Under a new program, rural hospitals could get more money — but they have to end inpatient care

by Devna Bose, Mississippi Today
February 22, 2023

Thanks to a new federal program, a few rural Mississippi hospitals at risk of closure might have been given a lifeline.

The Mississippi Department of Health finalized its rules for “rural emergency hospitals” last week, so Mississippi rural hospitals with less than 50 beds and critical access hospitals can now apply for the designation.

Critical access hospitals — another designation designed to reduce hospital financial strain — must have 25 or fewer inpatient beds, be located 35 miles from another hospital, maintain an annual hospital stay of less than 96 hours for patients and provide full-time emergency services.

The federal government created the rural emergency hospital program, which was finalized in November, to ease the financial strain of rural hospitals across the country at risk of closure.

To qualify, the hospitals must agree to have emergency care available all day, every day, and provide observation care and outpatient services.

But there’s one more catch: In exchange for monthly payments and higher Medicare reimbursements, rural emergency hospitals must end all inpatient care and discharge or transfer its patients to bigger hospitals within 24 hours of their arrival.

Ryan Kelly, executive director of the Mississippi Rural Health Association, said the program is ideal for hospitals that have low patient counts and are in deep financial distress.

“It’s a good opportunity,” Kelly said. “This is no silver bullet, but the more tools we can put in the tool belt to solve this issue, the better.”

The premise of the program is that so many rural hospitals already struggle with low census counts and inpatient care costs far higher than what they’re paid. In states that have not expanded Medicaid, the program could be a solution for small hospitals that only operate some of the health services in their communities and have shuttered other units in order to maintain operations.

Harold Miller, president and CEO of the Center for Healthcare Quality and Payment Reform, takes issue with several of the program’s requirements.

Seniors whose health conditions most often need more intensive care might have to be transferred to a larger facility if their local hospital is a rural emergency hospital, and transferring patients is no longer as easy as it used to be, he said. Bigger hospitals, already under strain, must be willing to accept them.

The University of Mississippi Medical Center, for example, was on diversion (or at capacity) for both critical care and medical-surgical beds consistently from Jan. 30 to Feb. 11 of this year, according to a website that tracks hospitals on diversion. The website is updated at least twice a day.

Richard Roberson, the vice president of state policy for the Mississippi Hospital Association, said UMMC is not alone.

“You always had hospitals go on diversion, even prior to COVID, so that’s not a new thing … but what we’re seeing now is more and more diversions becoming the norm in some places,” he said.

Hospitals – even larger ones – are making decisions based on limited budgets, inadequate nurse staffing and increased wages for employees.

“Unfortunately, what’s happening is it’s impacting patient care,” said Roberson.

Additionally, when a facility is converted into a rural emergency hospital, it can no longer provide swing bed services. In that case, when there’s no separate skilled nursing facility, the community loses its nursing home, too.

Rural emergency hospitals also can’t utilize the federal 340B drug pricing program, which allows hospitals that treat low-income populations to buy prescription drugs at a discount.

“For some very small hospitals, all of the changes in payments might mean that the hospital is more profitable than it was before,” Miller said. “But it also has to eliminate services for the community in order to do that. Why should a small rural hospital that is losing money be forced to eliminate important services in order to get higher payment?”

And still, there is no guarantee that the hospital will be paid enough to remain open, Miller said.

However, for some Mississippi communities in danger of losing their only hospital, the payoff might be worth the risk.

According to a report from the CHQPR, 19 out of the state’s 74 rural hospitals are at risk of closing within the next two to three years, putting Mississippi fourth in the country for percentage of rural hospitals at immediate risk of closure.

The University of North Carolina’s Sheps Center estimates that more than 1,700 hospitals might be eligible. Kelly said he estimates around five Mississippi hospitals will qualify for the program.

Though the federal program took effect Jan. 1, the state had to finalize its qualifications before hospitals could begin applying for the designation.

Mississippi will be one of the first states to roll out the program, Kelly said.

“We’ve been waiting on the Department of Health to finalize their rules,” he said. “Now, they have the guidelines that they need to follow through and begin work.”

To become rural emergency hospitals, officials must first notify the MDSH Office of Licensure of their intent to convert, provide required documents and complete the Centers for Medicare and Medicaid Services’ application. Then, they must complete an initial survey, and apply for an MSDH rural emergency hospital license.

Community Health Editor Kate Royals contributed reporting to this story.

This article first appeared on Mississippi Today and is republished here under a Creative Commons license.