress to promote regional health-care 
solutions and incentives for larger collaboratives of health-care 
providers to work collectively and become accountable for regional 
communities. While sufficient population bases are necessary to deliver 
value-based care consistently and in a sustainable manner, it is most 
important to assure that care is delivered safely.

    Among areas to explore for rural models, we would suggest:

          Rural ACO model with different benchmarks for a smaller pool 
        of attributed lives as well as differentiated risk--medical 
        costs versus access costs.
          Re-designation of rural hospitals into specified categories 
        based on average daily census. For instance:

              ``Small Rural'' hospitals (average daily 
        census of five or fewer patients) would receive cost-based 
        reimbursement for outpatient services in exchange for 
        discontinuing acute inpatient services while maintaining 24/7 
        emergency department services.

              ``Rural'' hospitals (average daily census of 
        six to 25 patients) would continue to receive cost-based 
        reimbursement if they are participating in an ACO, MA plan or 
        other value-based model that includes a component of downside 
        risk.

              ``Tweener'' hospitals (average daily census 
        of 26 to 49 patients) would receive ``permanent,'' ongoing 
        cost-based reimbursement for inpatient services if they are 
        participating in an ACO, MA plan or other value-based model 
        that includes downside risk. In turn, these tweener hospitals 
        should become a rural health ``aggregator,'' serving as a 
        convener by which the populations served by the tweener and 
        local ``Small Rural'' and ``Rural'' hospitals patient 
        populations could form a rural ACO or other value-based 
        arrangement.

          Rural Emergency Departments/Centers: Support bills like the 
        Rural Emergency Acute Care Hospital (REACH) Act \6\ that allow 
        rural hospitals to transition to new designations designed to 
        meet modern needs.
---------------------------------------------------------------------------
    \6\ Rural Emergency Acute Care Act, S. 1130, 115th Cong. (2017-
2018). https://www.
congress.gov/bill/1l5th-congress/senate-bill/1130/text?g-
%7B%22search%22%3A%5B%22
%5C%22Rural+Emergency+Acute+Care+Hospital+Act%SC%22%22%SD%7D&r=1.

          Critical Access Hospital Excess Capacity Demonstration: 
        Allow a pilot to relax the 96-hour rule or other Condition of 
        Participation barriers to test innovative service delivery 
        models. For instance, using CAH beds as psychiatric beds in 
---------------------------------------------------------------------------
        mental health HPSA areas.

    For rural providers, Congress could consider tax incentives as a 
channel to address current participation barriers amongst providers and 
reward those physicians whom have already transitioned to AAPM models. 
Incentives could take form as tax-free retained earnings, retained by 
the physician practices, which could exclusively be utilized as 
infrastructure development and risk reserve offsets to assist in the 
transition to an AAPM model. Distributed incentive earnings should not 
be considered as a loan and should not require physicians to match 
funds.

                                 ______
                                 
              Questions Submitted by Hon. Debbie Stabenow 
                      and Hon. Benjamin L. Cardin
                              dental care
    Question. Lack of oral health care is a significant public health 
problem in the United States. Significant health professional shortages 
and lack of access to dentistry impacts rural and underserved 
communities disproportionately. We know that our seniors are negatively 
impacted by the lack of a dental benefit in Medicare. We also know that 
children, families and people with disabilities who rely on Medicaid 
and CHIP, programs which offer coverage for pediatric dental care and 
sometimes care for adults, often struggle to find providers to see 
them. Nowhere is the need for comprehensive dental coverage and access 
to providers more profound than in our rural and underserved 
communities. We have an opportunity to address the needs of our rural 
and underserved communities by improving our health-care system by 
incorporating dental care more holistically through better coverage in 
Medicare, Medicaid, and CHIP, utilizing telemedicine, and assessing 
provider and workforce gaps that can and should be filled in these 
communities. What is the most important thing that we, as the Senate 
Finance Committee, can do to improve dental core and coverage for 
people living in rural and underserved communities?

    Answer. As mentioned during my comments and responses to committee 
members, we believe that Congress has opportunities to support 
integrated care models and innovative programs that offer patients 
access to physical, behavioral, and social health care. Specific to 
improvement of dental care and coverage for our fellow Americans living 
in rural and underserved communities, integrating oral health care into 
primary care is the first priority. This integration increases access 
to and use of dental services to reduce disparities in rural and 
underserved areas by:

          Building on relationships between providers and patients;

          Allowing for direct or warm hand-offs between medical and 
        dental providers;

          Reducing barriers to care such as transportation, time off 
        work, childcare, etc.; and

          Enabling care coordination especially for patients with 
        chronic issues.

    In Iowa, our Federally Qualified Health Centers (Community Health 
Centers) are an example of how this integration can be developed and 
offered to rural and underserved patients. To ensure these programs 
continue to be sustainable and successful in providing affordable and 
high-quality services, health centers and other providers need stable 
funding and resources so they can continue to serve this unique patient 
population, recruit talented providers and expand services where 
appropriate. In particular, incentivizing integrated programs promotes 
whole person health andresults in the greatest return on Federal 
investments.

    As a complement to this effort, improving dental care and coverage 
for people living in rural and underserved communities should include 
incentives and funding to develop innovative workforce pilot projects. 
These projects should have the flexibility to utilize more economical 
dental workforce strategies within medical, dental and public health 
settings. Examples could include Community Health Workers with oral 
health training, expanded function dental assistants and dental 
hygienists, opportunities for additional mid-level dental professionals 
such as dental therapists to be licensed in States and serve as an 
additional provider option, and the use of tele-dentistry to increase 
the reach of the limited number of dentists. Further, programs such as 
the National Health Service Corps could assist in allowing dental 
students to take jobs in rural and underserved areas which may be cost 
prohibitive due to their student loans. These or other pilot programs 
aimed at workforce solutions for dental provider shortages can only 
improve access issues.

                                 ______
                                 
              Questions Submitted by Hon. Debbie Stabenow
                           maternity coverage
    Question. We've heard from families and health-care providers in 
Michigan who are concerned about access to maternity coverage in rural 
areas. Close to 500,000 women give birth each year in rural hospitals 
and often face additional barriers and complications. For example, 
women in rural areas report higher rates of obesity, deaths from heart 
disease, and childbirth related hemorrhages. In addition, more than 
half of women in rural areas must travel at least half an hour to 
receive obstetric care, which can lead to decreased screening and an 
increase in birth related incidents.

    Since 2004, a large number of rural obstetric units have closed, 
and only increased the distances that mothers must travel in order to 
receive maternity and delivery care. Unfortunately, the percent of 
rural counties in the United States without hospital obstetric units 
increased by about 50% during the past decade.

    Do you have experience with loss of obstetric care for women within 
your respective fields?

    Answer. Of the 118 hospitals in Iowa, 35 percent (43) do not offer 
obstetric care. For rural Iowans served by Critical Access Hospitals, 
50 percent (41 of 82) do not provide obstetric care. Three obstetric 
unit closures have occurred in the last 5 years, with the most recent 
involving a hospital with less than 30 births annually and 27 miles 
from the nearest hospital with obstetric services.

    Question. What steps should be taken to ensure that the proper 
range of maternal care services are being offered through innovative 
rural health models?

    Answer. While this question targets maternity care, it is 
representative of the larger policy issue facing rural America--how to 
safely right size service delivery. Maternity care, as a specialty 
area, illustrates the need for rural models to address the cost of 
access--i.e., time and distance from major service centers, lack of 
comprehensive community services, and healthcare workforce dead zones. 
Innovative models must carefully define service areas with these access 
characteristics in mind and promote service delivery flexibility to 
allow providers to practice at top of licensure, use centers of 
excellence models when appropriate, and capitalize on technology to 
overcome distance barriers. For maternity, a special emphasis should 
include prenatal care and outreach and leverage child and maternal 
health funding.

    In terms of the larger picture, rural service delivery needs a 
regional emphasis with weight concentrated on the front end of the 
story (i.e., preventive services). A regional emphasis does not mean 
common healthcare ownership; instead, providers must be connected to a 
healthcare facility/facilities with enough volume to provide safe and 
quality care. These strong linkages are imperative to respond in an 
emergency to an acute event or over time to manage a chronic disease. 
As a country, we cannot support an OB specialist, cardiologist, 
neurologist, or pulmonologist at each hospital, nor can advanced 
practice professionals fill every gap. We would encourage Congress to 
incentivize collaborative relationships in rural areas to uphold 
Medicare's duty to provide quality services regardless of location.

                                 ______
                                 
             Questions Submitted by Hon. Benjamin L. Cardin
                              telemedicine
    Question. Although many may think of Maryland as an urban hub with 
its DC suburbs and large cities, there are parts of my State, both on 
the Eastern Shore and on the western side of the State, that are either 
very rural or medically underserved. My constituents who live in these 
parts of the State, must often drive long distances to get the health 
care they need. One way to increase access to quality health services 
to rural and underserved communities, is by offering treatment through 
telehealth technology. How do you see the role of telehealth continuing 
to grow in healthcare delivery, and how can it be better utilized to 
increase care for Medicare beneficiaries?

    Answer. Telehealth offers an important tool to increase access to 
health care. The use of telehealth continues to increase as a means to 
enhance access to and improve quality of care in the most cost-
effective setting.\7\ Telehealth technologies are quickly evolving and 
becoming increasingly patient-focused in terms of attempting to provide 
access to care in a location of the patient's preference. To support 
telehealth, laws should be flexible to accommodate new and emerging 
technologies and reduce administrative burden to enable rural 
facilities to shift costs to infrastructure investment to best serve 
the needs of rural and underserved patients. In particular, we would 
recommend that two-sided AAPMs and MA plans should be provided with 
regulatory flexibility to encourage telehealth and its role in high 
value service delivery.
---------------------------------------------------------------------------
    \7\ In 2001, the Congressional Budget Office estimated it would 
cost the Medicare program $150 million to cover telehealth services for 
the first 5 years ($30 million a year). Fifteen years later, total 
payments (2011-2016) still have not cracked that $150-million forecast, 
and annual spend has not hit $30 million. Lacktman, Nathaniel, 
``Medicare Payments for Telehealth Increased 28% in 2016: What You 
Should Know,'' National Law Review, August 28, 2017.

    In general, the case use for telehealth has been restrained by 
Medicare payment policy. It is difficult in some areas to determine its 
efficacy because it has not been widely used. The following are options 
that Congress could consider to better serve Medicare beneficiaries 
---------------------------------------------------------------------------
through telehealth:

          Remove licensure barriers. As stated in the response to 
        Senator Wyden, this would enable licensed health care providers 
        to be authorized to treat beneficiaries through telehealth 
        irrespective of the State, or of the location in a State, of 
        the health-care provider or the beneficiary.

          Remove geographic restrictions. This would allow telehealth 
        to be provided in locations regardless of rural or HPSA status. 
        This is currently allowed in the Next Generation ACO benefit 
        enhancement and is scheduled to be expanded to other ACOs in 
        2020.\8\ This policy should encompass all AAPMs as an incentive 
        to take risk; however, it could be expanded further.
---------------------------------------------------------------------------
    \8\ Balanced Budget Act of 2018.

          Expand coverage. Explore a broader approach to telehealth 
        coverage beyond the ``replicate and repeat'' of the Medicare 
---------------------------------------------------------------------------
        Fee-For-Service reimbursement schedule.

          Define ``clinically appropriate.'' MA plans will soon be 
        allowed to offer additional, clinically appropriate telehealth 
        benefits in their annual bid amounts. We encourage Congress and 
        CMS to clarify that clinically appropriate should reflect the 
        full scope of practice as determined by State licensing boards 
        and should not be restricted by CMS.

          Authorize additional coverage areas. This would entail 
        revising Social Security Act section 1834(m) to allow Medicare 
        telehealth services for:

              ``Store-and-forward'' services such as wound 
        management and diabetic retinopathy;

              Provider services otherwise covered by 
        Medicare, such as physical therapy, occupational therapy, and 
        speech-language-hearing services; and

              Already covered health procedures rendered by 
        a telehealth method.

          Expand ``originating site'' to include a beneficiary's 
        residence. Unlike Medicare, many healthcare systems and 
        commercial insurance providers have adopted and cover direct-
        to-consumer telehealth services. Medicare's noncoverage shifts 
        the cost burden to the beneficiary for self-pay, instead of a 
        co-pay, and potentially delays care due to scheduling and 
        travel. This is another item that is available to certain 
        Medicare ACOs, but should be considered for expansion to all 
        AAPMs and perhaps beyond.
                   chronic kidney disease and medigap
    Question. For many Medicare beneficiaries living with kidney 
failure, particularly those living in rural or underserved areas, 
accessing affordable care for their complex and chronic condition is a 
constant financial challenge. Over 92,000 dialysis patients live in 
States with no access to Medigap. This often leaves them unable to 
afford Medicare Part B's 20-percent cost sharing, which for a patient 
with kidney failure can often amount to tens of thousands of dollars of 
out-of-pocket costs each year. Have you had challenges with Medicare 
beneficiaries who don't have access to Medigap coverage getting the 
care they need? For example Medicare beneficiaries or patients with 
ESRD under 65?

    Answer. Iowa does not require Medigap policies for people under 65 
and eligible for Medicare because of a disability or End-Stage Renal 
Disease (ESRD). We would agree that when beneficiaries, particularly 
those with chronic illnesses, are uninsured or underinsured, financial 
pressures exist. It appears that this question is larger than Medigap 
coverage and may demand alternative models for addressing these chronic 
conditions, such as the CMS Innovation Center's Comprehensive ESRD Care 
(CEC) Model.

    Question. Could you speak to the challenges Medicare beneficiaries 
face when they don't have access to Medigap plans and the benefits for 
Medicare beneficiaries who do have access to Medigap plans?

    Answer. We lack the specifics to appropriately respond, as there 
are upwards of 11 different standard benefit packages for Medigap with 
varying cost sharing levels.
                               in closing
    Thank you for permitting us to share our thoughts as this committee 
considers the future of rural health care. We are passionate about our 
work in rural health care and its impact on the well-being of our 
residents and the vitality of our communities. We welcome and look 
forward to continuing this dialogue in the future and extend an offer 
to this committee to come see us in action.

                                 ______
                                 
                 Prepared Statement of Hon. Ron Wyden, 
                       a U.S. Senator From Oregon
    Every year I hold open-to-all town hall meetings in every rural 
Oregon county, and I meet with a lot of leaders from the rural health 
care community. There are a few potential health-care calamities that 
have them afraid for what's coming down the pike.

    First, people in rural communities feel like there's a wrecking 
ball headed their way because the Trump administration and half of 
Congress have spent the last 15 months desperately trying to make huge 
cuts to Medicaid. Now there are rumblings that another assault may be 
coming. The fact is, Medicaid is a lifeline for rural hospitals and 
patients. The experts will tell you that if you wanted to turn rural 
America into sacrifice zones where hospitals shut down and people 
cannot get the health care they need, the quickest way to do it is by 
slashing Medicaid.

    Second, people in rural areas today feel like their local hospitals 
are already teetering on the brink of closing their doors. And if the 
local hospital goes under, that means no more emergency department open 
in a crisis.

    This isn't a far-off, theoretical problem. Decades ago, back when 
getting routine health care more often meant spending multiple nights 
in a hospital inpatient bed, rural hospitals were much more secure. 
They could afford to maintain the emergency department. But that 
service may be on the ropes, because rural hospitals today are under 
huge financial pressure. Offering a variety of inpatient services and 
keeping that emergency room open is enormously expensive, and at the 
same time, more and more Americans are turning to outpatient settings 
for chronic care, rehab and routine surgeries. Since 2010, 83 rural 
hospitals have closed services, and hundreds more are in dire straits.

    Bottom line, when you live in a big city like Portland, Chicago, or 
Los Angeles, you take it for granted that there's always going to be an 
emergency department nearby. But rural Americans who fear their 
hospital will be the next to close are left wondering where they'd turn 
if their son or daughter breaks a leg in a high school basketball game. 
Where would they go if an older loved one suffers a stroke? Would they 
get to a hospital in time if dad suffers a heart attack?

    Keeping these hospital emergency departments open is a key 
challenge when it comes to rural health care. In my view, it's step one 
when you're working to prevent rural America from turning into that 
sacrifice zone where people can't get the care they need. In a country 
as wealthy as this one, where we spend $3.5 trillion a year on health 
care, it absolutely must be possible to guarantee rural Americans 
aren't on the outside looking in.

                                 ______
                                 

                             Communications

                              ----------                              


                     American Ambulance Association

                   8400 Westpark Drive, Second Floor

                            McLean, VA 22102

                            Ph 703-610-9018

                            Fax 703-610-0210

                            www.the-aaa.org

The American Ambulance Association (AAA) is pleased that the Senate 
Finance Committee is holding a hearing entitled ``Rural Health Care in 
America: Challenges and Opportunities.'' The AAA represents ambulance 
services of all types and sizes and from all areas of the United 
States, including ambulance services in the most rural areas of the 
country.

Founded in 1979, the AAA's Mission is to promote health care policies 
that ensure excellence in the ambulance services industry. The AAA 
represents ambulance services across the United States that participate 
in serving more than 75 percent of the U.S. population with emergency 
and nonemergency care and medical transportation services. The 
Association views prehospital care not only as a public service, but 
also as an essential part of the total public health care system.

Ambulance services are the front line and initial access point of our 
local and national health care and emergency response systems. 
Ambulance services provide crucial medical emergency response to 
patients when they need it most. They also assist beneficiaries who 
require skilled medical transportation and services in certain non-
emergency situations. In addition the vast majority of ambulance 
services are small business. 54 percent of ambulance services provide 
250 or fewer Medicare transports each year.

Ambulance services located in rural and super-rural areas face many of 
the same challenges that other providers and suppliers are trying to 
address. For example, while the Congress continues to extend the rural 
and super-rural add-ons, these amounts do not make ambulances whole; 
the Medicare rates still do not cover the cost of providing services in 
rural areas, as the GAO has noted in two different studies. In 
addition, CMS changed the ZIP code designations for several rural and 
super-rural areas that has resulted in some clearly rural areas, such 
as Siequoia National Forest, being deemed ``urban.'' A ZIP code being 
designated as rural has a significant impact on reimbursement under the 
Medicare ambulance fee schedule. Transports that originate in a rural 
ZIP code receive an additional 1 percent increase to the base and 
mileage rates, but more importantly a 50 percent increase in the 
mileage rates for miles 1 to 17. This can mean as much as an 8 percent 
increase in reimbursement for providers who serve rural areas.

In addition, ambulance services find it difficult to maintain the 
skilled workforce necessary to provide high quality services. Given the 
low Medicare rates, EMTs and paramedics can often earn more at fast 
food restaurants than by providing life-
saving and life-sustaining care as part of an ambulance team.

The low-density population in rural areas also presents serious 
challenges. Economies of scale possible in more densely population 
areas are not achievable in rural areas, especially when ambulances are 
required to transport patients to highly skilled facilities in far-away 
urban areas that can be hours away from their locations.

Moreover, rural ambulance services often find themselves as the safety 
net for citizens and only available health care provider in communities 
in which the hospital has closed ore or other health care providers 
have left or limited their hours. This safety net is being strained.

However, despite these challenges, there is hope--ambulance services 
can help rural communities maintain access to health care services. 
Ambulance services can and do provide highly specialized and skilled 
care that 20 years ago was only available in hospital emergency 
departments. In addition, Medicare demonstration projects have shown 
that ambulance services can provide important community health care 
services, including services such as care management, pharmacological 
interventions, airway management, and vaccinations, as well as patient 
safety checks and education.

MedPAC recognized in its 2016 Report to the Congress Chapter on 
``Improving efficiency and preserving access to emergency care in rural 
areas'' that ``communities that cannot support a 24/7 ED . . . may have 
to rely on an ambulance service to stabilize and transfer patients.'' 
\1\ In some instances, an ambulance service may work with a primary 
care practice. Some communities are already testing these models, such 
as the Kansas Hospital Association efforts in rural areas of the State.
---------------------------------------------------------------------------
    \1\ MedPAC, ``Improving efficiency and preserving access to 
emergency care in rural areas,'' Ch. 7, Report to the Congress (June 
2016).

Other models, such as community paramedicine, offer additional avenues 
through which ambulance can assist in addressing the rural health care 
crisis. Results from the Centers for Medicare and Medicaid Innovation 
have shown that ambulance services are able to improve patient outcomes 
and reduce overall Medicare spending when allowed to provide innovative 
models of care. In the analysis of this pilot, Regional Emergency 
Management Services Authority (REMSA) through its community 
paramedicine showed statistically significant reductions in inpatient 
admissions. While REMSA's sample size was small, REMSA's data show that 
it saved during the four-year grant period $1.8 million in program 
---------------------------------------------------------------------------
savings by avoiding 1,509 emergency department visits.

To enable ambulance services to fill the gaps in these communities, the 
Congress should:

1.  Stabilize the Medicare ambulance fee schedule by making the add-ons 
permanent and taking into consideration 132 rural census tracts when 
determining how ZIP codes are designated as rural and super-rural.

2.  Consider other funding mechanisms, such as MedPAC's recommendation 
for federal subsidies, to incentivize ambulance services in underserved 
areas to remain when other providers have closed their doors.

3.  Allow ambulance services to be defined as ``providers'' under 
Medicare and reimburse them for the care provided, even if a patient 
does not require transport to a designated facility.

4.  Eliminate unnecessary and overly-burdensome regulatory requirements 
by:

     a.  Eliminating the requirement for the Physician Certificate 
Statement when a beneficiary is transported between hospitals or by 
Specialty Care Transport, which duplicates other paperwork 
requirements;

     b.  Requiring ambulance providers to update the 8558 Ambulance 
Enrollment Form no more than once a year, rather than any time a 
vehicle is added to, or removed from, the service;

     c.  Eliminating the requirement that patients sign ambulance 
claims when other documentation establishing that the beneficiary 
received the service is available; and

     d.  Requiring the Secretary to take into account inaccuracies in 
Social Security records or other official death records before revoking 
billing authority for ambulance services.

    As the Committee considers ways to address the rural health care 
crisis in America, the AAA encourages Members to find ways not only to 
stabilize the economics of ambulance services to ensure access to these 
critically important health care services in rural American, but also 
to incentivize these services so that they remain in the communities. 
The AAA appreciates the Committee's attention to this important issue 
and offers our assistance in working with you to develop, pass, and 
implement appropriate policies that make sure that rural ambulance 
services can overcome the challenges they face, as well as to eliminate 
statutory and regulatory barriers that make it difficult for ambulance 
services to develop innovative care delivery models to meet the needs 
of patients and to address the unique situations rural communities 
face.

                                 ______
                                 
            American Clinical Laboratory Association (ACLA)

               1100 New York Avenue, N.W., Suite 725 West

                          Washington, DC 20005

                             (202) 637-9466

                          Fax: (202) 637-2050

Introduction

The American Clinical Laboratory Association (ACLA) appreciates the 
opportunity to provide this statement for the record for the May 24, 
2018 hearing entitled, ``Rural Health Care in America: Challenges and 
Opportunities.''

ACLA is a not-for-profit association representing the nation's leading 
clinical and anatomic pathology laboratories, including national, 
regional, specialty, ESRD, hospital and nursing home laboratories. The 
clinical laboratory industry employs nearly 277,000 people directly and 
generates over 115,000 additional jobs in supplier industries. Clinical 
laboratories are at the forefront of personalized medicine, driving 
diagnostic innovation and contributing more than$100 billion to the 
nation's economy.

Flawed Implementation of PAMA Section 216

Congress passed the Protecting Access to Medicare Act (PAMA) in 2014. 
Section 216 of PAMA dramatically changed how laboratories are 
reimbursed for providing clinical laboratory services to Medicare 
beneficiaries, moving from a static fee schedule to determining 
payments based on commercial payments to the broad spectrum of 
laboratory providers.

Congress directed the Centers for Medicare & Medicaid Services (CMS) to 
collect private payor payment rates and associated volumes 
(``applicable information'') from independent laboratories, hospital 
laboratories, and physician office laboratories (``applicable 
laboratories''), and to calculate a weighted median for each test on 
the Clinical Laboratory Fee Schedule (CLFS) to determine a Medicare 
payment rate for each test.

However, CMS deliberately disregarded Congress' instructions by 
gathering rate and volume information from less than one percent of 
laboratories nationwide. This blatant omission ignores the fundamentals 
of a market-based system. By ignoring the data from more than 99 
percent of the nation's laboratories, CMS' actions will have a chilling 
effect on patient care and delivery system reforms moving forward. 
Furthermore, per CMS' own analysis, only 36 rural laboratories in the 
entire United States reported data.\1\ That is less than 2 percent of 
the total number of laboratories, although 23 percent of Medicare 
beneficiaries live in rural areas.\2\
---------------------------------------------------------------------------
    \1\ Summary of Data Reporting for the Medicare Clinical Laboratory 
Fee Schedule Private Payor Rate-Based System (``Summary''), available 
at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/
ClinicalLabFeeSched/Downloads/CY2018-CLFS-Payment-System-Summary-
Data.pdf.
    \2\ ``Health Care Spending and the Medicare Program,'' MedPAC, 
available at http://www.medpac.gov/docs/default-source/data-book/
jun17_databookentirereport_sec.pdf.

Additionally, as shown below, the volume of applicable information CMS 
received from independent laboratories, physician office laboratories, 
and hospital laboratories is far out of proportion to their respective 
shares of CLFS volume.\3\,\4\
---------------------------------------------------------------------------
    \3\ Summary of Data Reporting for the Medicare Clinical Laboratory 
Fee Schedule Private Payor Rate-Based System (``Summary''), available 
at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/
ClinicalLabFeeSched/Downloads/CY2018-CLFS-Payment-System-Summary-
Data.pdf.
    \4\ ``Medicare Payments for Clinical Diagnostic Laboratory Tests in 
2016: Year 3 of Baseline Data,'' available at https://oiq.hhs.gov/oei/
reports/oei-09-17-00140.pdf.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

Clearly, independent laboratories submitted a far larger proportion of 
applicable information than their share of CLFS volume. Hospital 
laboratories and physician office laboratories submitted significantly 
less applicable information by volume than their share of CLFS volume. 
Simply put, the preliminary rates cannot be characterized as ``market-
based'' when the data does not reflect the market.

PAMA Payment Amounts Not Market-Based

The flawed data reporting requirements established by CMS have resulted 
in Medicare payment rates that are not market-based. The Medicare 
payment rate cuts could be unsustainable for many laboratories 
furnishing services to Medicare beneficiaries and threaten access to 
laboratory services in some areas, particularly in rural and 
underserved communities. The cuts go far beyond what Congress and the 
Office of Management and Budget (0MB) anticipated, calling into 
question CMS' approach to implementing the law.

The below chart includes the increasing estimates of the PAMA cuts. The 
Congressional Budget Office (CBO) estimated the initial three-year 
transition to a market-based system at $1 billion. CMS now estimates 
the cuts at $3.6 billion, an increase of 360 percent.

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

Under PAMA Sec. 216, nine of the top 10 laboratory tests (by CLFS 
spending) will be cut by more than 30 percent when fully phased-in. 
Moreover, 18 of the top 25 lab tests (by CLFS spending) will be cut by 
more than 30 percent, and another three of the top 25 tests will be cut 
by between 20 and 30 percent. For example:

      Comprehensive metabolic panel will be cut by 37 percent (41.6 
million tests performed in 2016).

      Complete blood count will be cut by 35 percent (42 million tests 
performed in 2016).

      Vitamin D test will be cut by 35 percent (9 million tests 
performed in 2016).

      Glycosylated hemoglobin Ale test will be cut by 36 percent (19.3 
million tests performed in 2016).

      Thyroid stimulating hormone test will be cut by 35 percent (21.5 
million tests performed in 2016).

Collectively, laboratories performed more than 133 million of the 
foregoing five tests for Medicare beneficiaries in 2016. The top 25 
tests by CLFS spending represented fully 63 percent of all Medicare 
payments for lab tests in 2016, or $4.3 billion.\5\ But the deep cuts 
are in no way limited to the highest volume test codes. The majority of 
test codes will be cut by more than 10 percent when they are fully 
phased-in.\6\
---------------------------------------------------------------------------
    \5\ ``Medicare Payments for Lab Tests in 2016: Year 3 of Baseline 
Data'' (OEI-09-17--00140) at 3.
    \6\ Summary at 6. CMS itself said that ``about 58 percent of HCPCS 
codes will receive a phased-in payment reduction in CYs 2018, 2019, and 
2020, rather than a full private payor rate-based payment amount in CY 
2018 because the total payment decrease'' will exceed 10 percent.

Cuts of this magnitude could be unsustainable for many laboratories 
serving beneficiaries in rural areas, physician office labs in many 
locations, and nursing homes, and they could threaten beneficiary 
access to even basic laboratory testing. The costs of providing 
laboratory testing to Medicare beneficiaries in these areas is higher 
than in urban areas. It is likely that the cost could exceed the return 
for some routine tests, meaning some rural labs may shutter and some 
physician offices no longer will offer routine lab testing to their 
patients to inform treatment and enable diagnosis at the time of a 
patient's visit. It is unlikely other laboratories will rush in to fill 
---------------------------------------------------------------------------
the void once these laboratories stop operating.

This misguided approach to PAMA implementation will directly harm 
millions of beneficiaries, and beneficiaries in rural areas will be 
most severely impacted. Over the next three years, ACLA has estimated 
that laboratories in an urban area like Washington, DC will experience 
a 15 percent cut, while some laboratories in rural areas, for instance 
rural hospital laboratories, will experience a 28.5 percent cut.\7\ By 
drastically cutting rates, particularly for the top-25 most performed 
lab tests, CMS is severely affecting beneficiaries managing diabetes, 
heart disease, liver disease, kidney disease, prostate and colon 
cancers, anemia, infections, opioid dependency and countless other 
common diseases and conditions. Reducing access to clinical lab service 
will ultimately drive up the cost of care for beneficiaries and 
taxpayers and result in delays in care as well as adverse outcomes.
---------------------------------------------------------------------------
    \7\ CMS Final 2018 Clinical Lab Fee Schedule Rates, 2016 100% 
Outpatient Standard Analytic File, 2016 Physician/Supplier Procedure 
Summary File.

The harm from these cuts only increases for beneficiaries who are frail 
or reside in medically underserved communities, such as rural areas. 
These communities and patients rely on a shrinking number of smaller, 
local laboratories: laboratories that will face the brunt of these 
cuts. These cuts will force laboratories serving the most vulnerable 
and homebound to either shut down operations, reduce services, 
eliminate tests, or lay off employees. Ultimately, patients will have 
fewer options to receive the lab test services that will keep them 
healthy and out of the hospital, particularly patients who are less 
mobile or would have to travel unreasonable distances to receive 
---------------------------------------------------------------------------
laboratory services.

Cuts to Medicaid Payments for Labs Further Threaten Rural Patient 
Access

In addition to the direct cuts to Medicare laboratory rates, we have 
seen additional cuts in state Medicaid reimbursement rates. More than 
one-third of all states have pegged their Medicaid rates for laboratory 
services to the Medicare CLFS. Those state that base their Medicaid 
reimbursement on then-current Medicare CLFS rates experienced a cut in 
Medicaid reimbursement, in addition to Medicare reimbursement, as the 
new PAMA rates went into effect on January 1, 2018. Since the new CLFS 
rates went into effect, some states have reduced Medicaid reimbursement 
for laboratory services even further, beyond the already deep PAMA 
cuts. The application of an even lower percentage of Medicare rates by 
state Medicaid programs imposes even greater reductions than 
anticipated for Medicaid beneficiaries particularly in rural and areas 
where there are relatively few providers. These Medicaid cuts, in 
addition to the Medicare cuts, may leave providers no choice but to 
discontinue laboratory services for Medicaid patients as the rates will 
be less than what they cost to provide the services.

Conclusion

ACLA thanks the Committee for consideration of our comments. We look 
forward to working with the Senate Finance Committee and stakeholders 
on advancing legislation to address the flawed implementation of 
Section 216 of the Protecting Access to Medicare Act, protecting access 
to laboratory services for Medicare beneficiaries.

                                 ______
                                 
                     American Hospital Association

                          800 10th Street, NW

                       Two CityCenter, Suite 400

                       Washington, DC 20001-4956

                          (202) 638-1100 Phone

                              www.aha.org

On behalf of our nearly 5,000 member hospitals, health systems and 
other health care organizations, and our clinician partners--including 
more than 270,000 affiliated physicians, 2 million nurses and other 
caregivers--and the 43,000 health care leaders who belong to our 
professional membership groups, the American Hospital Association (AHA) 
appreciates the opportunity to provide input regarding action Congress 
can take to maintain access to health care in rural communities.

Nearly 60 million Americans live in rural areas and depend on their 
hospital as an important--and often only--source of care in their 
communities. Rural hospitals face multiple instabilities due to the 
unique circumstances of providing care in rural areas, including remote 
geographic location, low-patient volumes, workforce shortages, and a 
population that is often older and sicker and more dependent upon 
federal programs, such as Medicare and Medicaid, which reimburse below 
the cost of care.

During the 1990s, Congress created the critical access hospital (CAH) 
program and other special payment programs to help address the 
financial distress facing many rural providers, as well as an increase 
in the number of rural hospital closures.

Over time, as health care delivery has shifted from volume to value, 
and as more services are provided in the outpatient setting, many of 
these special rural programs have become outdated and fail to provide 
the intended financial stability. Over this same period, federal 
payment changes and the cost of meeting increasing regulatory 
requirements (e.g., Medicare's 96-hour rule and ``direct supervision'' 
policy, Meaningful Use, etc.) have further exacerbated the financial 
instability of many rural providers. According to the North Carolina 
Rural Health Research Program, 83 rural hospitals have closed since 
2010 due to ``likely multiple contributing factors, including failure 
to recover from the recession, population demographic trends, market 
trends, decreased demand for inpatient services, and new models of 
care.''

Recognizing these challenges and the need for new integrated and 
comprehensive health care delivery and payment strategies, the AHA 
Board of Trustees created in 2015 the Task Force on Ensuring Access in 
Vulnerable Communities. The following year, the task force issued a 
report outlining nine emerging strategies that can help preserve access 
to health care services in vulnerable communities. These strategies 
will not apply to or work for every community, and each community has 
the option to choose one or more that are compatible with its needs. 
The AHA is pleased to include those recommendations in this statement, 
along with additional policy recommendations from the AHA Rural 
Advocacy Agenda and the 2018 AHA Advocacy Agenda.

Our statement provides an overview of the unique circumstances and 
challenges facing rural communities and hospitals, as well as 
recommendations for action. We appreciate the opportunity to submit 
this statement for the record.

UNIQUE CIRCUMSTANCES AND CHALLENGES FACING RURAL COMMUNITIES AND 
HOSPITALS

DECLINING POPULATION, INABILITY TO ATTRACT NEW BUSINESSES AND BUSINESS 
CLOSURES

Rural communities are challenged by declining populations because 
population growth from natural change (births minus deaths) is no 
longer sufficient to counter migration losses when they occur. 
According to the U.S. Department of Agriculture (USDA), from April 2010 
to July 2012, the estimated population of non-metro counties as a whole 
fell by close to 44,000 people.\1\ Although this may seem like a small 
decline, the USDA indicates that it is a sizeable downward shift from 
the 1.3 percent growth these counties experienced during 2004-2006.\2\ 
From July 2012 to July 2013, the population in non-metro areas 
continued this three-year downward trend.\3\ Such declines may have a 
ripple effect, leading to other negative impacts, such as business 
closures. They may change the health or needs of the community, which 
may in turn affect the viability of certain businesses. When businesses 
close or a community is unable to attract new businesses, it becomes 
more difficult for it to retain existing health care services and 
recruit new providers. As a result, these communities tend to have 
fewer active doctors and specialists, and face difficulties in 
accessing care, which can complicate early detection and regular 
treatment of chronic illnesses.
---------------------------------------------------------------------------
    \1\ United States Department of Agriculture Economic Research 
Service. ``Rural America at a Glance, 2013 Edition.'' Last accessed 1/
19/16 at: http://www.ers. usda.gov/media/1216457/eb-24_single-
poges.pdf.
    \2\ Id.
    \3\ United States Department of Agriculture Economic Research 
Service. ``Rural America at a Glance, 2014 Edition.'' Last accessed 1/
19/16 at: http://www.ers. usda.gov/media/1697681/eb26.pdf.

---------------------------------------------------------------------------
POOR ECONOMY, HIGH UNEMPLOYMENT AND LIMITED ECONOMIC RESOURCES

The presence of a poor economy typically leads to high levels of 
unemployment and a limited amount of economic resources. These factors 
are linked to poor health outcomes. For example, poverty may result in 
individuals purchasing processed food instead of fresh produce, which 
over time could lead to hypertension, obesity and diabetes. This also 
may affect individuals' mental health and result in other health 
conditions, such as high blood pressure, high cholesterol, diabetes and 
obesity.\4\ Rural and inner city areas more often show the effects of a 
poor economy. For example, overall, rural areas have seen moderate 
growth in employment, but certain areas face losses in jobs (including 
much of the South, Appalachia, Northwest and the Mountain West).\5\
---------------------------------------------------------------------------
    \4\ Think Progress. ``Four Ways That Poverty Hurts Americans' Long-
Term Health.'' Last accessed 10/24/16 at: http://thinkprogress.org/
health/2013/07/30/2381471/four-ways-poverty-impacts-americans-health/.
    \5\ United States Department of Agriculture Economic Research 
Service. ``Rural America at a Glance, 2014 Edition.'' Last accessed 1/
19/16 at: http://www.ers. usda.gov/media/1697681/eb26.pdf.
---------------------------------------------------------------------------

AGING POPULATION

America's rural areas have a high proportion of Medicare patients, 
which means changes and cuts to federal reimbursement programs have a 
disproportionate effect on rural providers. U.S. Census data indicate 
that close to 18 percent of rural counties' total population is aged 65 
or older.\6\ This is in contrast to the general average of 14.3 percent 
in large metropolitan statistical areas (MSAs) and 14.8 percent in 
other MSAs.\7\ Given that older individuals are more likely to have one 
or more chronic diseases, these communities may face poorer health 
outcomes. This challenge can be exacerbated if access to health care 
services in the community is already limited.
---------------------------------------------------------------------------
    \6\ U.S. Census Bureau. ``2009-2013 American Community Survey 5-
Year Estimates.'' Note: Urban/Rural status is assigned to counties 
based on FY 2015 CBSA designations.
    \7\ Id. Note: Large MSAs have a population of 1 million or more; 
other MSAs have a population of less than 1 million.
---------------------------------------------------------------------------

LOWER VOLUME AND LOWER PROVIDER SUPPLY

Rural hospitals' low-patient volumes make it difficult for these 
organizations to manage the high fixed costs associated with operating 
a hospital. This in turn makes them particularly vulnerable to policy 
and market changes, and to Medicare and Medicaid payment cuts. Many 
rural hospitals operate with modest balance sheets and have more 
difficulty than larger organizations accessing capital to investment in 
modern equipment or renovating or ``right-sizing'' aging facilities.

Rural hospitals also have a difficult time attracting and retaining 
highly skilled personnel, such as doctors and nurses.

GEOGRAPHIC ISOLATION

Rural communities are often self-contained and located away from 
population centers and other health care facilities. Public 
transportation is rare and, if it does exist, it is sporadic. In 
addition, for many rural communities, inclement weather or other forces 
of nature can make transportation impossible or, at the very least, 
hazardous. Challenges with transportation for many rural residents 
means that preventive and post-acute care, pharmaceutical and other 
services are delayed, or, forgone entirely, which can increase the 
overall cost of care once services are delivered.

LACK OF ACCESS TO PRIMARY CARE SERVICES

High-quality primary care involves health care providers offering a 
range of medical care (preventive, diagnostic, palliative, therapeutic, 
behavioral, curative, counseling and rehabilitative) in a manner that 
is accessible, comprehensive and coordinated.\8\ A meaningful and 
sustained relationship between patients and their primary care health 
care providers can lead to greater patient trust in the provider, good 
patient-provider communication, and the increased likelihood that 
patients will receive, and comply with, appropriate care.\9\ 
Unfortunately, access to primary care services is unavailable for many 
Americans. Today, nearly 20 percent of Americans live in areas with an 
insufficient number of primary care physicians. These health 
professional shortage areas for primary care face clear recruitment and 
retention issues and have less than one physician for every 3,500 
residents.\10\ They also tend to be more common in remote rural towns. 
Lack of access makes it difficult for millions of Americans to access 
preventive health care services, leaving them and their communities 
susceptible to fragmented, episodic care and poorer health outcomes.
---------------------------------------------------------------------------
    \8\ American Medical Association. ``Health and Ethics Policies of 
the AMA House of Delegates.'' Last accessed 10/24/16 at: http://
www.ama-assn.org/ad-com/polfind/Hlth-Ethics.pdf.
    \9\ Office of Disease Prevention and Health Promotion. ``Healthy 
People 2020 Access to Health Care.'' Last accessed 10/24/16 at: http://
www.healthypeople.gov/2020/topics-objectives/topic/Access-to-Health-
Services.
    \10\ Health Resources and Services Administration Data Warehouse. 
Last accessed 10/24/16 at: http://datawarehouse.hrsa.gov/Topics/
ShortageAreas.aspx.

The AHA's Task Force on Ensuring Access in Vulnerable Communities 
identified additional challenges facing rural communities in its 
report. In addition, the task force identified the essential health 
care services that should be provided in all communities, including 
emergency services, primary care services, transportation and a robust 
referral structure.

RECOMMENDATIONS

ALTERNATIVE PAYMENT MODELS

Rural Emergency Medical Center Designation. The AHA's Task Force on 
Ensuring Access in Vulnerable Communities considered a number of 
integrated, comprehensive strategies to reform health care delivery and 
payment. The ultimate goal was to provide vulnerable communities and 
the hospitals that serve them with the tools necessary to determine the 
essential services they should strive to maintain locally, and the 
delivery system options that will allow them to do so.

One such option is the 24/7 Emergency Medical Center (EMC) model. The 
EMC would allow existing facilities to meet a community's need for 
emergency and outpatient services, without having to provide inpatient 
acute care services. EMCs would provide emergency services (24 hours a 
day, 365 days a year) as well as transportation services. They also 
would provide outpatient services and post-acute care services, 
depending on a community's needs.

The AHA urges Congress to consider the Rural Emergency Acute Care 
Hospital (REACH) Act (S. 1130), which would establish a 24/7 rural 
emergency medical designation under the Medicare program to allow small 
rural hospitals to continue providing necessary emergency and 
observation services (at enhanced reimbursement rates), but cease 
inpatient services.

Additionally, the AHA strongly supports the Rural Emergency Medical 
Center (REMC) Act (H.R. 5678), which would allow exiting CAHs and those 
with 50 or fewer beds to convert to a new designation (REMC) under the 
Medicare program. REMCs would provide 24/7 emergency services and the 
type of services a hospital provides on an outpatient basis to Medicare 
beneficiaries, including observation, diagnostic and telehealth 
services. REMCs also could provide post-acute care in a separately 
licensed skilled nursing facility unit. Payment for REMCs would be a 
fixed facility fee and the outpatient prospective payment system (OPPS) 
rate for services. REMCs would be required to provide transportation 
services to higher acuity facilities as needed. (The Medicare Payment 
Advisory Commission recently expressed support for isolated, rural 
stand-alone emergency departments that would bill at the OPPS rate and 
provide annual payments that would assist with fixed costs.)

Rural Community Hospital Demonstration Program. Special hospital 
designations and demonstration programs have the potential to enable 
rural hospitals to maintain access to critical health care services. 
The Rural Community Hospital (RCH) Demonstration is a program Congress 
created in the Medicare Modernization Act of 2003, extended and 
expanded in the Patient Protection and Affordable Care Act, and 
extended again in the 2016 as part of the 21st Century Cures Act. The 
RCH program allows hospitals with 26- 50 beds to test the feasibility 
of cost-based reimbursement. These hospitals are too large to qualify 
for the CAH program, but too small to benefit from economies of scale. 
The AHA urges Congress to expand the RCH program and make it permanent.

In addition to the EMC model and RCH Demonstration program, the AHA 
recommends the establishment of additional alternative payment models, 
including global budgets, a frontier health strategy and urgent care 
centers. These are discussed in detail in the attached report.

WORKFORCE

Recruiting and retaining health professionals in rural areas remains 
challenging and expensive. Telehealth offers a promising solution to 
some of the challenges related to physician shortages in rural areas 
and limited access to certain services including behavioral health and 
addiction treatment. However, coverage and payment for telehealth 
services must be expanded in order to better address the issue (see 
additional information below regarding improving access to telehealth). 
Additionally, Congress should expand existing programs that make it 
easier for physicians to practice in rural areas and expand scope of 
practice laws to allow nurses and other allied professionals to 
practice at the top of their license.

The AHA urges Congress to pass the Conrad State 30 and Physician Access 
Act (S. 898/H.R. 2141) to extend and expand the Conrad State 30 J-1 
visa waiver program, which allows physicians holding J-1 visas to stay 
in the U.S. without having to return home if they agree to practice in 
a federally designated underserved area for three years; and the 
Resident Physician Shortage Reduction Act (S. 1301/H.R. 2267) to 
increase the number of Medicare-funded residency positions.

REIMBURSEMENT

Medicare reimburses hospitals below the cost of care for the services 
they provide and does not account for the high fixed costs associated 
with operating a hospital. Medicare sequestration cuts of 2 percent of 
reimbursement have further destabilized many small, rural hospitals. 
The AHA urges Congress to end Medicare sequestration and ensure 
providers are appropriately reimbursed for the care they provide.

REGULATORY RELIEF

A recent AHA report on the regulatory burden faced by hospitals 
indicates that the burden is substantial and unsustainable. Hospital 
and health systems spend nearly $39 billion a year solely on 
administrative activities related to regulatory compliance from four 
federal agencies, such as quality reporting, Medicare conditions of 
participation, and audits of various kinds.

Meeting regulatory requirements requires an investment of both staff 
and resources, which can be more challenging for rural providers who 
must meet many or all of the same requirements as other hospitals. 
Federal regulation is largely intended to ensure that health care 
patients receive safe, high-quality care. In recent years, however, 
clinical staff find themselves devoting more time to regulatory 
compliance, taking them away from patient care. An overall reduction in 
regulatory burden would enable providers to focus on patients, not 
paperwork, and reinvest resources in innovative approaches to improve 
care, improve health, and reduce costs.

Additionally, certain federal regulations are unnecessary; do not 
positively impact patient care; and have the potential to limit access 
to services. Some examples are provided below.

Direct Supervision. The Centers for Medicare and Medicaid Services' 
(CMS) ``direct supervision'' rule requires that CAHs and hospitals with 
100 or fewer beds provide outpatient therapeutic services under the 
``direct supervision'' of a physician. These services have always been 
provided by licensed, skilled professionals under the overall 
supervision of a physician and with the assurance of rapid assistance 
from a team of caregivers, including a physician. While hospitals 
recognize the need for ``direct supervision'' for certain outpatient 
services that pose a high risk or are very complex, the agency's policy 
generally applies to even the lowest risk services. The AHA urges 
Congress to pass the Rural Hospital Regulatory Relief Act (S. 243/H.R. 
741) to make permanent the enforcement moratorium on CMS's ``direct 
supervision'' policy for outpatient therapeutic services provided in 
CAHs and small, rural hospitals.

Ninety-six-hour Physician Certification. Medicare currently requires 
physicians to certify that patients admitted to a CAH will be 
discharged or transferred to another hospital within 96 hours in order 
for the CAH to receive payment under Medicare Part A. While CAHs must 
maintain an annual average length of stay of 96 hours, the y may offer 
some critical medical services that have standard lengths of stay 
greater than 96 hours. Enforcing the condition of payment will force 
CAHs to eliminate these ``96-hour-plus'' services. The AHA urges 
Congress to pass the Critical Access Hospital Relief Act (H.R. 5507) to 
remove permanently the 96-hour physician certification requirement as a 
condition of payment for CAHs, thus recognizing that this condition of 
payment could stand in the way of promoting essential, and often 
lifesaving, health care services to rural America. These hospitals 
would still be required to satisfy the condition of participation 
requiring a 96-hour annual average length of stay.

Electronic Health Records (EHRs) and Interoperability. America's 
hospitals are strongly committed to the adoption of EHRs, and the 
transition to an EHR-enabled health system is well underway. We are 
pleased that CMS proposed some significant changes to the newly renamed 
Promoting Interoperability program to increase flexibility in 2019. 
This includes moving to a performance-based scoring system and removing 
several measures that unfairly hold hospitals accountable for the 
actions of others. In addition, the agency proposes a 90-day reporting 
period in 2019 and 2020. Unfortunately, CMS proposes to require the use 
of the 2015 Edition certified EHR in 2019 and to retain the requirement 
to connect ``apps'' to a hospital's system without the ability to vet 
them for security. The AHA urges Congress to pass the EHR Regulatory 
Relief Act (S. 2059), which would eliminate the ``all or nothing'' 
approach, establish a 90-day reporting period, and expand hardship 
exemptions.

Co-location. Hospitals in rural communities often create arrangements 
with other hospitals or providers of care in order to offer a broader 
range of medical services and better meet the needs of patients. For 
example, a rural hospital may lease space once a month to medical 
specialists from out of town, such as a cardiologist, behavioral health 
professional or oncologist. These kinds of arrangements can improve 
access to care and care coordination, while also increasing convenience 
for patients.

However, in 2015, a CMS presentation created concern among hospitals 
that longstanding co-location arrangements would be declared ``non-
compliant with CMS's rules.'' Since then, hospitals have heard mixed 
messages related to co-location. Hospital staffs have spent significant 
amounts of time trying to ascertain the rules and determine how to 
sustain the most effective patient care for their community while 
considering whether re-construction would be required in some 
circumstances. Out of an abundance of concern and in the absence of 
clear direction, some hospitals have begun to unwind their co-location 
or shared service arrangements. Unfortunately, these changes can result 
in patients having difficulty accessing needed care.

If CMS does not clearly and appropriately define how hospitals can 
share space, services and staff with other providers in rural areas, 
Congress should statutorily define such arrangements in order to 
protect access to specialists in rural communities.

Stark and Anti-Kickback. Hospitals and other providers are adapting to 
the changing health care landscape and new value-based models of care 
by eliminating silos and replacing them with a continuum of care to 
improve the quality of care delivered, the health of their communities 
and overall affordability. Standing in the way of their success is an 
outdated regulatory system predicated on enforcing laws no longer 
compatible with the new realities of health care delivery. Chief among 
these outdated barriers are portions of the Anti-kickback Statute, the 
Ethics in Patient Referral Act (also known as the ``Stark Law'') and 
certain civil monetary penalties. These laws make it difficult for 
providers to enter into clinical integration agreements that would 
allow them to collaborate to improve care in ways envisioned by new 
care models. Providers also need additional opportunities and support 
to participate in new models of care, especially in rural areas where 
there may be limited funds available for the significant infrastructure 
investments that many of the existing models require.

The AHA urges Congress to create a safe harbor under the Anti-kickback 
Statute to protect clinical integration arrangements so that physicians 
and hospitals can collaborate to improve care, and eliminate 
compensation from the Stark Law to return its focus to governing 
ownership arrangements.

EXPAND ACCESS TO TELEHEALTH SERVICES

Telehealth is changing health care delivery. Through videoconferencing, 
remote monitoring, electronic consultations and wireless 
communications, telehealth expands patient access to care while 
improving patient outcomes and satisfaction.

Telehealth offers a wide-range of benefits, such as:

      Immediate, around-the-clock access to physicians, specialists, 
and other health care providers that otherwise would not be available 
in many communities;

      The ability to perform remote monitoring without requiring 
patients to leave their homes;

      Less expensive and more convenient care options for patients; 
and

      Improved care outcomes.

Medicare Coverage of Services. Coverage for telehealth services by 
public and private payers varies significantly and whether payers cover 
and adequately reimburse providers for telehealth services is a complex 
and evolving issue. However, without adequate reimbursement and revenue 
streams, providers may face obstacles to investing in these 
technologies. This may be especially detrimental to hospitals that 
serve vulnerable rural and urban communities--where the need for these 
services may be the greatest. For Medicare specifically, more 
comprehensive coverage and payment policies for telehealth services 
that increase patient access to services in more convenient and 
efficient ways would likely be necessary to make these strategies work 
for vulnerable communities. This would include elimination of 
geographic and setting location requirements and expansion of the types 
of covered services.

As the use of telehealth has grown in recent years, well over half of 
U.S. hospitals connect with patients and consulting practitioners at a 
distance through the use of video and other technology. However, there 
are several barriers to wide use of telehealth, including statutory 
restrictions on how Medicare covers and pays for telehealth. While the 
AHA was pleased that the Bipartisan Budget Act (BiBA) of2018 expanded 
Medicare coverage for telestroke and provided waivers in some 
alternative payment models, more fundamental change is needed. In 
addition, many hospitals and health systems find that the 
infrastructure costs for telehealth are significant. Establishing 
telehealth capacity requires expensive videoconferencing equipment, 
adequate and reliable connectivity to other providers, and staff 
training, among other things. The fiscal year (FY) 2018 omnibus 
appropriations bill included more than $50 million for rural telehealth 
programs, but greater support is needed.

The AHA urges Congress to further expand telehealth capacity by 
establishing a grant program to fund telehealth start-up costs. 
Congress also should remove Medicare's limitations on telehealth by:

      Eliminating geographic and setting requirements so patients 
outside of rural areas can benefit from telehealth;

      Expanding the types of technology that can be used, including 
remote monitoring;

      Covering all services that are safe to provide, rather than a 
small list of approved services; and

      Including telehealth in new payment models.

Access to Broadband. Adequate broadband infrastructure is necessary to 
improve access to telehealth services and facilitate health care 
operations, such as widespread use of EHRs and imaging tools. Many 
innovative approaches to care delivery require a strong 
telecommunications infrastructure. However, according to the Federal 
Communications Commission (FCC), 34 million Americans still lack access 
to adequate broadband. Lack of affordable, adequate broadband 
infrastructure impedes routine health care operations, such as 
widespread use of EHRs and imaging tools, and limits the ability to use 
telehealth in both rural and urban areas. Congress took steps to 
address this challenge in the FY 2018 omnibus appropriations bill, 
which included $600 million to the Department of Agriculture for a new 
pilot program offering grants and loans for broadband projects in rural 
areas with insufficient broadband. The FCC also has a Rural Health Care 
Program, which supports broadband adoption for non-profit rural health 
care providers. Unfortunately, the $400 million annual cap has been 
unchanged for over 20 years, and was exceeded in both 2016 and 2017, 
leading to significant cuts for rural health care providers that have 
limited budgets. These cuts not only affect the ability of these rural 
health care providers to maintain strong broadband connections but also 
could force tough decisions affecting funding for essential health care 
services. In a February 2nd letter, we asked the FCC to restore this 
funding and supported an FCC proposal to adjust the funding cap 
annually for inflation, including a ``catch up'' increase for FY 2017 
to account for inflation since the program began. We also urged the 
Commission to assess future demand for broadband-enabled health care 
services to set a more accurate cap.

The AHA appreciates Congress's focus in this area and urges continued 
support for funding to help improve rural broadband access for health 
care providers.

CONCLUSION

The AHA applauds this Committee's focus on issues facing rural 
hospitals and the patients and communities they serve. The AHA looks 
forward to working with you and the Congress to take meaningful action 
to ensure access to health care services in vulnerable communities and 
to support rural hospitals and the patients they serve.

See also:

    AHA Task Force on Ensuring Access in Vulnerable Communities Report

    AHA Rural Advocacy Agenda

    AHA 2018 Advocacy Agenda

                                 ______
                                 
               Association of Air Medical Services (AAMS)

                    909 N. Washington St., Suite 410

                          Alexandria, VA 22314

                   (703) 836-8732  Fax (703) 836-8920

                              www.aams.org

Established in 1980, the Association of Air Medical Services (AAMS) is 
an international, non-profit 501(c)(6) trade association headquartered 
in the Washington, DC area that represents and advocates on behalf of 
our membership to enhance their ability to deliver quality, safe, and 
effective medical care and medical transportation for every patient in-
need. AAMS is a dedicated team, committed to representing and 
advocating for the air medical and the critical care ground transport 
industry and supporting our members who proudly serve their communities 
throughout the United States and around the world.

AAMS, on behalf of the 257 AAMS members representing over 95% of the 
air medical operations in the United States, submits the following 
statement to the Senate Finance Committee.

Air Medical Services

The use of air medical services has become an essential component of 
the rural health care system. Air medical critical care transport saves 
lives and reduces the cost of health care. It does so by minimizing the 
time the critically injured and ill spend out of a hospital, by 
bringing more medical capabilities to the patient than are normally 
provided by ground emergency medical services, and by helping get the 
patient to the right care quickly. Helicopter emergency medical 
services (HEMS) and fixed wing aircraft are flying emergency intensive 
care units deployed at a moment's notice to patients whose lives depend 
on rapid care and transport. While air medical services may appear to 
be expensive on a single-case basis compared with ground ambulance 
service, examining the benefits behind the cost on an individual and a 
system-wide basis shows that it is cost-effective. This is especially 
true in rural America, where patients are simultaneously at greater 
risk of severe injury and farther from definitive care.

Emergency air medical transport services are:

      Required to respond to all requests for emergency transport 
without knowledge or regard to the patient's ability to pay.

      Available 24 hours a day, 7 days a week, 365 days a year, for 
response to emergency requests, with some states requiring a minimum 
response time.

      Are always requested by medical professionals (physicians or 
first responders). They do not self-dispatch and have no control over 
their volume.

Air Medical's Critical Role in Rural Health Care

Air medical services provide a valuable medical resource that can 
transport patients and medical staff long distances, as well as carry 
medical equipment and medical supplies directly to the scene of the 
onset of an illness or injury. The air medical industry dramatically 
improves access to Level 1 and 2 trauma centers for over 120 million 
Americans who would not be able to receive emergent care in a timely 
manner otherwise. Over 90% of air medical flights are for treating 
trauma, cardiac, and stroke--all conditions that are dependent on rapid 
treatment at advanced medical facilities for the best outcome possible.

In rural and frontier areas, HEMS and fixed wing aircraft play a 
particularly important role. For example, when the nearest ground 
ambulance is farther, by travel-time, from the scene of injury than the 
nearest HEMS, the air medical service may be the primary ambulance for 
critically ill and injured patients in that area. Similarly, when the 
nearest advanced life support (ALS)-capable medical facility is 
farther, by travel-time, from the scene of the injury than a HEMS or a 
fixed wing provider, the air medical service may be the primary ALS 
provider for critically ill or injured patients in that area.

The air medical service can transport specialized medical staff 
(surgical, emergency medicine, respiratory therapy, pediatric, 
neonatal, obstetric, and specialized nursing staff) to assist with a 
local mass casualty event or to augment the rural/frontier hospital's 
staff in stabilizing patients needing special care before transport.

Increased need for these services, combined with the highly trained 
staff, medical equipment, aviation and patient safety improvements, and 
overhead costs, have increased operating costs significantly since the 
Centers for Medicare and Medicaid Services (CMS) established the air 
medical services fee schedule.

Study on Air Medical Costs

Current Medicare rates were never based on the cost of providing the 
service and must be updated to reflect modern-day costs. AAMS engaged 
an independent research firm, Xcenda LLC, to explore the cost of 
providing emergency air medical transport using common Medicare cost 
reporting methods. The purpose of the study was to provide unbiased 
data to CMS, the Government Accountability Office (GAO), and members of 
Congress regarding the actual costs of providing emergency air medical 
services. The study was designed to represent the entire industry, not 
just one business model or type, and to be as inclusive as possible 
across the air medical community. AAMS strongly believes this study 
provides an actual cost baseline for transport providers regardless of 
business model.

Key findings from this groundbreaking study include:

      While the study shows the break-even cost of an emergent 
transport is estimated to be $10,199, it is important to understand 
that CMS, as a government payer, does NOT include the costs of 
uncompensated care generated by transporting un-insured and under-
insured patients and by patients covered by under-paying government 
programs like Medicaid, Indian Health, TRICARE, and others.

      When those costs (the accumulated deficit from transporting un-
insured, under-insured, and under paying government programs, weighted 
according to the percentage of patients they cover) are accounted for, 
the break-even cost of an emergent transport is estimated to be over 
$26,000.

      Those break-even costs do NOT include any operating income to 
ensure air medical services are able to continue to operate. Every 
business must be financially viable to sustain its operations. A modest 
positive change in net assets (non-profit companies) or a modest margin 
(for-profit companies) enable air medical programs to invest in their 
people (medical licensing, certifications, etc.), new equipment 
(aircraft, medical equipment, etc.), safety improvements (night vision 
systems, flight data monitors, etc.), training (flight simulators, 
medical training, etc.), and other systemic improvements to ensure they 
provide the finest, patient-centered emergent care possible, 24/7/365, 
for every patient-in-need.

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

Shortfall in Reimbursements for Air Medical Services

The air medical transport industry is faced with consistent reductions 
in reimbursement payments for the emergency medical services provided 
to patients in need. Despite the regularly increasing costs of 
providing these emergency services, Medicare reimbursement has remained 
stagnant and many state Medicaid programs cover little or no 
reimbursement for these emergency transports. On average, 40% to 50% of 
the patients transported are covered by Medicare, an additional 20% to 
30% are covered by Medicaid, and 10% are uninsured. This means that 
only 2 or 3 out of ten patients are commercially insured--an average 
that worsens in rural America--and while the cost of providing the 
transport is relatively the same for the majority of patients, the 
amount reimbursed for that cost can vary widely from patient to 
patient. Those costs must be recouped from somewhere, or the service 
cannot survive in that location; this raises the price for all 
patients, in the hopes of preserving the service and the access to 
healthcare it provides.

Commercial insurers play a very large role in the ability of air 
medical services to survive. If they refuse payment, delay payment, or 
question the medical necessity of a service that can only respond when 
requested by a physician or trained first-responder, air medical 
services are unable to provide ongoing critical healthcare access. 
Worse, varying state insurance laws allow insurance companies in some 
states to arbitrarily limit payments to air medical transport 
providers, leaving patients responsible for covering the remainder of 
their bill. Patients are left in the middle and often used as leverage 
to lower insurers' payment responsibilities.

While insurers must be held accountable and patients protected from 
being used as leverage, the root cause of the problem can be addressed 
by reforming Medicare and providing transparency through mandatory cost 
reporting.

The ``Ensuring Access to Air Ambulance Services Act of 2017'' (S. 2121)

Congress can protect access to definitive care for the most critically 
ill and injured patients by supporting the Ensuring Access to Air 
Ambulance Services Act of 2017 (S. 2121), introduced last November by 
Senators Heller (R-NV) and Bennet (D-CO). This legislation would 
establish mandatory cost and quality reporting requirements on air 
medical operators and update the Medicare fee schedule for air medical 
services. The bill was designed and drafted to provide a long-term 
solution to the shortfall in Medicare reimbursements which is already 
leading to base closures and the curtailment of air medical operations 
across the country.

This legislation helps ensure:

      Transparency: Cost and quality reporting measures will provide 
transparency to the public on the high cost of providing air medical 
transport, especially in rural areas.

      Efficiency: Increased transparency on costs and quality will 
drive a more efficient system, rewarding those who can perform higher 
quality services at a lower cost.

      Quality: Value based purchasing program rewards high performing 
air medical transport services and incentivizes increased quality in 
healthcare transportation across the air medical community.

      Access: Most importantly, the bill helps ensure that the largest 
single payer of air medical transports--Medicare--funds those 
transports at or near the cost of that service. This provides for the 
stability of existing services and the access they provide to 
healthcare.

We urge the Senate Finance Committee to report S. 2121 to the full 
Senate, as it will address the chronic shortfall in Medicare 
reimbursements and support the continued provision of this life-saving 
service across the country and especially in rural areas.

Conclusion

We thank the Senate Finance Committee for this important opportunity to 
provide the views of the air medical community on these critical 
issues, and are happy to provide further information upon request.

                                 ______
                                 
                              Centerstone

                       44 Vantage Way, Suite 400

                          Nashville, TN 37228

June 7, 2018

U.S. Senate
Committee on Finance
Dirksen Senate Office Building
Washington, DC 20510-6200

RE: Statement for the record pertaining to May 24, 2018 full committee 
hearing entitled ``Rural Health in America: Challenges and 
Opportunities''

Dear Chairman Hatch and Ranking Member Wyden:

    We applaud you for your commitment to examining ways to offer rural 
Americans better care in their communities. Centerstone shares that 
goal. Below, we share some information about our services, and share 
our recommendations for improving the quality and timeliness of care 
for individuals living in rural parts of the country.

About Centerstone

    Centerstone is a multi-state not-for-profit provider of evidence-
based behavioral health services. In operation for over 63 years, we 
service nearly 180,000 lives across Florida, Illinois Indiana, 
Kentucky, and Tennessee in both inpatient and outpatient settings. In 
Florida, Centerstone has facilities in Manatee and Sarasota counties. 
In Illinois, Centerstone has facilities in 4 counties, with one 
considered a rural county by the Health Resources and Services 
Administration (HRSA) \1\, \2\ and 2 experiencing population 
declines. Illinoisans come to our facilities from at least 54 other 
counties across the state, most of which are rural. In Indiana, 10 of 
the 18 counties with Centerstone facilities are considered rural by the 
HRSA, with 9 counties experiencing population declines.\3\ In Kentucky, 
we serve 7 counties.\4\ In Tennessee, 17 of the 30 counties we serve 
are defined as rural by the HRSA, with 3 experiencing population 
declines.\5\
---------------------------------------------------------------------------
    \1\ https://www.hrsa.gov/sites/default/files/ruralhealth/resources/
forhpeligibleareas.pdf.
    \2\ Centerstone has facilities in the following Illinois counties: 
Franklin,* Jackson, Madison, and Williamson. Those designated by an 
asterisk(*) are considered rural counties by the HRSA.
    \3\ Centerstone has facilities in the following Indiana counties: 
Bartholomew, Brown, Decatur,* Delaware, Fayette,* Henry,* Jackson,* 
Jefferson,* Jennings,* Johnson, Lawrence,* Monroe, Morgan, Owen, 
Randolph,* Rush,* Scott, Wayne.* Those designated by an asterisk(*) are 
considered rural counties by the HRSA.
    \4\ Centerstone has facilities in the following Kentucky counties: 
Bullitt, Henry, Jefferson, Oldham, Shelby, Spencer, Trimble.
    \5\ Centerstone serves the following counties in Tennessee via 
outpatient clinics, school-based therapy, or mobile crisis services: 
Bedford*, Bradley, Cheatham, Coffee,* Davidson, Dickson, Franklin,* 
Giles,* Hamilton, Hickman, Houston,* Humphreys,* Lawrence,* Lewis,* 
Lincoln,* Marshall,* Maury, McMinn,* Montgomery, Moore,* Perry,* Polk, 
Putnam,* Robertson, Rutherford, Stewart,* Sumner, Wayne,* White,* 
Wilson. Those designated by an asterisk (*) are considered rural 
counties by the HRSA.

    Through our specialized military services, we also serve veterans, 
service members, and their families across the United States. Finally, 
our Centerstone Research Institute (CRI) is tasked with developing 
clinical innovations based upon the very best science that aims to 
close the 17-year science-to-service gap. With decades of on-the-ground 
experience, supported by outcomes research generated by CRI, we are 
able to identify the most significant barriers to offering timely and 
safe care to individuals.

``How do we get more providers to rural America?''

b Take steps to support the behavioral healthcare workforce

    Senator Roberts noted that ``recruiting, training, and retaining 
staff are some of the greatest challenges we have.'' We agree. 
According to a 2018 State of Workforce Management Survey, the top 
priority for behavioral health not-for-profit providers is recruiting 
and retaining top talent, with the primary challenges being (a) an 
inability to offer competitive pay and benefits, and (b) a lack of 
qualified applicants. Thus, Centerstone supports the use of financial 
incentives to start to close the critical behavioral healthcare 
workforce gap.

    The Substance Use Disorder Workforce Loan Repayment Act of 2018 
(H.R. 5102/S. 2524) would function to directly alleviate the supply 
problem because it would provide a loan-repayment incentive to 
individuals choosing to practice in workforce shortage areas. The bill 
would authorize the HRSA to pay up to $250,000 of an individual's 
program loan obligations for those who complete a period of service in 
an SUD treatment job in a mental health professional shortage area or 
in a county particularly badly impacted by the opioid epidemic. 
Specifically, the bill will offer student loan repayment of up to 
$250,000 for participants who agree to work as a SUD treatment 
professional in areas most in need of their services. The program will 
be available to a wide range of direct care providers, including 
physicians, registered nurses, social workers, and other behavioral 
health professionals. Loan repayment would be for individuals pursing a 
``SUD treatment job'' in an area defined as a Mental Health 
Professional Shortage Area (MHPSA), as designated under section 332, or 
a county (or a municipality, if not contained within any county) where 
the mean drug overdose death rate per 100,000 people over the past 3 
years for which official data is available from the State, is higher 
than the most recent available national average overdose death rate per 
100,000 people, as reported by the Centers for Disease Control and 
Prevention. Persons would need to work full time for 6 years to receive 
the full $250,000 in loan forgiveness.

    The Opioid Crisis Response Act of 2018 (S. 2680) includes very 
similar language in Section 412, but struck a critical provision of 
H.R. 5102/S. 2524, which extends applicability of the loan repayment 
beyond the boundaries of just Health Professional Shortage Areas 
(HPSAs) to also include areas hardest hit by the opioid crisis (as 
explained above). H.R. 5102/S. 2524 would function to more effectively 
alleviate workforce shortages in areas that have the most need, many of 
which are rural areas. Additionally, by providing loan repayment year 
by year and not considering leaving early a breach of contract, H.R. 
5102/S. 2524 avoids deterring participants who might be hesitant to 
sign up for a longer commitment. By providing up to $250,000 in loan 
forgiveness, there will be a significant incentive for participants to 
stay in the program once they join. Finally, more types of providers 
are eligible to participate in loan forgiveness through H.R. 5102/S. 
2524 than through the S. 2680 language. H.R. 5102/S. 2524 provides a 
broad list of providers that would be eligible for the program, and 
allows the Secretary to add professions as needed. Thus, we ask that 
you consider the benefits of the H.R. 5102/S. 2524 language in 
recruiting and retaining providers in the hardest hit areas nationwide, 
which will not only help bring providers to rural areas, but should 
also help them stay in those areas long-term.

b Enable professionals to work at the top of their licensure

    We know that there are more than 30 million people living in rural 
communities in which no treatment options of any kind exist today--let 
alone comprehensive, 
evidence-based ones.\6\ By the year 2025, workforce projections 
estimate that there will be a workforce shortage in the fields of 
substance abuse and mental health treatment of approximately 250,000 
providers across all disciplines.\7\ In 2013, all nine types of 
behavioral health practitioners had shortages. Currently, six provider 
types have estimated shortages of more than 10,000 FTEs, including 
psychiatrists, clinical and counseling psychologists, substance abuse 
and behavioral disorder counselors, mental health and substance abuse 
social workers, and mental health counselors.\8\ With immense gaps in 
treatment access and fatal opioid-related overdoses at an all-time 
high,\9\ it is imperative that we take steps to address from multiple 
angles.
---------------------------------------------------------------------------
    \6\ National Rural Health Association.
    \7\ https://www.whitehouse.gov/sites/whitehouse.gov/files/images/
Final_Report_Draft_11-1-20
17.pdf.
    \8\ https://bhw.hrsa.gov/sites/default/files/bhw/health-workforce-
analysis/research/projections/behavioral-health2013-2025.pdf.
    \9\ https://www.cdc.gov/vitalsigns/opioid-overdoses/.

    Licensed marriage and family therapists (LMFTs) and licensed mental 
health counselors (LMHCs) hold licensures on par with licensed clinical 
social workers (LCSWs), yet their exclusion under Medicare is somewhat 
arbitrary. (Please see attached document entitled: ``Medicare Standards 
for Licensed Mental Health Counselors, Licensed Clinical Social 
Workers, and Licensed Marriage and Family Therapists.'') As a result of 
this workforce gap, providers face significant barriers when recruiting 
within the limited allowable provider types, particularly in rural 
areas. This shortage in eligible workers also results in wait times 
that can be 4 times higher amongst Medicare patients, as opposed to 
under Medicaid, which permits for reimbursement of LMHC and LMFT 
services in some of our sites. The Mental Health Access Improvement Act 
of 2017 (H.R. 3032/S. 1879) would allow LMFT and LMHC services to be 
reimbursed by Medicare. This bill would enable faster access to care 
for Medicare and some commercial patients, as well as optimize our 
---------------------------------------------------------------------------
current workforce to operate at the top of its licensure.

b Urge CMS to issue swift guidance to all Medicare Managed Care 
entities on ways to streamline the credentialing process so as to 
improve credentialing in high need areas

    Access to specialty addiction care is alarmingly low in rural 
areas. In a meaningful step forward, the American Board of Medical 
Specialties (ABMS) is now recognizing Addiction Medicine as a 
specialty. Despite this recognition, however, it has been our 
experience in Florida, Kentucky, Illinois, and Indiana that if a 
physician, certified in addiction medicine by the American Board 
Certification of Addiction Medicine (ABAM), is not a psychiatrist, then 
that physician will either (a) be denied in the credentialing process, 
or (b) the payer will not reimburse for their services, regardless of 
credentialing approval. With some of the hardest hit areas facing the 
most significant workforce shortages, these credentialing and 
reimbursement barriers are not only undue red-tape, but are also 
endangering patients by denying them access to professional care. 
Below, we provide two examples of such scenarios:

          One of our Medicare Managed Care entities has stated they 
        would accept Addiction Medicine Doctors on their panel as long 
        as they were listed with the American Board of Medical 
        Specialties (ABMS). As noted above, ABMS is now recognizing 
        Addiction Medicine as a specialty. However, with the 
        documentation ``transition'' still in progress, ABAM certified 
        physicians are still not listed with ABMS. Thus, even though a 
        physician may be certified, we are not able to credential them 
        with the managed Medicare entity if they are not listed with 
        ABMS.

          A separate managed Medicare entity will credential ABAM 
        certified addiction specialists, who re not psychiatrists, but 
        have stated they will not reimburse Centerstone for any 
        medication management services rendered. In this case, the 
        payer/insurance company claimed that the addiction specialist 
        is not categorized under the correct taxonomy code, and noted 
        that in order to be eligible for reimbursement, the addiction 
        specialist would need to be categorized under taxonomy code 
        2084A0401X, which requires a physician to be a psychiatrist. 
        Thus, even though this entity will credential ABAM certified 
        physicians (who are not psychiatrists), they will not reimburse 
        for their services.

Therefore, Congress should urge CMS to issue swift guidance to all 
Medicare Managed Care entities, stating that board certified addiction 
specialists in good standing with appropriate medical boards shall be 
credentialed within 30 days of submitting an application, and be 
reimbursed for their services.

``How do we get our deployment models to catch up to the new and 
emerging needs of our population?''

b Encourage the use of telehealth services

    Encouraging the use of telehealth services can go a long way 
towards treating rural populations. Telehealth has a dual purpose of 
both connecting patients to lifesaving care that may have previously 
been beyond their physical reach, and also of reducing the effects of a 
behavioral health workforce shortage. Moreover, aging researchers have 
found that, ``isolated seniors had a 59 percent greater risk of mental 
and physical decline than their more social counterparts.'' \10\ 
Telehealth can help seniors get the care they need while continuing to 
live in communities that are important to them.\11\ As such, telehealth 
may play an instrumental role in providing a layer of connectivity for 
some seniors, or minimally reducing the burden for care takers so they 
are better equipped to provide on-going care.
---------------------------------------------------------------------------
    \10\ https://www.agingcare.com/articles/loneliness-in-the-elderly-
151549.htm.
    \11\ https://www.aarp.org/content/dam/aarp/ppi/2018/05/using-
telehealth-to-improve-home-based-care-for-older-adults-and-family-
caregivers.pdf?utm_source=Telehealth+Enthusiasts&utm
campaign=e0e7_a09bcc-
EMAIL_CAMPAIGN_2018_06_01_09_59&utm_medium=email&utm_
term=0_ae00b0e89a-e0e7a09bcc-353221013.

    Lawmakers should fully optimize the value of our behavioral health 
workforce by affording them a wider latitude to treat SUD patients in 
hard-to-reach areas via telemedicine.\12\ The Ryan Haight Act makes it 
illegal for a practitioner to issue a prescription for a controlled 
substance via telemedicine without having first conducted at least one 
in-person medical evaluation of the patient. There are currently three 
FDA-approved medications for the treatment of opioid use disorder: 
naltrexone, methadone, and buprenorphine.\13\ These medications are 
recognized by the National Institute of Drug Abuse,\14\ American 
Society of Addiction Medicine,\15\ and the Substance Abuse and Mental 
Health Services Administration \16\ as essential tools in responding to 
the opioid epidemic. Under current law, non-SAMHSA practitioners who 
wish to prescribe Suboxone (brand name for buprenorphine) to a patient 
they are treating via telemedicine would need to first perform an in-
person evaluation, had they not already done so. Following this 
regulatory mandate for buprenorphine prescribing, however, may be 
overly burdensome in many circumstances, and may prevent many patients 
from receiving life-saving treatment. Thus, we believe that licensed 
community mental health and addiction providers, who follow nationally 
recognized models of treatment, should gain access to a special 
registration process so that they may register with the DEA to 
prescribe substances now commonly embraced in MAT practice, without a 
prior in-person patient/provider encounter. To bring about this end, we 
support the Special Registration for Telemedicine Clarification Act of 
2018 (H.R. 5483), which calls for the promulgation of interim final 
regulations on the topic of special registration for health care 
providers to prescribe controlled substances via telemedicine without 
the initial in-person contact. Section 401 of the Opioid Crisis 
Response Act of 2018 (S. 2680) would do the same.
---------------------------------------------------------------------------
    \12\ https://homehealthcarenews.com/2018/05/cms-launches-rural-
health-strategy-with-telehealth-aims/.
    \13\ Dr. McCance-Katz, oral testimony, November 13, 2017, http://
www.aei.org/events/the-opioid-crisis-what-can-congress-do-a-
conversation-with-house-committee-on-energy-and-commerce-chairman-greg-
walden-r-or/.
    \14\ https://www.drugabuse.gov/publications/research-reports/
medications-to-treat-opioid-addiction/overview.
    \15\ https://www.asam.org/docs/default-source/practice-support/
guidelines-and-consensus-docs/asam-national-practice-guideline-
supplement.pdf?sfvrsn=24#search="medication assisted treatment".
    \16\ https://www.samhsa.gov/medication-assisted-treatment/
treatment#medications-used-in-mat.

    We know that telehealth can bridge the gap of distance and stigma 
by allowing beneficiaries to receive care when and where they need 
it.\17\ A Medicare provider can only be reimbursed for telehealth 
services if the patient is located at a specified ``originating 
site''--a restriction that clearly limits the purpose and benefits of 
telehealth. The Access to Telehealth Services for Opioid Use Disorders 
Act (H.R. 5603) would authorize the Secretary to, through rulemaking, 
waive originating site and geographic restrictions for the delivery of 
telehealth to Part A beneficiaries with a substance use disorder (SUD) 
diagnosis, or to a beneficiary with a SUD and serious mental illness 
(SMI) diagnosis effective January 1, 2020. By essentially waiving the 
``originating site'' restriction for certain Medicare patients, this 
bill will expand the number of providers that are able to treat the 
elderly in their own homes, and will significantly improve access to 
addiction treatment services to these patients.
---------------------------------------------------------------------------
    \17\ https://www.healthitnow.org/press-releases/2018/5/29/blog-
honor-mental-health-month-by-rededicating-commitment-to-technology-
enabled-treatment-and-support.

---------------------------------------------------------------------------
b Encourage the use of peer support services

    Peer support services are currently accepted as evidence-based 
practices by both CMS and SAMHSA. Research indicates that use of peer 
supports leads to significant decreases in substance use, symptom 
improvement, and better management of patients' own conditions.\18\ 
Connecting with a peer support specialist also helps individuals feel 
less alone in their challenges and has also been positively linked with 
addressing social isolation for older adults.\19\ These outcomes are 
largely achieved by a sense of trust and by the non-judgmental attitude 
peers exhibit towards patients. These services are currently 
reimbursable under most state Medicaid programs. Therefore, Centerstone 
recommends that Congress fully optimize the value of our behavioral 
health workforce by recognizing certified peer supports within the 
Medicare program.
---------------------------------------------------------------------------
    \18\ https://www.ncbi.nlm.nih.gov/pubmed/26882891.
    \19\ http://clri-ltc.ca/2018/04/the-power-of-peer-support/.

---------------------------------------------------------------------------
b Enable providers to access full patient records

    The Confidentiality of Substance Use Disorder Patient Records 
rule--42 CFR Part 2--is a stringent rule that prevents providers from 
systematically treating OUD/SUD patients in reliance on complete and 
accurate patient histories. In moving towards more robust integrated 
care models where every member of a patient's treatment team needs to 
understand a patient's full medical/SUD history, Part 2 stands as a 
hindrance to whole-person, safe care. Part 2 has never been applied 
universally: only federally assisted alcohol and drug abuse programs 
providing SUD diagnosis or treatment are subject to the stringent 
Confidentiality of Substance Use Disorder Patient Records rule--42 CFR 
Part 2.\20\, \21\ Part 2 prevents these federally funded 
providers from accessing a patient's full substance use history without 
the patient's prior written consent. In contrast, non-federally 
assisted providers throughout the country are governed only by HIPAA. 
Today, SUD is the only condition not governed by HIPAA. Failure to 
update Part 2 has weakened our Nation's ability to tackle our addiction 
problems. Stigmatized conditions like mental health disorders and AIDS 
are governed under HIPAA--care for both of those conditions are 
improving.
---------------------------------------------------------------------------
    \20\ https://www.samhsa.gov/sites/default/files/faqs-applying-
confidentiality-regulations-to-hie.pdf.
    \21\ http://www.jhconnect.org/wp-content/uploads/2013/09/42-CFR-
Part-2-final.pdf.

    The bipartisan Opioid Prevention and Patient Safety Act (OPPS Act) 
(H.R. 5795/S. 1850) would function to align Part 2 with HIPAA's consent 
requirements for the purposes of treatment, payment, and healthcare 
operations (TPO), which would allow for the appropriate sharing of SUD 
records, among covered entities, to ensure persons with OUD and other 
SUDs receive the integrated care they need. The bill further clarifies 
that SUD records may not be used as evidence in any criminal 
proceedings, may not be used for any purposes in federal agency 
proceedings, may not be used for law enforcement purposes at any agency 
level, and may not be used to apply for a warrant, except where a 
patient has provided consent, or when a court order has been issued. 
Penalties for violations are those outlined in the Public Health 
Service Act. Discrimination is prohibited in treatment, housing, 
employment, and courthouse settings. No recipient of federal funds may 
discriminate against affected individuals. HITECH Notification of 
Breach provisions apply to the same extent as they apply to all other 
breaches of protected health information. (For a visual representation 
of Part 2 intricacies, please see attached document entitled: 
``Congress Considers Medical Privacy Overhaul to Combat the Opioid 
---------------------------------------------------------------------------
Epidemic.'')

    We at Centerstone aim to do everything we can to evaluate what is 
most appropriate for each individual on a case-by-case basis in order 
to provide the highest quality, individually-tailored care. Without a 
full understanding of the challenges an individual is facing, however, 
the care of even the best-intentioned providers will fall short of the 
care they could offer if they understood the whole person. Therefore, 
we strongly urge lawmakers to pass legislation that would align 42 CFR 
Part 2 with HIPAA for the purposes of treatment, payment, and health 
care operations.

``How can we promote higher quality care?''

b Incent reimbursement models that promote integrated, whole-
personcare, as opposed to fragmented care

    Currently, in many of our states, Medicare and HMOs do not 
reimburse for more than one service per day. In other words, if a 
patient has a doctor's visit and a group therapy session on the same 
day, only one service will be reimbursed. This means that patients with 
co-occurring physical and behavioral health conditions who may need a 
medical evaluation followed by an individual therapy session will 
typically be required to make multiple appointments for these services 
on separate days so that providers do not incur a financial loss. This 
not only creates tremendous inefficiencies in the cost of delivering 
high quality, integrated care, but also makes treatment more burdensome 
for patients. Multiple appointments can be impossible for some patients 
to keep due to school and work schedules, family responsibilities, or 
transportation challenges (as in the case of many rural citizens).

    It is important that Congress incent reimbursement models that 
promote integrated, whole person care, such as Certified Community 
Behavioral Health Clinics or Health Homes. These care models are 
designed to be the antithesis to disjointed care. Through Centerstone's 
implementation of grant funded patient centered health homes designed 
for consumers with co-occurring and complex conditions, where patients 
receive the appropriate care as the need arises, we have experienced a 
lower health care spend per capita in comparison to non-
integrated care models. More importantly, 84% of our patients with high 
blood pressure saw lower readings after 12 months; recipients reported 
a 56% improvement in anxiety levels; 53% showed improvement in general 
health. Additionally, we saw a significant reduction in emergency room 
utilization. Through this model, we have been able to provide 
contiguous care to consumers who had previously only experienced 
fragmented, expensive care. Our participants awarded this model a 98% 
approval rating. We continue to capture cost savings through integrated 
health home pilots. Therefore, we recommend that Congress prioritize 
legislation that will help break down barriers for same day billing for 
behavioral health providers in Medicare and, more generally, incent 
reimbursement models that promote integrated, whole-person care such as 
Certified Community Behavioral Health Clinics as identified in the 
Excellence in Mental Health and Addiction Treatment Expansion Act (H.R. 
3931/S. 1905).

c Amend the appeals process so that reimbursement practices follow 
federal parity laws

    When a claim is denied, an appeal may be filed. Appeals are 
supposed to take up to 30 days, but may take longer. A successful 
appeal typically involves multiple phone calls with the managed care 
entity and our treatment team, including with one of our treating 
psychiatrists or addiction specialists, followed by a submission of the 
client record. With most of our facilities facing workforce shortages, 
dealing with the appeals process uses valuable provider time, which 
would be better utilized serving patients.

    Thus, we recommend that federal parity laws be strictly enforced so 
as to guard against undue claims denials. Currently, many states lack 
appropriate systems for tracking prior authorizations and denials 
between coverage types (medical vs. behavioral health benefits). 
Because states often lack the infrastructure to track parity, the full 
extent of parity violations is unknown. Thus, even though there is 
industry-wide consensus that the federal parity law goes systematically 
unenforced, robust evidence detailing the extent of medical/behavioral 
health discrepancies is currently missing. We suspect if the parity law 
was fully and faithfully implemented, we would see a steep reduction in 
administrative burden.

    We appreciate the opportunity to submit comments for the record on 
the topic of improving the quality of care for rural Americans. Kindly 
let us know if you have any questions or comments, or wish to discuss 
any of these items further. We look forward to collaborating with you 
in the future.

Sincerely,

Lauren McGrath, MSSW
Vice President of National Policy, Centerstone

Monica Nemec, JD, MPP
Director of National Policy, Centerstone


   Medicare Standards for Licensed Mental Health Counselors, Licensed
  Clinical Social Workers, and Licensed Marriage and Family Therapists
      Social Security Act Sec.  1861(hh)(l) sets out the education,
 experience, and licensure requirements for mental health professionals'
  participation in Medicare. Clinical social workers are recognized as
Medicare providers, but mental health counselors and marriage and family
    therapists are not. The text below is taken directly from Social
  Security Act Sec.  1861(hh)(1) for social workers and the legislation
  adding mental health counselors and marriage and family therapists to
                                the law.
------------------------------------------------------------------------
                         Licensed      Licensed Mental      Licensed
                     Clinical Social       Health         Marriage and
                          Worker          Counselor     Family Therapist
------------------------------------------------------------------------
Current Medicare     Yes              No                No
 Provider:
------------------------------------------------------------------------
Education:           Possesses a      Possesses a       Possesses a
                      master's or      master's or       master's or
                      doctoral         doctoral degree   doctoral degree
                      degree in        in mental         which qualifies
                      social work      health            for licensure
                                       counseling or a   or
                                       related field     certification
                                                         as a marriage
                                                         and family
                                                         therapist
                                                         pursuant to
                                                         State law
------------------------------------------------------------------------
Experience:          Two years of     Two years of      Two years of
                      post-graduate    post-graduate     post-graduate
                      supervised       supervised        clinical
                      clinical         mental health     supervised
                      social work      counselor         experience in
                      experience       practice          marriage and
                                                         family therapy
------------------------------------------------------------------------
Licensure            Licensed or      Licensed or       Licensed or
 Requirement:         certified to     certified as a    certified as a
                      practice as a    mental health     marriage and
                      clinical         counselor         family
                      social worker    within the        therapist
                      by the State     State of          within the
                      in which the     practice          State of
                      services are                       practice
                      performed
------------------------------------------------------------------------
State Licensed       193,000          144,500           62,300
 Providers:
------------------------------------------------------------------------


 [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
                                                        

                                 ______
                                 
              Medicare Dependent Rural Hospital Coalition

                         500 N. Capitol Street

                          Washington, DC 20001

                          www.mdhcoalition.com

                        Statement for the Record

On behalf of the Medicare Dependent Rural Hospital Coalition, thank you 
for holding the May 24, 2018 hearing entitled, ``Rural Health Care in 
America: Challenges and Opportunities.'' As discussed at the hearing, 
there are a number of challenges to providing high-quality health care 
in rural communities. The Coalition is pleased to submit testimony for 
the record highlighting some of these challenges and offering 
collaborative solutions to ensure access to health care in rural areas 
is maintained and improved.

Created in 2011, the Medicare Dependent Rural Hospital (MDH) Coalition 
is an informal coalition of affected and concerned hospitals from 
around the country who wish to see the MDH program extended and 
enhanced. According to a recent U.S. Department of Health and Human 
Services (HHS) report, rural America is older than the urban population 
(18.2 percent of rural individuals are 65 and over, compared to 13.7 
percent in the U.S. population overall).\1\ This statistic demonstrates 
the importance of the Medicare program--and to sustaining the rural 
health care infrastructure--to rural communities nationwide. The MDH 
Coalition is committed to ensuring that lawmakers and policymakers in 
Washington, DC understand just how critical this program is to the 
rural population.
---------------------------------------------------------------------------
    \1\ ``Rural Hospital Participation and Performance in Value-based 
Purchasing and Other Delivery System Reform Initiatives,'' Assistant 
Secretary for Planning and Evaluation, U.S. Department of Health and 
Human Services, Issue Brief, October 19, 2016.
---------------------------------------------------------------------------

About MDHs

The Medicare-Dependent, Small Rural Hospital program was established by 
Congress in 1990 with the intent of supporting small rural hospitals 
for which Medicare patients make up a significant percentage of 
inpatient days or discharges. To qualify as a MDH, a hospital must be: 
(1) located in a rural area, (2) have no more than 100 beds, and (3) 
demonstrate that Medicare patients constitute at least 60 percent of 
its inpatient days or discharges.

Because they primarily serve Medicare beneficiaries, MDHs rely heavily 
on Medicare payment to sustain hospital operations. As such, Congress 
acknowledged the importance of Medicare reimbursement to MDHs and 
established special payment provisions to buttress these hospitals. 
Congress recognized that if these hospitals were not financially viable 
and failed, Medicare beneficiaries would lose an important point of 
access to hospital services. Today, more than 150 hospitals nationwide 
have MDH status.

Challenges Facing MDHs

When examining rural health challenges, the Coalition believes it is 
important to address unique challenges facing MDHs that may impact the 
quality of, and access to, essential health care services. Some of 
these issues are described below.

Older and Aging Patient Population: MDHs serve a disproportionate 
number of Medicare beneficiaries. In 2018, the most recent year for 
which Medicare cost report data is available, Medicare patients 
(excluding Medicare Advantage patients) accounted for 54 percent of MDH 
patient days, significantly more than the 42 percent average at other 
rural hospitals, as well as the 34 percent average at urban 
hospitals.\2\ Medicaid enrollees also account for a substantial 
percentage of hospital discharges at MDHs, although empirical data is 
not available to quantify that.
---------------------------------------------------------------------------
    \2\ Centers for Medicare and Medicaid Services, FY 2018 IPPS Impact 
File, September 29, 2017.

Congress has recognized that MDHs are vitally important to the Medicare 
program, as evidenced by the number of Medicare patients they serve. If 
an MDH fails, Medicare beneficiaries lose access to an important source 
of hospital services. As a result, Congress has repeatedly extended the 
MDH designation since the program's beginning. Most recently, the 
Balanced Budget Act of 2018 extended the MDH program for five years, 
---------------------------------------------------------------------------
until October 1, 2022.

Narrow Operating Margins: In its March 2018 Report to Congress, the 
Medicare Payment Advisory Commission (MedPAC) found that rural IPPS 
hospitals (excluding Critical Access Hospitals (CAHs)) had a negative 
7.4 percent overall Medicare margin.\3\
---------------------------------------------------------------------------
    \3\ ``Hospital inpatient and outpatient services: Assessing payment 
adequacy and updating payments,'' MedPAC, March 2018, http://
www.medpac.gov/docs/default-source/reports/mar18
_medpac_ch3_sec.pdf?sfvrsn=0.

Because of the high percentage of Medicare (and Medicaid) patients, 
MDHs lack the ability to offset costs through non-governmental payer 
patients. Whereas larger rural and urban facilities can shift costs to 
make up for negative Medicare margins, MDH do not have that same 
---------------------------------------------------------------------------
flexibility.

While MedPAC examines Medicare margins by hospital type each year, it 
does not examine Medicare margins by specially designated Medicare 
hospital type. A Government Accountability Office report was included 
in the Bipartisan Budget Act of 2018 that would report data on Medicare 
margins for MDHs. However, this report is not due to Congress until 
early-to-mid 2020.

If Congress is evaluating the ongoing need for the MDH program, it 
should direct MedPAC to include hospital margin data on hospitals with 
special designations under Medicare, including MDHs.

Recommendations for Congressional Action

Overall, MDHs treat an older, rural patient population with limited 
financial resources. This makes these rural providers dependent on 
accurate and appropriate payment policies. To ensure MDHs are able to 
continue to provide high-quality health care to rural communities, 
there are six policy changes the Coalition recommends.

Recommendation One--340B Eligibility for MDHs: The 340B program has 
been critical in expanding access to lifesaving prescription drugs to 
low-income patients in communities across the country. Congress created 
the 340B program with the mission of enabling its covered entities ``to 
stretch scarce federal resources as far as possible, reaching more 
eligible patients and providing more comprehensive services.'' The 
program has been essential to helping hospitals and other health care 
providers ensure that their patients get access to affordable 
medications and quality health care.

Under the 340B program--which is administered by the Health Resources 
and Services Administration (``HRSA'')--certain covered entities may 
purchase outpatient drugs from manufacturers at discounted prices, 
provided they comply with certain program requirements. Congress 
designated certain provider types as covered entities because they each 
fulfill a special role in serving low-income, special-needs, and 
otherwise vulnerable populations. In 2010, Congress extended 340B 
program eligibility by making it easier for freestanding cancer 
hospitals, CAHs, Rural Referral Centers (RRCs) and Sole Community 
Hospitals (SCHs) to participate as well.

Many 340B participating hospitals--particularly rural safety net 
facilities--are indispensable to their communities, and the discounts 
they receive through the 340B program play an essential role in 
allowing these facilities to provide care to otherwise underserved 
communities.

Under this change, freestanding cancer hospitals and CAHs are eligible 
by virtue of their status. RRCs and SCHs are not automatically 
eligible, but Congress made it easier for them to qualify by lowering 
the DSH threshold to eight percent for these facilities. Currently, 
MDHs are the only specially recognized Medicare provider type not 
eligible for 340B based on status or through a lowered threshold. Given 
Congress has recognized the unique role all of these rural providers 
play in providing care to rural communities, the eight percent 
threshold qualifying level should be extended to MDHs.

Recommendation Two--Extend 340B Exception to MDHs: Congress should 
examine the impact of the Center for Medicare & Medicaid Services (CMS) 
drug payment policy implemented via the CY2018 OPPS rulemaking, but in 
the meantime take steps to prevent further harm to rural providers. As 
the Committee is aware, beginning in 2018, CMS instituted a policy 
change reducing the amount Medicare pays hospitals for drugs covered 
under Part B of the program when those drugs are purchased through the 
340B program. Specifically, CMS reduced payment from Average Sales 
Price (ASP) plus six percent to ASP minus 22.5 percent. While CMS 
excepted rural SCHs from the payment adjustment, MDHs are subject to 
the adjustment. CMS cited hospital operating margins, closure rates of 
rural hospitals, low-volume, and existing special payment designations 
among reasons for excepting rural SCHs, but not other rural safety net 
providers.

MDHs also play a vital role in the rural health care infrastructure, 
and exhibit some of the very same characteristics CMS used to justify 
excepting SCHs from the cuts. Congress should except MDHs from the 
payment cuts in the OPPS as well.

Recommendation Three--Update and Align MDH Payment Rate: As the 
Committee knows, the primary benefit of MDH status is eligibility for 
payments based on hospital-specific payment rates. Under Medicare's 
Inpatient Prospective Payment System (IPPS), hospitals with MDH status 
receive payments based on the federal rate or hospital-specific rate, 
whichever is greater. If the hospital-specific rate is greater, the MDH 
is paid the federal rate plus 75 percent of the difference between the 
hospital-specific rate and federal rate.

There are two updates to the MDH payment Congress should consider. 
First, an MDH's hospital specific rate is based on the hospital's costs 
in 1982, 1987 or 2002. We propose that Congress add a more current cost 
year--e.g., 2016 or 2017--for purposes of determining the target 
amount.

Second, MDHs should be afforded the same payment benefits as SCHs. As 
mentioned above, if the hospital-specific rate is greater, MDH's are 
paid 75 percent of the difference between the hospital-specific rate 
and the federal rate. SCH payments use the same formula, but receive 
100 percent of the difference. MDHs and SCHs both serve as safety net 
providers for rural communities. Additionally, like SCHs, MDHs play a 
vital role in caring for patients facing more complex and chronic 
health issues, but MDHs lack the ability to cross-subsidize with 
additional private payer payments. Congress should consider closing the 
gap in the payment rate between MDHs and SCHs by increasing the payment 
rate difference to 100 percent for MDHs.

Recommendation Four--Make MDH Designation Permanent: Because MDHs serve 
a disproportionate number of Medicare beneficiaries, MDHs rely on 
Medicare payments for delivering patient care to these beneficiaries 
and their broader communities. MDH status and the associated payment 
protections are critical to the continued viability of these 
facilities.

The Bipartisan Budget Act of 2018 extended the MDH program for 5 years. 
While the Coalition appreciates this extension, providing short-term 
extensions is not a long-term solution. As such, we support the Rural 
Hospital Access Act (S. 872), which would make the MDH program 
permanent, and urge Congress to make the MDH program permanent.

Further, as the program gets closer to lapsing, the cost for renewal 
will increase. If Congress considers this change well in advance of the 
next expiration in 2022, it would be less costly to the government and 
taxpayers. It also would provide MDHs more financial stability, the 
ability to plan effectively and continue to provide high-quality care. 
Congress should pass this legislation.

Recommendation Six--Extend 7.1 Percent OPPS Payment Adjustment to MDHs: 
Under current CMS policy, Medicare payments to rural SCHs for 
outpatient services are increased by 7.1 percent. CMS makes this 
adjustment because it found, pursuant to a study required by Congress, 
that, compared to urban hospitals, SCHs have substantially higher 
costs, and need a payment adjustment to be comparably treated under the 
outpatient PPS. CMS was not directed to include MDHs in this study, and 
has not examined this issue on its own. Congress should direct CMS to 
study the difference in costs by ambulatory payment classification 
(APC) between MDHs and hospitals in urban areas and make adjustments 
based on the findings.

Conclusion

As the Committee continues its examination of rural health challenges, 
we urge thoughtful attention and consideration be given to MDHs. As 
described above, these hospitals play essential roles in providing 
high-quality health care to rural communities and Medicare 
beneficiaries. We are available for questions, further comments, and 
additional information. Please feel free to reach out to Eric Zimmerman 
([email protected] ) or Rachel Stauffer 
(rstauffer@mcdermottplus.
com).

                                 ______
                                 
           National Association of Chain Drug Stores (NACDS)

                      1776 Wilson Blvd., Suite 200

                          Arlington, VA 22209

                              703-549-3001

                             www.nacds.org

Introduction

The National Association of Chain Drug Stores (NACDS) thanks Chairman 
Hatch, Ranking Member Wyden, and members of the Committee on Finance 
for holding the hearing on ``Rural Health Care in America: Challenges 
and Opportunities.''

NACDS and the chain pharmacy industry are committed to partnering with 
Congress, HHS, patients, and other healthcare providers to improve the 
quality, access, and affordability of health care services in 
underserved parts of the county, particularly in rural America. NACDS 
represents traditional drug stores, supermarkets and mass merchants 
with pharmacies. Chains operate over 40,000 pharmacies, and NACDS' 
nearly 100 chain member companies include regional chains, with a 
minimum of four stores, and national companies. Chains employ nearly 3 
million individuals, including 152,000 pharmacists. They fill over 3 
billion prescriptions yearly, and help patients use medicines correctly 
and safely, while offering innovative services that improve patient 
health and healthcare affordability. NACDS members also include more 
than 900 supplier partners and over 70 international members 
representing 20 countries. Please visit www.NACDS.org.

As the face of neighborhood health care, chain pharmacies and 
pharmacists work on a daily basis to provide the best possible care and 
the greatest value to their patients with respect to access to critical 
medications and pharmacy services. We help to assure that patients are 
able to access their medications and take them properly. NACDS believes 
retail pharmacists can play a vital role in improving access to 
affordable, quality health care in rural areas of the country. As this 
Committee examines the challenges and opportunities related to rural 
health care in America we offer the following for your consideration.

Pharmacist Provider Status

As the U.S. healthcare system continues to evolve, a prevailing issue 
will be the adequacy of access to affordable, quality healthcare. The 
national physician shortage coupled with the evolution of health 
insurance coverage will have serious implications for the nation's 
healthcare system. Access, quality, cost, and efficiency in healthcare 
are all critical factors--especially to the medically underserved and 
those in rural areas. Significant consideration should be given to 
policies and initiatives that enhance health care capacity and 
strengthen community partnerships to offset provider shortages in 
communities with medically underserved populations.

Pharmacists play an increasingly important role in the delivery of 
services, including key roles in new models of care beyond the 
traditional fee-for-service structure. In addition to medication 
adherence services such as medication therapy management (MTM), 
pharmacists are capable of providing many other cost-saving services, 
subject to state scope of practice laws. Examples include access to 
health tests, helping to manage chronic conditions such as diabetes and 
heart disease, and expanded immunization services. However, the lack of 
pharmacist recognition as a provider by third-party payors, including 
Medicare and Medicaid, limits the number and types of services 
pharmacists can provide, even though they are fully qualified to do so. 
Retail pharmacies are often the most readily accessible healthcare 
provider. Research shows that nearly all Americans (89 percent) live 
within five miles of a retail pharmacy. Such access is vital in 
reaching the medically underserved.

NACDS encourages your support for S. 109, the Pharmacy and Medically 
Underserved Areas Enhancement Act, which will allow Medicare Part B to 
utilize pharmacists to their full capability by providing underserved 
beneficiaries with services, subject to state scope of practice laws, 
not currently reaching them. This important legislation would lead not 
only to reduced overall healthcare costs, but also to increased access 
to healthcare services and management of medications.

Combating the Opioid Crisis

Not only can pharmacists play a vital role in ensuring access to care 
for those who reside in rural areas, but pharmacists can also play an 
important role in helping combat the opioid crisis. As such, NACDS 
supports the expansion of community-based services, such as enhanced 
roles for retail community pharmacists in identifying and treating 
those with opioid addiction, as well as community-based programs in 
which retail community pharmacists educate consumers on the dangers of 
opioid abuse and addiction.

This can be accomplished by recognizing the value pharmacists play as a 
member of the healthcare team and utilizing them at the top of their 
training in fighting the opioid crisis. For example, pharmacists could 
play a greater role in:

      Providing greater access to community-based Screening, Brief 
Intervention, and Referral to Treatment (SBIRT) activities. SBIRT is an 
evidence-based practice used to identify, reduce, and prevent 
problematic use, abuse, and dependence on alcohol and illicit drugs and 
includes a referral to treatment for those in need. Pharmacists are 
currently recognized as providers of this service in at least one state 
Medicaid program.

      Providing essential screenings and immunizations related to 
Hepatitis B, Hepatitis C, HIV, Tuberculosis (TB), and depression to 
improve the population health of communities. For example, one 
community pharmacy has partnered with a State health department to 
provide HIV screening/testing in their pharmacies. The pharmacy can 
provide these services at a lower cost, and patients find the 
pharmacies to be less stigmatizing locations than other places to 
receive screenings.

      Increasing access to Naloxone, a medication designed to rapidly 
reverse opioid overdose. Several states have recognized the importance 
of ensuring quick access to this life-saving medication and have 
employed various approaches to make it easier for pharmacists to 
provide naloxone to patients, such as:

            Establishing authority for pharmacists to 
        ``furnish'' naloxone without a prescription;

            Allowing pharmacists to dispense naloxone in 
        accordance with a written statewide protocol; and

            Employing the use of standing orders and/or 
        collaborative practice agreements between prescribing 
        practitioners and pharmacists.

      Assisting physicians with opioid treatment program, which 
provide medication-assisted treatment (MAT) for people diagnosed with 
an opioid-use disorder. CMS recently recognized the importance of MAT 
in its proposed FY 2019 Call Letter, when it stated `` . . . it is 
imperative to also ensure that Medicare beneficiaries have appropriate 
access to medication-assisted treatment (MAT).''

      Increased use of pharmacogenomic testing to determine the right 
pain medication and dosing. By performing pharmacogenetic testing, 
personalized medicine allows patients to be prescribed with the right 
drug to be administered for adequate pain control--to avoid 
experiencing dose-dependent side effects or lack of drug efficacy. A 
pain medication may alleviate pain for one patient and provide no 
relief for another. Pharmacogenetic testing can help alleviate this 
problem.

Conclusion

NACDS thanks the Committee for your consideration of our comments. We 
look forward to working with policymakers and stakeholders on improving 
rural healthcare through pharmacist services in Medicare Part B.

                                 ______
                                 
                National Rural Health Association (NRHA)
    The National Rural Health Association (NRHA) is pleased to provide 
the Senate Finance Committee with testimony on the reforms necessary to 
ensure the economic prosperity and healthy future of rural America. As 
we watch our rural communities face the gravest health care crisis in 
decades, we want to thank the Committee for holding a hearing devoted 
to the opportunities and challenges facing rural health care. Please 
know that we look forward to continuing this dialogue in the coming 
months.

    NRHA is a national nonprofit membership organization with a diverse 
collection of 21,000 individuals and organizations who share a common 
interest in rural health. The association's mission is to improve the 
health of rural Americans and to provide leadership on rural health 
issues through advocacy, communications, education and research. As 
such, we recognize the important role that health care serves in the 
economic development of rural communities across the country. The 
economic needs of rural America are vastly different than those faced 
by counterparts in other geographic and population settings. So too are 
the health care challenges, and opportunities, for rural health care 
providers.

Access to Quality Care Is Paramount

    Access to quality, affordable health care is essential for the 62 
million Americans living in rural and remote communities. Rural 
Americans are more likely to be older, sicker and poorer then their 
urban counterparts. Disparities both between urban and rural 
communities, and within rural communities along lines of race, income, 
and age, continue to widen. Further, access in rural America is impeded 
by not only geography, but also by decreasing reimbursements, physician 
shortages, and excessive regulatory burdens.

    This is exacerbated by the increasing crisis of rural hospital 
closures. Eighty-three rural hospitals have closed since 2010, and two 
more will close later this month. 10,000 rural jobs have been lost as a 
result and 1.2 million rural patients have lost access to local 
community care. Even more concerning is that 673 rural hospitals are at 
risk of closure, meaning that without Congressional action, 1 in 3 
rural hospitals are financially vulnerable.

    Medical deserts are appearing across rural America, leaving many of 
our nation's most vulnerable populations without timely access to care. 
Seventy-seven percent of rural counties in the United States are 
Primary Care Health Professional Shortage Areas while nine percent have 
no physicians at all. Rural seniors are forced to travel significant 
distances for care, especially specialty services. In an emergency, 
rural Americans travel twice as far as their urban counterparts to 
receive care. As a result, while 20 percent of Americans live in rural 
areas, 60 percent of trauma deaths occur in rural America.

In Rural America, One Size Cannot Fit All

    In rural America, health care is a pillar of the community. It 
helps to create and foster a sustainable and livable environment for 
rural Americans, and without health care, without a hospital, a rural 
community will crumble. As John Henderson, CEO of Childress Regional 
Hospital in Texas explains, ``Hospitals, schools, churches. It's the 
three-legged stool. If one of those falls down, you don't have a 
town.''

    A hospital is essential to a community, providing jobs and 
fostering economic growth with a healthy workforce and a source of care 
in case of an emergency. As the landscape of rural America and the face 
of health care throughout our nation change we ne d to adapt our ideas 
about care provision. Examining the diverse needs of communities 
requires us to create policy that can address a wide array of 
challenges to help a diverse group of providers.

Growing Health Disparities in Rural Communities

    The health disparities between rural populations and their urban 
counterparts are pronounced and growing rapidly. 18% of rural 
populations are living below the poverty threshold, compared to less 
than 16% in urban areas (HRSA Health Equity Report 2017), and health 
outcomes and income are inextricably linked. According to the Center 
for Disease Control's (CDC) Morbidity and Mortality Weekly Report 
(MMWR), rural populations are significantly more likely to report poor 
or fair health outcomes. Additionally, rural communities have 
significantly higher rates of suicide, substance use disorder, heart 
disease, cancer, chronic respiratory disease, and unintentional injury; 
and these conditions are more likely to result in unnecessary deaths 
because of lack of treatment or lack of access to appropriate care.

    If you are a member of a minority group in rural America, these 
disparities are even more pronounced. A recent study in the Journal of 
Rural Health underscored the alarming extent of these challenges. Using 
data from the National Center for Health Statistics, and adjusting for 
age, the researchers found that rural whites have 102 more deaths per 
100,000 members of the population than their urban counterparts. Rural 
blacks have 115 more deaths per 100,000 than their urban counterparts. 
The number of excess rural deaths from 1986 to 2012 was 694,000 for 
whites and 53,000 for blacks.

    These disparities are visible even at birth. Maternity care 
shortages plague rural communities, and the most vulnerable communities 
are the most likely to be without obstetrics. Rural counties with 
higher percentages of African American women were more than 10 times as 
likely as rural counties with higher percentages of white women to have 
never had hospital-based obstetric services and more than 4 times as 
likely to have lost obstetric services between 2004- 2014, when more 
than 200 rural maternity wards closed their doors.

As Health Disparities Worsen, So Does the Rural Hospital Closure Crisis

    Between 2017 and 2018, the number of rural hospitals operating at a 
loss rose from 40 to 44%. As stated earlier, 83 rural hospital have 
closed since 2010 and 673 rural hospitals are currently at financial 
risk. Three more rural hospitals announced in May that they will soon 
close their doors.

    Rural hospitals are closing for a myriad of reasons, including 
lower patient volumes in certain rural communities. However, the most 
significant reason of increased financial risk is the cumulative 
reduction in reimbursement rates in Medicare, Medicaid and private 
insurers. Rural hospitals serve more Medicare patients (46% rural vs. 
40.9% urban), thus across-the-board Medicare cuts do not have across 
the board impacts. According to MedPAC Average Medicare margins are 
negative, and under current law they are expected to decline in 2016 
has led to 7% gains in median profit margins for urban providers while 
rural providers have experienced a median loss of 6%. Since 2013 many 
hospitals have seen Medicare reduce the share of beneficiaries' unpaid 
debt it covers for out-of-pocket costs; the rate-dropped from 70% to 
65%. This cut was even deeper for Critical-Access Hospitals, which went 
from having 100% of that debt covered down to 65%.

    Continued changes to bad debt, sequestration, and Medicare 
reimbursement cuts have put more and more hospitals at risk. As more 
rural hospitals close, the number of rural communities at risk grows. 
Most rural closures occurred in states that did not expand Medicaid, 
and with reductions in the Disproportionate Share Hospital (DSH) 
payments that helped hospitals cover bad debts incurred by serving high 
rates of uninsured people, these hospitals could not survive.

    But full closure of a hospital is not the only concern. Across the 
country, hospitals are losing their obstetrics units--between 2004 and 
2014 more than 200 rural hospitals stopped providing labor and delivery 
services. The most vulnerable are placed at greater risk: rural 
counties with higher percentages of African American women were more 
than 10 times as likely as rural counties with higher percentages of 
white women to have never had hospital-based obstetric services and 
more than 4 times as likely to have lost obstetric services between 
2004-2014.

    As access to care in rural communities disappears, we need the 
support of Congress now more than ever to stop the flood of hospital 
closures and create an environment in which innovation can thrive.

Economic Impact of Rural Providers

    Rural health care providers are not only critically important for 
the health of rural Americans, the providers are critically important 
for the economic health of rural communities.

    Much of rural America was left behind in the economic recovery. 
According to the United States Department of Agriculture (USDA), rural 
counties were losing 200,000 jobs per year and the rural unemployment 
rate stood at nearly 10 percent during the Great Recession. Since then, 
the economic recovery that has positively changed the face of many 
other communities has not come to rural America. In fact, 95% of the 
jobs that have returned since the end of the Great Recession have been 
to urban, not rural areas.

    While many industries in rural America have been shrinking for a 
wide variety of reasons, health care is an industry with the potential 
to reverse declining employment. As factory and farming jobs decline, 
the local rural hospital often becomes the hub of the local business 
community--not only offering critical life-saving services, but also 
representing as much as 20 percent of the rural economy.

    Simply put, hospitals provide a large number of jobs. The economic 
well-being of rural American towns depends on a healthy rural economy, 
which is anchored by the local rural hospital and local providers. The 
average Critical Access Hospital (CAH) creates 195 jobs and generates 
$8.4 million in payroll annually. Rural hospital s are often the 
largest or second-largest employer in a rural community (along with the 
school system). In addition, even a single rural primary care physician 
can generate 23 jobs and more than $1 million in annual wages, salaries 
and benefits.

    Because hospitals provide so many jobs, it follows that their 
closure has a devastating effect on employment. If we allow the 673 
additional vulnerable rural hospitals to shut their doors, 99,000 
direct health care jobs and another 137,000 community jobs will vanish.

    A critical component of maintaining economic stability in rural 
communities is ensuring that rural hospitals and other health care 
providers are able to remain in their communities. Protecting rural 
hospitals from closure is an immediate step that can be taken to 
prevent significant job loss in rural communities.

Workforce Shortages Continue to Plague Rural America

    Workforce challenges also exist in rural America. The rural health 
landscape, with its uneven distribution and shortage of health care 
professionals, is faced with significant problems in recruiting and 
retaining a trained health care workforce. This is compounded by the 
disparity in federal reimbursement for rural providers, which if 
addressed, would not only improve the recruitment and retention of 
rural physicians, but would also stabilize the rural economy.

    Currently, 77 percent of the 2,050 rural counties in the United 
States are designated as primary care Health Professional Shortage 
Areas. The Association of American Medical Colleges projects a shortage 
of 124,000 full-time physicians by 2025. The Council on Graduate 
Medical Education projects a shortage of 85,000 physicians in 2020, 
which is approximately 10% of today's physician workforce. However, the 
most severe workforce shortages are seen among mental and behavioral 
health professionals, oral health providers, and obstetrics and 
gynecology specialists.

    Providers are more likely to practice in a rural setting if they 
have a rural background, participate in a rural training program (RTT 
Technical Assistance Program) and have a desire to serve rural 
community needs. The RTT Technical Assistance Program identified that 
residents training in rural training track residency programs were 
about twice as likely to practice in rural areas following graduation 
than family medicine graduates overall. Investments in rural 
distributed medical education are supported by such programs as Area 
Health Education Centers (AHEC), and supported by organizations such as 
the RTT Collaborative, a not-for-profit sustainable result of the RTT 
Technical Assistance Program.

    Distributed medical education campuses across rural states and 
rural America then become the platform for workforce initiatives that 
develop infrastructure to support quality healthcare delivery and 
produce economic value. Graduate medical education regulatory reform 
that allows for common sense investment specifically allowing for 
education of physicians in rural hospitals is one example of how to 
address rural economic development and workforce shortages in one 
action, while improving quality and delivering cost-saving healthcare.

Rural Provider Challenges--Geographic Diversity Effects Operating 
Margins

    We see geographic diversity in hospital operating margins, provider 
shortages, hospital closures, and other aspects of rural health care 
provision. All rural hospitals struggle because of multiple payment 
cuts that have caused Medicare margins that are currently below the 
cost of providing care according to MedPAC. While opportunities to 
innovate can keep the cost of providing care down, NRHA supports 
reimbursement rates that ensure rural providers have the resources 
necessary to provide vital care for their communities. Keeping rural 
PPS hospitals and Critical Access Hospitals (CAHs) open when possible 
provides cost-effective primary care delivery as well as economic 
stability in rural communities across the nation. For communities that 
no longer need a full service rural hospital, new models can allow them 
to right size their hospital to meet the needs of the community.

    While all rural communities have commonalities, each possesses 
needs specific to the demographics of the area and its location. The 
needs of a small town on the plains of Nebraska are different than a 
frontier community in Wyoming or a remote Appalachian community in West 
Virginia. While the Midwest has seen changes that impact their rural 
hospitals, southern communities with high poverty and racial 
disparities have been particularly hard hit by the closure crisis. 
While some policy changes can help every one of these rural areas, 
different policy solutions may be necessary to address the wide range 
of rural providers.

Breaking Down Regional Variance

    A 2016 report from the Sheps Center at the University of North 
Carolina studied the total margin of rural and urban hospitals by 
geographic census area. The total margin metric, as explained by the 
researchers, ``measures the control of expenses relative to revenues, 
and expresses the profit a hospital makes as a proportion of revenue. 
For example, a 5 percent margin means that a hospital makes five cents 
of profit on every dollar of revenue.'' Medicare Dependent Hospitals, 
Sole Community Hospitals, and rural PPS hospitals (denoted in the study 
as ``ORH'') in the Midwest had a total margin of 2.96% in the Midwest 
compared to only 1.43% in the South. Midwest CAHs had a total margin of 
3.43% compared to just 0.19% in the South.

    This difference may be in part due to the differences in the 
populations that the two areas serve. The majority of rural hospitals 
are located in the South, the region with the highest rates of poverty. 
The second largest region is the Midwest, the region with the lowest 
rates of poverty. Southern rural hospitals are more likely to serve 
increasingly vulnerable populations--those with higher rates of 
poverty, more racial minorities, and increasingly remote communities.

    According to the United States Department of Agriculture (USDA) 
Economic Research Service (ERS) ``the non-metro/metro poverty rate gap 
for the South has historically been the largest.'' From 2012-2016, the 
South had a non-metro poverty rate of 21.3%--higher than the Midwest 
and Northeast and nearly 6 percentage points higher than in the South's 
metro areas. During this period, 42.6% of the nation's non-metro 
population lived in non-metro Southern areas and 51.1% of the nation's 
non-metro poor lived in the South. More simply, ``non-metro counties 
with a high incidence of poverty are mainly concentrated in the 
South.'' Within the Southern region, those areas with the most severe 
poverty are found in the Mississippi Delta and Appalachia, as well as 
on Native American lands.

    The USDA ERS also found more health care industry jobs in the 
Midwest, which considering the role that a rural hospital has in 
creating community-based jobs, may be a factor in considering poverty 
rates. Between 2001 and 2015, rural counties with the most inpatient 
healthcare facility jobs per resident were concentrated in the Upper 
Midwest and Northern Great Plains. Regions with fewer inpatient 
healthcare jobs per resident included the West, the Southern Great 
Plains, and the South.

Developing Policy to Address National Needs

    NRHA believes a multifaceted approach is necessary to address the 
struggles of rural health care providers. This is why we have 
continuously supported legislation such as H.R. 2957, the Save Rural 
Hospitals Act. Passage of this bill will provide immediate relief to 
rural hospitals by stopping the onslaught of reimbursement cuts that 
have hit rural hospitals. Without increasing reimbursement rates, it 
will stabilize payments and stop rural hospital closures. It will also 
create a new health care delivery model with the critical flexibility 
to be adjusted as necessary to fit the varied needs in rural 
communities. That being said, we believe that any legislation passed 
should include three pieces and accomplish two goals: stabilization and 
innovation.

    The first prong is ensuring rural providers' reimbursement rates 
are sufficient to allow them to keep their doors open and provide 
critical community care.

    The second prong is supporting measures that reduce the cost of 
providing care including regulatory relief efforts that reduce costs 
without negatively impacting patient care.

    And the third prong is bolstering new models that allow communities 
to retain necessary access to local care including a local emergency 
room while right sizing their facilities to flexibly meet the needs of 
the specific community.

    Together, these policies can all begin to bring rural health care 
into the 21st Century and ensure its successful future. We look forward 
to working with the Senate Finance Committee moving forward to develop 
legislation that will support innovation and increase opportunities for 
care in rural America.

                                 ______
                                 
3280 Cherry Oak Lane, Suite 100
Cumming, GA 30041
www.hometownhealthonline.com

May 24, 2018

Senate Finance Committee Testimony

Good morning, Mr. Chairman:

Greetings from the great State of Georgia and its governor, Governor 
Deal. Thank you for the opportunity to share perspectives and dilemmas 
for the rural hospital community, as seen in Georgia and many other 
states with rural hospitals.

I, Jimmy Lewis, Founder and CEO of HomeTown Health and rural health 
advocate for over 70 hospitals throughout the Southeast, have 
personally studied and worked in rural hospitals for over 20 years 
after serving many years in various fortune 500 companies. The dilemma 
of rural hospitals in the United States is very threatening to the 
rural way of life and patient care for as many as 20% of Americans who 
live in rural America. I would like to share critical information about 
rural hospitals using four different perspectives to speak from.

These perspectives include:

    I.  Rural Hospital Reimbursement.

    II.  Rural Hospital Patient Access.

    III.  Georgia's Rural Hospital Stabilization Committee Program, 
created by Governor Nathan Deal.

    IV.  Rural Hospitals as Economic Development Engines.

I. Rural Hospital Reimbursement

The Georgia Medicaid Program is highly underfunded due to a budget 
adjustment dating back to 1999. At that time, the Medicaid payment 
rates were cut by 15% to about 85% of cost. In the nearly twenty years 
following, cuts have never been restored; resulting in Georgia Medicaid 
being underpaid by $4 billion. This has occurred where Medicaid has 
grown substantially due to increased Medicaid eligible patients; which, 
in turn, means the financial losses to hospitals have increased as the 
total Medicaid population has increased. More Medicaid covered lives 
with continuing losses has critically damaged the Medicaid Program. The 
product of this scenario has put the Georgia Medicaid Program among the 
lowest payers in the nation.

While all of this has occurred, the complexity of the rural hospital 
claims payment systems has accelerated. Currently, typical hospital 
business offices are required to administer more than 40 insurance 
payment platforms. This complexity translates directly into the loss of 
cash flow. Claims payment is damaged through denials of insurance 
payments, resulting from inability to understand and apply rules in 
over 40 insurance plat forms. Many hospitals have less than 10 days of 
cash on hand; and, for a $10-15 million annual revenue hospital, this 
is extremely difficult to manage.

As a further problem in reimbursement, Critical Access Hospitals, which 
were designed to pay 101% of cost to keep these smaller hospitals 
operationally viable, have found that for the smaller hospital 
(typically under $10 million annual net revenue), the hospital cost 
report, which is the final measure of performance for rural hospitals, 
runs into a cost-to-charge efficiency penalty--that forces CMS to make 
claw-backs for unintended overpayments. Over time, as the rural 
hospital tries to manage its cost to make payroll, those efforts are 
negated by these claw-backs that are often as much a $600,000 annually.

Solution Options: One major solution-seeker has been the Georgia 
Governor's Rural Hospital Stabilization Committee Program announced in 
2014. This program has been funded for the purpose of having 22 rural 
hospitals within a ``hub and spoke'' program to seek and develop 
solutions to improve financial sustainability. This program's success 
has contributed to keeping many rural hospitals from closing.

II. Rural Hospital Patient Access

Georgia has closed eight rural hospitals in the last 5 years and is the 
third worst state for closure during that time. Many hospitals have 
eliminated services, including more than 10 rural hospitals dropping OB 
services. With a typical rural hospital covering 10,000 to 15,000 
population and with eight rural hospitals having closed, that equates 
to health care access having been jeopardized or transplanted for 
120,000 rural Georgians, as well as another 150,000 of the population 
impacted from the loss of baby deliveries when OB services were 
eliminated. This is basically creating a third world nation type of 
health care in the rural parts of Georgia.

Solution options: Three major solution options have been developed that 
include, but are not limited to, the following:

1. Georgia has developed a Tax Credit Program: This allows private 
citizens and corporate citizens to donate directly into hospital 
operations with 100% state tax credit for donation to the hospital to 
offset losses, thus keeping the hospital open along with services like 
OB.

2. Due to the shortage of primary care physicians (estimated to be 
1,600 physicians short in Georgia), rural health care access is being 
helped incrementally through leveraging telemedicine. Growth in 
telemedicine usage can come additionally with CMS funding for 
telemedicine consults. With more than 150 providers having over 650 end 
points, Georgia has faced this physician shortage head-on by conducting 
thousands of telemedicine consults annually, using state of the art 
remote diagnostic and monitoring technology.

3. County governments raising money to support local hospitals through 
local referendums and tax millage carve-outs from county budgets 
dedicated to rural hospitals. This occurred about 10-12 times in 
Georgia in 2017, thus keeping those rural hospitals from potentially 
closing due to financial distress. This is a direct cost shift to the 
local citizens for health care.

III. Governor Deal's Rural Hospital Stabilization Committee Program

Governor Deal has budgeted $12 million over the last four years to fund 
research and pilot development for rural health care through best 
practices. Best practices can be replicated throughout the rural 
hospital community to prevent rural hospital closure. To date, 
approximately 18 hospitals have been researched through the Georgia 
State Office of Rural Health. Four additional hospitals are in pilots, 
for a total of 22 hospitals studied for process improvement through 
this program. Process improvements include, but are not limited to: 
community paramedicine, telemedicine, mental health outreach, denial 
management and continuous education.

IV.  Rural Hospitals as Economic Development Engines

Rural hospitals serve as one of the top three employers in a rural 
community and offer among the highest salary rates available in those 
areas. Rural hospitals that close in Georgia typically employ 80-120 
citizens. Hospital closures in rural communities are comparable to 
funerals, impacting the local community and those that are able to 
remain living there after the rural hospital closure. Keeping a rural 
hospital open is a direct investment in economic development. This 
means preserving the economic viability of health care for the 20% of 
Georgia rural citizenry, as well as the local tax base that keeps 
industry retained or added.

As a means to preserve the rural economy, the Georgia Legislature has 
recently passed and the Governor has signed a major piece of 
legislation to:

1. Facilitate the 100% tax credit to rural hospitals for donors.

2. Create Hospital Board Training to ensure that properly educated 
decisions are made by hospital boards.

3. Create a Rural Health Care Innovation Center in an academic setting 
to further explore best practices that can be shared to save rural 
hospitals and communities.

4. Offer certain incentives to physicians locating to rural Georgia.

5. Enhance use of remote pharmacists to offset pharmacist shortages.

The primary barriers rural health care continues to face, in spite of 
the innovative initiatives described above, include:

1. The lack of skilled health care personnel at all levels. This 
includes physicians, nurse practitioners, physician assistants, nurses, 
pharmacists, and educated business office personnel, just to name a 
few. As the unemployment rate has dropped nationally and in Georgia, 
the unintended consequence has been the migration of rural skilled 
personnel to large urban centers, leaving rural communities 
underserved.

2. Telemedicine is an ideal source for solution, however the payment 
structure to support telemedicine has not kept pace with the 
technological advances. Telemedicine is the key to redistributing the 
mal-apportioned skill sets, especially physician specialists, but must 
have enhanced reimbursement to succeed.

3. Entitlement expansion for Medicaid has out-paced the ability to 
raise payment rates for core Medicaid services, resulting in physicians 
dropping out of Medicaid.

4. The inability for a rural county to absorb the cost-shift for 
federally funded Medicaid through locally funded health care 
referendums. County governments cannot afford to pay for the expected 
health care services created by entitlements.

5. EMTALA, the federal law that requires providers who accept Medicaid 
to take all comers no matter their ability to pay. It is not uncommon 
for a rural hospital to absorb over $3 million annually in indigent, 
self-pay, and charity care. There is no practical way rural hospitals 
can afford t his cash loss. Furthermore, there is inconsistency in 
federal programs that require EMTALA. For example, Federally Qualified 
Health Centers (FQHCs) do not have to abide by EMTALA, thus putting the 
rural hospital at a serious payment disadvantage. Additionally, mental 
health units called Community Service Boards (CSBs), which are mental 
health hospitals, do not have to abide by EMTALA Law.

In summary, rural hospitals serve 20% of the population of the United 
States. Rural health care is complex and underfunded but critically 
important to keep rural Georgians from living in third world type 
conditions. Georgia has invested in process improvements to save rural 
hospitals but continues to suffer from near insurmountable barriers. 
Any help that can be afforded by Congress in budget allocation and/or 
regulation improvement to cut overhead will be appreciated by the 
citizens of Georgia. Thank you for your time, consideration, and the 
opportunity to present these findings.

Respectfully Submitted,

Jimmy Lewis, Chief Executive Officer
HomeTown Health, LLC
[email protected]
(770) 363-7453

                                 ______
                                 
               Point of Care Testing Association (POCTA)

                      500 N. Capitol Street, N.W.

                          Washington, DC 20001

                        Statement for the Record

On behalf of the Point of Care Testing Association (POCTA), thank you 
for holding the May 24, 2018 hearing entitled ``Rural Health Care in 
America: Challenges and Opportunities.'' POCTA appreciates the 
Committee's attention to the very unique challenges faced by healthcare 
providers in rural settings and supports the mission to ensure that 
individuals living in rural communities have access to essential health 
care services.

POCTA comprises manufacturers of in vitro diagnostic test systems 
ordered and furnished directly in patient care settings to allow for 
effective and efficient incorporation of diagnostic test results into 
patient care decision making. Point-of-care (POC) testing is performed 
in physician office laboratories (POLs), emergency departments, 
hospital clinics, and at the bedside during inpatient stays. POC 
testing is critical to providing real-time diagnostic answers to 
healthcare questions that aid in the diagnosis and treatment of a wide 
variety of medical conditions from the chronic to the acute.

POC testing plays a substantial role in rural and underserved areas. 
Because POC tests are performed in the healthcare setting, providers 
can rapidly diagnose and begin treatment without the need to wait days 
or weeks for a test result. For providers and facilities that do not 
have comprehensive in-house testing facilities, POC tests can improve 
the time from test to result, in turn optimizing a provider's decision 
making ability.

Rural areas may be particularly susceptible to population health issues 
including heart disease, diabetes, obesity and certain cancers, 
particularly if they have diminished access to testing. With the 
ability to immediately identify disease and begin appropriate 
treatment, providers minimize the risk of losing patients to follow up 
and improve their ability to treat and prevent the spread of disease 
throughout their community.

While it is important that the Committee continue to examine ways to 
address closures of rural hospitals, it is equally important to ensure 
that physicians, and other types of safety-net providers, are able to 
continue to provide the care that rural Americans need. As these 
hospitals close, the ability of rural communities to get the care and 
the testing they need becomes increasingly difficult and the role of 
the physician office becomes even more critical.

Recently, the Centers for Medicare and Medicaid Services (CMS) 
implemented the most wide ranging reforms to the Medicare Clinical 
Laboratory Fee Schedule (CLFS) since it was created in the early 1980s. 
These reforms, included in the Protecting Access to Medicare Act of 
2014 (PAMA), aimed to modernize the way that Medicare determines 
payment rates for diagnostic tests, including POC tests.

PAMA requires CMS to collect commercial insurer payment data from labs 
and use those commercial payer rates to set payment rates under the 
Medicare CLFS. The payment rates calculated under the PAMA based CLFS 
apply to all diagnostic tests, irrespective of the type of test 
(chemistry or molecular); place of service (physician office, reference 
lab, etc.); or whether provided in rural, suburban or urban settings.

POCTA remains concerned that, because the CMS data collection process 
under PAMA was skewed toward large reference labs, data collected are 
not representative of the overall lab marketplace--especially the 
marketplace for POL tests. In fact, only 1,100 POLs reported data to 
CMS. This represents less than one percent of the estimated 120,000 
POLs.\1\
---------------------------------------------------------------------------
    \1\ Report: ``Labs Within a U.S. Physician's Office a 1.5 Billion-
Dollar Market;'' PRNewswire: January 14, 2015.

POCTA members develop novel in vitro diagnostic technologies that are 
typically billed under the same billing codes as tests for the same 
analytes performed by large reference laboratories. However, the cost 
structures and value of tests are significantly different in the point-
of-care setting (physician offices, emergency departments, at the 
hospital bedside, and at nursing facilities) compared with the 
reference laboratory setting. Each setting plays an important role in 
the U.S. healthcare system, but they each operate in different 
marketplaces, have vastly different cost experiences and have different 
---------------------------------------------------------------------------
arrays of private payor rates for tests billed under the same codes.

Establishing rates for POL tests based upon data reported by large 
reference laboratories will not represent the marketplace of private 
payor rates for tests that are performed in large part in the POL 
setting, and as a result, the Medicare payment rates may not cover the 
cost of furnishing POC tests in non-reference lab settings.

While we acknowledge the need for Medicare to be able to act swiftly in 
the face of changing testing technology, and to be fiduciaries of the 
Medicare program by not overpaying for lab tests, we are concerned that 
these payment reductions (some as high as 50 percent or more when new 
rates are fully phased in) will compromise the ability of physician 
office labs and other common POC testing sites to make such POC testing 
available, and that these consequences may be particularly felt in 
rural communities where access already is so fragile. While payment 
decreases are limited to 10 percent each year between now and 2020 and 
then 15 percent per year through 2023, reductions of the magnitude that 
some tests will experience can only have a negative impact on 
providers' willingness and ability to continue to provide care.

POCTA's members supported the enactment of PAMA as an opportunity to 
modernize the CLFS. At the same time, shortly after enactment, and 
throughout the comment process when it became clear that CMS's data 
collection scheme would underrepresent POLs, POCTA's members raised 
concerns about the potential negative effects of PAMA on payment for 
clinical diagnostic tests furnished at the point-of-care in particular, 
tests performed in the POL setting.

We are concerned that the impact of these cuts may be amplified in 
rural healthcare settings because of the fragility of the rural health 
care safety net and rural providers' heightened sensitivity to costs in 
excess of payment. Our data show that a significant number of tests are 
provided by providers in rural settings. The following table 
demonstrates the magnitude of these payment rate changes on 20 of the 
test codes that are frequently performed at the point of care, and for 
which there is significant volume reported by providers in rural areas. 
For the 20 codes included on this table, we show:

    1.  ``Rural Utilization''; that is, the number of units of each 
code billed to Medicare in 2016 from a physician's office enrolled with 
Medicare in a rural ZIP code;

    2.  ``Fully Implemented Medicare Rate''; that is, the actual 
weighted median of private payer rates submitted to Medicare without 
application of payment rate reduction guardrails; and

    3.  ``Decrease from 2017 Medicare Rates''; that is, the total 
percentage decrease (or increase) from 2017 payment rates to the fully 
reduced rate without application of payment rate reduction guardrails 
(these may reflect rates after 2022 if the next round of PAMA data 
collection, reporting and rate setting--which commence next year--are 
unchanged from current policies).

    This table shows that virtually all of these 20 test codes will 
experience substantial decreases in payment rates resulting from the 
recent changes to CLFS payments made based on the PAMA reforms. These 
decreases range from modest (less than one-half of one percent) to 
significant (exceeding 38 percent).


                                  POCTA
                    POINT OF CARE TESTING ASSOCIATION
------------------------------------------------------------------------
                                                   Fully       Decrease
                                      Rural     Implemented   From 2017
   CPT Code        Descriptor      Utilization    Medicare     Medicare
                                     (Units)      Rate \2\       Rate
------------------------------------------------------------------------
85610          Prothrombin time      1,470,140        $4.29       -20.4%
------------------------------------------------------------------------
80053          Comprehensive         1,366,150        $9.08       -37.3%
                metabolic panel
------------------------------------------------------------------------
80061          Lipid panel           1,063,578       $11.23       -38.2%
------------------------------------------------------------------------
83036          Glycosylated          1,050,858        $8.50       -36.2%
                hemoglobin test
------------------------------------------------------------------------
81003          Urinalysis auto w/      687,968        $2.18       -29.2%
                o scope
------------------------------------------------------------------------
80048          Metabolic panel         633,338        $8.06       -30.5%
                total ca
------------------------------------------------------------------------
81002          Urinalysis              504,801        $3.48        -0.6%
                nonautomated
                without
                microscopy
------------------------------------------------------------------------
81001          Urinalysis              483,827        $2.82       -35.2%
                automated with
                microscopy
------------------------------------------------------------------------
82962          Glucose blood test      285,610        $3.28        +2.2%
------------------------------------------------------------------------
81000          Urinalysis by           241,186        $4.02        -7.6%
                dipstick or
                tablet
------------------------------------------------------------------------
82570          Assay of urine          226,732        $4.62       -34.9%
                creatinine
------------------------------------------------------------------------
82947          Assay glucose           166,020        $3.68       -31.7%
                blood quant
------------------------------------------------------------------------
82043          Microalbumin,           122,878        $4.85       -38.8%
                urine
                quantitative
------------------------------------------------------------------------
82044          Microalbumin,           104,476        $6.23        -0.8%
                urine
                semiquantitative
                (reagent strip
                assay)
------------------------------------------------------------------------
84550          Assay of blood/          78,234        $4.02       -35.2%
                uric acid
------------------------------------------------------------------------
82565          Assay of                 77,822        $4.89       -30.4%
                creatinine
------------------------------------------------------------------------
87804          Influenza assay w/       74,342       $16.55        +0.7%
                optic
------------------------------------------------------------------------
84460          Transferase,             64,991        $4.71       -35.2%
                alanine amino
                (alt) (sgpt)
------------------------------------------------------------------------
87880          Strep a assay w/         59,772       $16.53        +0.5%
                optic
------------------------------------------------------------------------
82550          Assay of creatine        59,400        $5.80       -35.1%
                kinase (CK)
                (CPK); total
------------------------------------------------------------------------
Table 1: Rural Test Codes; Payment Changes.
\2\ The rate shown reflects the fully implemented payment change.
  Payment decreases in 2018, 2019, and 2020 are limited to 10 percent of
  the previous year's payment; payment decreases in 2021, 2022, and 2023
  are limited to 15 percent of the previous year's payment rate.
Note: Data was sourced from CMS PAMA Rate Setting File and from CMS
  Physician/Supplier Procedure Summary File; 2016.

As the Committee is aware, the overall number of providers in rural 
communities is lower than that of urban and suburban areas. To the 
extent that new CLFS payment rates make if financially infeasible for 
physicians to offer these tests in rural areas, millions of 
beneficiaries could find it difficult to access point of care testing, 
and that could have negative public health implications for rural 
communities.

Two tests among the top 20 highlight this concern. Medicare 
reimbursements will decrease more than 38 percent for HCPCS Code 80061 
(lipid panel), and more than 30 percent for HCPCS code 80048 (basic 
metabolic panel [calcium total]). The lipid panel test is an important 
diagnostic to manage patients at risk for heart disease. The metabolic 
panel test is used to evaluate and follow up on patients with diabetes, 
on diuretics, with kidney disease, or with severe diarrhea or vomiting. 
In both instances, there is substantial clinical benefit, in fact need, 
for physicians to obtain immediate results in the office, at the 
bedside, or in an emergency department to rapidly understand and 
respond to a patient's condition. The alternative is that the physician 
sends specimens to a reference lab, and waits multiple days (maybe a 
week in some rural areas), to obtain results. That wait time between 
clinical visit and action can significantly compromise patient health 
management, compromise patient health, and increase health care costs.

As the Committee considers ways to protect access to high-quality care 
for rural communities, we encourage you to consider the implications of 
the changes made to Medicare's CLFS on rural healthcare providers and 
access to care in rural areas, and to carefully consider how Congress 
can support and encourage access to POC testing in rural areas.

Please contact Eric Zimmerman at [email protected] if you 
have any questions or wish to discuss this further.

                                 ______
                                 
        Rural Referral Center/Sole Community Hospital Coalition

                      500 N. Capitol Street, N.W.

                          Washington, DC 20001

               (202) 204-1457 phone  (202) 379-1490 fax

                     www.ruralhospitalcoalition.com

                        Statement for the Record

On behalf of the Rural Referral Center/Sole Community Hospital 
Coalition (the ``Coalition''), thank you for holding the May 24, 2018, 
hearing entitled, ``Rural Health Care in America: Challenges and 
Opportunities.'' As discussed at the hearing, there are a number of 
challenges to providing high-quality health care in rural communities. 
The Coalition is pleased to submit testimony for the record 
highlighting some of these challenges and offering collaborative 
solutions to ensure access to health care in rural areas is maintained 
and improved.

Formed in 1986, the Coalition is comprised of hospitals designated as 
Rural Referral Centers (``RRCs'') and Sole Community Hospitals 
(``SCHs'') under the Medicare Program. Member hospitals of the 
Coalition share the common goal of ensuring that federal hospital 
payment policies recognize the unique and important role of these 
hospitals in providing access to quality care in their communities.

Rural Referral Centers and Sole Community Hospitals

The RRC program was established by Congress to support high-volume 
rural hospitals that treat a large number of complicated cases and 
function as regional referral centers. Generally, to be classified as 
an RRC, a hospital has to be physically located outside a Metropolitan 
Statistical Area (indicating an urban area) and either have at least 
275 beds or meet certain case-mix or discharge criteria.

The SCH program was created to maintain access to needed health 
services for Medicare beneficiaries in isolated communities. The SCH 
program ensures the viability of hospitals that are geographically 
isolated and thus play a critical role in providing access to care. 
Hospitals qualify for SCH status by demonstrating that because of 
distance or geographic boundaries between hospitals they are the sole 
source of hospital services available in a wide geographic area. There 
are a variety of ways in which hospitals can qualify for SCH status, 
but the majority qualify by being more than 35 miles from another 
provider.

RRCs and SCHs provide rural populations with local access to a wide 
range of health care services. In so doing, RRCs and SCHs localize 
care, minimize the need for referrals and travel to urban areas, and 
provide services at costs lower than would be incurred in urban areas. 
These hospitals also commonly establish satellite sites and outreach 
clinics to provide primary and emergency care services to surrounding 
underserved communities, a function which is becoming increasingly 
important as economic factors force many small rural hospitals to 
close.

RRCs and SCHs are also vital to their local economies. These hospitals 
typically are significant employers, generating considerable cash 
outflow into the area economy and boosting the area tax base. There are 
395 hospitals in 45 states with RRC status and 448 hospitals in 47 
states with SCH status; 131 of these hospitals have both RRC and SCH 
status.\1\
---------------------------------------------------------------------------
    \1\ Centers for Medicare and Medicaid Services, FY 2018 FR and CN 
Impact File, September 29, 2017.

For these and other reasons, Congress has long appreciated the special 
role of RRCs and SCHs in the rural health care community and the need 
to afford these hospital s special recognition and protections to 
ensure their continued viability and role in the rural health care 
network.

Challenges Facing RRCs and SCHs

When examining rural health challenges, given the important role these 
hospitals play in their communities, it is important to address the 
challenges facing RRCs and SCHs that may impact the quality of, and 
access to, essential health care services.

Sole Source of Care: First, many of the RRCs and SCHs are, by 
definition, the sole source of care within and around a rural 
community. Many patients that live in rural communities depend on these 
facilities for a full complement of health care services, from primary 
care to inpatient sophisticated treatment. The closures of rural 
hospitals remains an on-going trend, causing access problems for 
residents of rural communities. When an RRC or SCH closes, the 
consequences for the community may be more grave than otherwise.

      Since January 2005, 125 rural hospitals have closed (83 since 
January 2010). Of the 125 closed hospitals, more than half either 
converted to non-health care use (54.2 percent) or were abandoned.\2\
---------------------------------------------------------------------------
    \2\ ``Rural Hospital Closures.'' 2014, http://
www.shepscenter.unc.edu/programs-projects/rural-health/rural-
hospitalclosures/.

      Patients in affected communities are traveling further to access 
inpatient care: 43 percent of the closed hospitals are more than 15 
miles to the next nearest hospital, and 15 percent are more than 20 
miles.\3\
---------------------------------------------------------------------------
    \3\ Clawar, M, Thompson, K, and Pink, G. ``Range Matters: Rural 
Averages Can Conceal Important Information'' (January 2018). NC Rural 
Health Research and Policy Analysis Program. UNC-Chapel Hill, http://
www.shepscenter.unc.edu/download/15861/.

      Approximately 673 rural hospitals are vulnerable to close, 
representing more than one third of the rural hospitals in the U.S. and 
impacting up to 11.7 million rural patients.\4\
---------------------------------------------------------------------------
    \4\ ``2016 Rural Relevance: Vulnerability to Value Study.'' 
iVantage Analytics, February 2016.

      The pace of closures is accelerating. From March 2013 to March 
2016, 43 rural hospitals closed. . . . While 27 of the closures were 
less than 20 miles from the nearest hospital, 13 were 20 to 30 miles 
from the nearest hospital and three were over 30 miles from the nearest 
hospital.\5\
---------------------------------------------------------------------------
    \5\ Report to the Congress: Medicare and the Health Care Delivery 
System. Medicare Payment Advisory Commission, June 2016, page 208.

Unique Patient Populations: Second, providers in rural areas treat more 
challenging patient populations. Individuals who live in rural areas 
have higher rates of chronic or life-threatening diseases, such as 
diabetes and coronary heart disease.\6\ Additionally, rural residents 
are more likely to face significant mental health issues including 
substance abuse and seasonal affective disorder.\7\ RRCs and SCHs tend 
to face even more complex patients than other rural hospitals. For 
instance, the average Medicare case mix index for RRCs and SCHs is 1.62 
and 1.39, respectively, compared to 1.26 for all other rural 
hospitals.\8\ The Medicare case mix index of RRCs more closely 
resembles that of urban hospitals (1.62), demonstrating that RRCs are 
fulfilling the congressional intent of localizing sophisticated care in 
rural areas.\9\
---------------------------------------------------------------------------
    \6\ O'Connor, A, and Wellenius, G (2012, April 24). ``Rural-urban 
disparities in the prevalence of diabetes and coronary heart disease.'' 
The Royal Society for Public Health, 126(10), 813-820, doi:10.1016/
j.puhe.2012.05.029.
    \7\ ``Health Status and Behaviors,'' Stanford Medicine, eCampus 
Rural Health.
    \8\ Centers for Medicare and Medicaid Services. FY 2018 IPPS Impact 
File, September 29, 2017.
    \9\ Id.

Financial Challenges: Third, and finally, rural health care providers 
are increasingly confronting extremely difficult financial 
circumstances. Rural hospitals (including RRCs and SCHs) tend to have 
negative or very small operating margins, in contrast to their urban 
counterparts, making them financially vulnerable. Additional Medicare 
reimbursement reductions impose further financial strain and compromise 
---------------------------------------------------------------------------
their ability to serve rural communities.

      Rural hospitals tend to have lower operating margins due to 
lower volumes, a predominately public payer mix, and higher levels of 
uninsured patients.\10\
---------------------------------------------------------------------------
    \10\ ``Rural Hospital Participation and Performance in Value-based 
Purchasing and Other Delivery System Reform Initiatives,'' Assistant 
Secretary for Planning and Evaluation, U.S. Department of Health and 
Human Services, Issue Brief, October 19, 2016.

      Nationally, urban hospitals were twice as profitable as rural 
hospitals in 2016: the U.S. median profit margin for urban hospitals 
was 5.51 percent which was more than double the margins for Critical 
Access Hospitals (2.56 percent) and other types of rural hospitals 
(2.01 percent).\11\
---------------------------------------------------------------------------
    \11\ Pink, GH, Thompson, K, and Holmes, GM. Testimony, Senate 
Finance Committee, May 24, 2018.

      Rural hospitals on average treat a higher percentage of Medicare 
patients (as measured by Medicare days) than their urban counterparts, 
46 percent for rural hospitals compared to 34 percent for urban 
hospitals.\12\ RRCs and SCHs, not surprisingly, tend to play an equally 
significant role in the Medicare program, having on average 43 percent 
and 45 percent, respectively, of their inpatient days accounted for by 
Medicare beneficiaries.
---------------------------------------------------------------------------
    \12\ Centers for Medicare and Medicaid Services. FY 2018 FR and CN 
Impact File, September 29, 2017.

While this negatively impacts patient care, it also significantly 
impacts local economies that often depend on rural hospitals as a large 
---------------------------------------------------------------------------
employer in their communities.

These hospitals also often do not have the same flexibility as other 
hospitals to discontinue lower margin or unprofitable services, like 
mental health services. As mission driven organizations, and the only 
source of hospital services for their community, these hospitals often 
will continue to offer services, even at great financial loss, because 
there are no other providers offering those services.

These hospitals also are struggling with dwindling federal support. 
Congress and the Centers for Medicare and Medicaid Services (CMS) have 
discontinued some of the benefits that these hospitals originally 
enjoyed.

Historically, RRC status carried with it several important financial 
benefits, including a higher standardized amount payment rate than 
ordinary rural hospitals. Today, RRCs receive special treatment under 
geographic reclassification and the Medicare disproportionate share 
hospital (DSH) program. With respect to geographic reclassification, 
hospitals with RRC status are exempt from proximity and certain other 
requirements. With respect to DSH, RRCs are not subject to the 12 
percent payment adjustment cap that applies to certain other rural 
hospitals. RRCs are also eligible to participate in the 340B program at 
a lower DSH threshold.

SCHs are reimbursed by Medicare for operating costs associated with 
inpatient services provided to program beneficiaries on the greater of 
the federal payment rate applicable to the hospital (i.e., the payment 
that the hospital would otherwise receive under the inpatient service 
prospective payment system (``PPS'')) or a cost-based payment, which is 
determined based on the hospital's costs in a base year: 1982, 1987, 
1996 or 2006 trended forward, whichever is highest, but these cost 
years have not been updated in more than a decade.

A hospital with SCH status also is eligible for an upwards payment 
adjustment for any cost reporting period during which the hospital 
experiences a more than 5 percent decrease in its total inpatient 
discharges as compared to its immediately preceding cost reporting 
period due to experiences beyond its control. The adjustment is 
determined based on a variety of considerations, but can be as high as 
the difference between the hospital's operating costs and the federal 
payment rate applicable to the hospital for the year in question.

Additionally, SCHs are eligible for ``special access'' rules for 
purposes of Medicare geographic reclassification, which means that a 
hospital with SCH status applying for reclassification does not have to 
be within 35 miles of the area to which it seeks reclassification, and 
may apply to the nearest Metropolitan Statistical Areas (MSAs).

Hospitals with SCH status receive a 7.1 percent adjustment to 
Outpatient Prospective Payment System. SCHs used to receive 
transitional payments under the OPPS, but Congress allowed that program 
to lapse in 2013.

Recommendations for Congressional Action

Overall, RRCs and SCHs treat patient populations with the most chronic 
and costly health issues with limited financial resources. This makes 
these rural providers especially dependent on accurate and appropriate 
payment policies. To ensure RRCs and SCHs are able to continue to 
provide high-quality health care to rural communities, there are five 
policy changes the Coalition recommends.

Recommendation One--Examine Impact of CMS's OPPS Drug Payment Policy: 
First, Congress should examine the impact of the CMS drug payment 
policy implemented via the CY2018 OPPS rulemaking, but in the meantime 
take steps to prevent further harm to rural providers. As the Committee 
is aware, beginning in 2018, CMS instituted a policy change reducing 
the amount Medicare pays hospitals for drugs covered under Part B of 
the program when those drugs are purchased through the 340B program. 
Specifically, CMS reduced payment from Average Sales Price (ASP) plus 6 
percent to ASP minus 22.5 percent. Fortunately, CMS excepted from this 
payment adjustment rural SCHs. Urban SCHs and RRCs, however, are 
subject to the adjustment. CMS cited hospital operating margins, 
closure rates of rural hospitals, low-volume, and existing special 
payment designations among reasons for excepting rural SCHs, but not 
other rural safety net providers. Urban SCHs and RRCs share many of 
these same characteristics, and also should be protected while CMS 
examines the impact. The idea of implementing a significant policy 
change, and then examining the harm is potentially reckless given the 
known fragility of these providers.

The OPPS rule established policies that do not appropriately support 
these communities and address these issues. Congress should make the 
SCH exception in the OPPS permanent. SCHs play a vital role in the 
rural health care infrastructure. By definition, these hospitals are 
the sole source of hospital services for a large area (they are either 
many miles away, separated by geographic barriers, or a minimum driving 
distance). If an SCH fails, a community is left without access to 
inpatient hospital services, and residents must travel great distances 
to access this care. CMS recognized these challenges in the May 8, 
2018, release of its ``Rural Health Strategy,'' where issues such as 
the unique economies of providing health care in rural America were 
highlighted.\13\ The uncertainty provided under the current policy--
i.e., not knowing if CMS will extend the policy--inhibits investment in 
services in rural communities, and further strains the rural health 
care safety net.
---------------------------------------------------------------------------
    \13\ ``Rural Health Strategy.'' Rural Health Council. Centers for 
Medicare and Medicaid Services, May 8, 2018, https://www.cms.gov/About-
CMS/Agency-information/OMH/Downloads/Rural-Strategy-2018.pdf.

Congress also should examine extending the exception to urban SCHs. CMS 
uses MSAs to delineate between urban and rural areas. MSA is a crude 
tool, at best, for characterizing urban and rural areas. Given that 
MSAs uses counties as building blocks, many ``urban'' areas are as 
rural as the most isolated frontier area. In fact, to be an urban SCH, 
a hospital has to be even further (35 miles) from another hospital to 
qualify. Currently, there are 78 urban SCHs in 38 states.\14\ Using 
MSAs to identify urban and rural areas is particularly problematic in 
the western United States where there are many very large counties that 
comprise MSAs (see, for example, San Bernardino County in California 
and Pima County in Arizona). There are instances where an SCH is 
designated urban by CMS, but is actually a considerable distance from 
the nearest urbanized area. For example, Verde Valley Medical Center is 
located in Prescott, AZ and is considered an urban SCH. However, the 
closest urbanized area with more than 40,000 people is Flagstaff, AZ, 
which is nearly 100 miles away.\15\
---------------------------------------------------------------------------
    \14\ Centers for Medicare and Medicaid Services. FY 2018 IPPS 
Impact File, September 29, 2017.
    \15\ ``Metropolitan and Micropolitan Statistical Areas of the 
United States and Puerto Rico.'' U.S. Census Bureau, July 2015, https:/
/www2.census.gov/geo/maps/metroarea/us_wall/Jul2015/cbsa_us_0715.pdf.

Using this approach, CMS fails to recognize MSAs are not an appropriate 
means to determine rural and urban SCHs. Further, it does not take 
account for the fact that urban and rural SCHs serve very similar 
patient populations, face the same financial challenges as described 
above, and both play an essential role as safety net providers in rural 
communities. While there are a relatively small number of urban SCHs, 
---------------------------------------------------------------------------
they should be afforded the same benefits of their rural counterparts.

Similarly, Congress should examine extending the exception to RRCs. 
RRCs, like SCHs, play an important role in the rural healthcare safety 
net, and exhibit many of the same vulnerabilities as SCHs. Congress 
sought to buttress RRCs in the 340B program the same as SCHs, by 
lowering the eligibility bar for both provider types.

Recommendation Two--Close the Orphan Drug Loophole: In 2010, Congress 
extended 340B Program eligibility by making it easier for freestanding 
cancer hospitals, Critical Access Hospitals (CAHs), RRCs, and SCHs to 
participate. Under this change, freestanding cancer hospitals and CAHs 
are eligible by virtue of their status as these providers. RRCs and 
SCHs are not automatically eligible, but Congress made it easier for 
them to qualify by lowering the DSH threshold for these facilities.

According to 2018 HRSA data, approximately 100 RRCs or SCHs 
participating under the lower DSH threshold are participating in the 
340B Program.

However, at the same time that Congress made it easier for these 
facilities to participate in the 340B Program, it also sought to ensure 
the program's discounts would not stifle investment in and development 
of drugs for rare diseases or conditions. Specifically, Congress 
included a provision that exempted from the 340B discount requirements 
any ``drug designated by the Secretary under section 360bb of title 21 
for a rare disease or condition'' when purchased by one of the 
expansion entities. This provision effectively exempts any drug with 
orphan drug designation.

Many commonly used drugs have orphan designation for one or more 
indications, even though the drug also is approved for more common 
indications too. Indeed, a January 2017 study by Kaiser Health News 
(KHN) found that about one third of orphan approvals made by the FDA 
since the orphan drug program was enacted in 1983 have been either for 
mass market drugs repurposed for an orphan designation, or for drugs 
that received multiple orphan designations.\16\ The FDA's orphan drug 
program provides a number of incentives--such as market exclusivity and 
tax credits--to encourage development of drug therapies for rare 
diseases or conditions, but each of these orphan drug incentives 
applies only when the drug is used to treat the rare disease or 
condition, and not when used for other indications.
---------------------------------------------------------------------------
    \16\ ``Drugmakers Manipulate Orphan Drug Rules to Create Prized 
Monopolies.'' Kaiser Health News, January 17, 2017, http://khn.org/
news/drugmakers-manipulate-orphan-drug-rules-to-create-
prizedmonopolies/?utm_campaign=KHN%3A+Daily+Health+Policy+Report&utm_sou
rce=h
s_email&utm_medium=email&utm_c ontent=40780219&_hsenc=p2ANqtz--
Iz5qttLkkNBVUJN3Te
rDq15vXUOZzQROhDe9_cERt1nPkP_T44hddg2bb5zflAkZB00isTyHt_xt4PcGIhjl7UwJ0w
&_hsm
i=40780219.

In 2011, HRSA published a proposed rule that sought to define the 
orphan drug exclusion established under the 2010 law by proposing that 
orphan drugs would be exempt from 340B discount requirements only when 
used for the rare condition or disease for which that drug received 
orphan designation. In 2013, HRSA published a final rule that largely 
adhered to the proposed rule's interpretation of the orphan drug 
---------------------------------------------------------------------------
exclusion.

Shortly after HRSA promulgated its final rule, the pharmaceutical 
industry--which had been urging HRSA to interpret the exception as 
applying to any drug with orphan designation, regardless of the 
clinical condition for which the drug was prescribed--sued the agency 
seeking to enjoin implementation of the final rule; the federal 
district court issued an opinion siding with the pharmaceutical 
industry. In 2014, HRSA responded by reissuing its notice as an 
interpretive rulemaking, which essentially announces the agency's 
interpretation of the statute, but does not include regulations 
enforcing it. The pharmaceutical industry responded with a new lawsuit 
challenging the interpretive rule; again the same court sided with the 
pharmaceutical manufacturers and invalidated the interpretive rule.

Since the court decisions, many pharmaceutical companies are 
restricting access to 340B Program discounts on drugs with orphan 
designations, thereby undermining the benefits of the program for RRCs, 
SCHs, CAHs and freestanding cancer hospitals. Many such hospitals 
report significant increases in drug spending since the court decision 
and are not realizing the full benefit of the 340B Program.

Congress established the orphan drug program to encourage development 
of drugs for the diagnosis and/or treatment of rare diseases or 
conditions, and the 340B orphan drug exclusion is, in effect, yet 
another incentive to promote investment these drugs. However, Congress 
could not have intended to extend this benefit to a drug use for which 
there is a substantial and lucrative market. Recent data shows that 
eight of the 10 best-selling drugs in the U.S. in 2015 were drugs with 
orphan designation.\17\ Further, spending on these drugs accounted for 
55 percent of all Medicare Part B drugs.\18\
---------------------------------------------------------------------------
    \17\ Orphan Drug List Governing April l to June 30, 2018, https://
www.hrsa.gov/opa/program-requirements/orphan-drug-exclusion/index.html.
    \18\ 2015 Total Part B Drug Spending from MedPAC June 2017 Data 
Book (Chart 10-1), http://www.medpac.gov/docs/default-source/data-book/
jun17_databookentirereport_sec.pdf?sfvrsn=O.

The Coalition urges the Committee to review and consider the Closing 
Loopholes for Orphan Drugs Act (H.R. 2889). This bill seeks to clarify 
the orphan drug exclusion by amending the exemption to limit the carve-
out only to those uses for which the drug received orphan status. This 
important, bipartisan piece of legislation will ensure that RRCs and 
SCHs (as well as CAHs and cancer hospitals) benefit from the 340B 
Program to the extent that Congress intended, allowing these facilities 
to continue to provide rural communities with local access to important 
---------------------------------------------------------------------------
health care services.

Recommendation Three--Extend and Codify the 7.1 Percent Payment 
Adjustment: Under current CMS policy, Medicare payments to rural SCHs 
for outpatient services are increased by 7.1 percent. CMS makes this 
adjustment because it found, pursuant to a study required by Congress, 
that, compared to urban hospitals, rural SCHs have substantially higher 
costs, and need a payment adjustment to be comparably treated under the 
outpatient PPS. Because Congress directed CMS to study only rural 
hospitals, the adjustment applies only to rural SCHs.

For the same reasons articulated above, Congress should extend this 
adjustment to urban SCHs. Urban and rural SCHs serve very similar 
patient populations, face the same financial challenges, and both play 
an essential role as safety net providers in rural communities. There 
is no policy basis to differentiate between urban and rural SCHs for 
purposes of this policy.

Recommendation Four--Update Hospital Specific Rate Base Year: SCHs are 
reimbursed by Medicare for operating costs associated with inpatient 
services provided to program beneficiaries on the greater of the 
federal payment rate applicable to the hospital (i.e., the payment that 
the hospital would otherwise receive under the inpatient PPS) or a 
cost-based payment, which is determined by adding together the federal 
payment rate applicable to the hospital and the amount that the federal 
payment rate is exceeded by a hospital-specific rate (based on the 
hospital's costs in fiscal year 1982, 1987, 1996 or 2006 trended 
forward, whichever is higher). A hospital that qualifies for SCH status 
will continue to be reimbursed under the PPS for as long as 
reimbursement under the PPS is more than reimbursement on a cost-basis; 
the hospital will be paid on a cost-basis if cost-based reimbursement 
is greater than reimbursement under the PPS.

We propose that Congress add a more current cost year--e.g., 2016 or 
2017--for purposes of determining the target amount. Congress last 
required an update nearly a decade ago (see, section 122 of Public Law 
110-275, the Medicare Improvement for Patients and Providers Act of 
2008), and it is time for this program to reflect more current cost 
experience.

Recommendation Five--Examine Why Annual MS-DRG Adjustments Disadvantage 
RRCs and SCHs, and Require an Appropriate Adjustment to Compensate: CMS 
inpatient payment policy has been systematically disadvantaging RRCs 
and SCHs vis-a-vis their urban counterparts. According to CMS's own 
Impact Analysis of Proposed Changes (Table 1, 83 Fed. Reg. 20,603 et 
seq.), rural hospitals are disproportionately disadvantaged by the 
budget neutrality adjustments CMS uses when implementing and 
reconciling MS-DRG changes from year-to-year. For FY 2019, CMS 
estimates that this adjustment will be neutral for urban hospitals, but 
cause a 0.3 percentage point payment reduction for rural hospitals. The 
impact for certain categories of rural hospitals is even greater, 
including 0.4 percentage point for SCHs. As if this isn't troubling 
enough, as the table below reveals, this has been a consistent trend in 
recent years, serving to perpetuate the gap between urban and rural 
hospitals and further threatening the gap between urban and rural 
providers.

Congress should require CMS to examine and report on this phenomenon, 
and make an adjustment, if deemed appropriate, to restore these 
hospitals to a level playing field.

 Weights and DRG Changes With Application of Recalibration Budget Neutrality Values Comparison Between Urban and
                                     Rural Hospitals From 2014 to 2018 \19\
----------------------------------------------------------------------------------------------------------------
                                                                      SCH and  MDH and
          Year            Urban    Rural     RRC      SCH      MDH      RRC      RRC           Data Source
----------------------------------------------------------------------------------------------------------------
2014                          0     -0.4     -0.1     -0.6     -0.7     -0.3     -0.5   IPPS 2014 Final Rule
----------------------------------------------------------------------------------------------------------------
2015                          0     -0.2        0     -0.2     -0.3     -0.3     -0.3   IPPS 2015 Final Rule
                                                                                         Correction Notice
----------------------------------------------------------------------------------------------------------------
2016                          0     -0.2     -0.1     -0.3     -0.3     -0.3     -0.3   IPPS 2016 Final Rule
                                                                                         Correction
----------------------------------------------------------------------------------------------------------------
2017                          0     -0.4     -0.1     -0.3     -0.6     -0.3     -0.6   IPPS 2017 Final Rule
                                                                                         Correction
----------------------------------------------------------------------------------------------------------------
2018                          0      0.1      0.1     -0.2              -0.1            IPPS 2018 Final Rule
                                                                                         Correction
----------------------------------------------------------------------------------------------------------------
2019                          0     -0.3        0     -0.4     -0.5     -0.2     -0.5   IPPS 2019 Proposed Rule
----------------------------------------------------------------------------------------------------------------
Total                         0     -1.4     -0.2     -2.0     -2.4     -1.5     -2.2
----------------------------------------------------------------------------------------------------------------
\19\ Federal Register Vol. 83, No. 88, Monday, May 7, 2018, Proposed Rules.

Conclusion

As the Committee continues to examine rural health challenges, we urge 
thoughtful attention and consideration be given to RRCs and SCHs. As 
described above, these hospitals play essential roles in providing high 
-quality health care to rural communities. We are available for 
questions, further comments, and additional information. Please feel 
free to reach out to Eric Zimmerman (ezimmerman@
mcdermottplus.com ) or Rachel Stauffer ([email protected]).

                                  [all]