[dropcap]I[/dropcap]n 2015, U.S. Representative Sam Graves of Missouri introduced The Save the Rural Hospitals Act to stem hospital closures and provide an innovative emergency care model for patients in need.

The bipartisan bill (H.R. 2957), reintroduced in 2017, endeavors to stop Medicare cuts that threaten rural hospitals and provide funding through permanent extensions of Medicaid and Low-Volume and Medicare-Dependent Hospital and rural ambulance and super-rural ambulance payment levels. It also establishes Community Outreach Hospitals (COHs) to provide emergency medical and observation care, transfer and community based medical services to patients in need.

Maggie Elehwany—J.D., vice president, government affairs and policy, National Rural Health Association (NRHA), Leawood, Kan.—endorses COHs, saying “It’s important to find a model for hospitals that makes sense. We think if we can get something like that, it may help keep some hospital doors open.

“What we saw in 2018 and see in 2019 is a continuation of the rural health crisis. Twelve months ago, 40 percent operated at a financial loss. One year later, 44 percent operated at financial loss. Those hospitals are significantly in trouble. One in three are financially vulnerable to close,” she observes.


Robert Seamon—CEO of Copper Queen Community Hospital (CQCH) in Bisbee, Ariz.—says his hospital became a COH after nearby Cochise Regional Hospital in Douglas, Ariz., shuttered in 2015.

Copper Queen Community Hospital
Copper Queen Community Hospital in Bisbee, Ariz.

“CQCH accepted all of (Cochise Regionals’) inpatients and immediately set up outpatient services to ensure Douglas and the surrounding communities had access to essential healthcare services. We have added a rural health clinic with seven primary care providers, a specialty clinic, laboratory, radiology services, physical therapy, an urgent care and free-standing emergency room,” explains Seamon who notes “these services are all part of CQCH. They do not change the critical-access designation of the hospital.”

Similarly, Karen M. Murphy—Ph.D, RN, executive vice president, chief innovation officer, Geisinger Health System, Danville, Penn.—outlines the Pennsylvania Rural Health Model, a COH, in her article, “A Path to Sustain Rural Hospitals,” published last year in the “Journal of the American Medical Association” (JAMA). Launched in 2017 by the Centers for Medicare and Medicaid Services (CMS), the Model, as it’s called, strives to transition rural hospitals in the commonwealth from volume-based fee-for-service reimbursement to a multi-payer global budget to improve care and lower costs.

“Rural hospitals depend on volume subsidized by fee-for-service revenue. Since admissions and outpatient volumes are declining in rural areas, it is unlikely rural hospitals will improve performance. The Pennsylvania Model is a different approach to rural health.”
According to the JAMA article, the Model relies on Medicare, Medicaid and commercial payers. A prospectively calculated budget ensures a predictable revenue stream while a global budget incentivizes rural hospitals to “retain the established revenue base regardless of hospital use,” it states.

Murphy says, “Global budgets allow rural hospitals to align services with community needs as opposed to filling hospital beds. The global budget is not dependent on volume. Instead, hospitals can add services not reimbursed in a fee for service scenario.

“The most critical success factor is developing a strong transformation plan that matches the budget and outlines strategies and services rural hospitals will use. The hospitals will spell out how they are using the global budget,” she adds.


According to the NRHA, the bill would eliminate Medicare sequestration and reverse bad debt reimbursement cuts. It also would eliminate Medicare and Medicaid payment reductions; and establish Meaningful Use (MU) payment support for rural facilities “struggling to maintain MU compliance.” Furthermore, the bill would “delay application of penalties for a rural hospital’s failure to become a meaningful electronic health record user,” states information from the Congressional Research Department, Library of Congress, Washington.

“If you look at where these hospitals are closing, you can’t deny they’re closing in states that have not expanded Medicaid,” explains Elehwany. She adds, “So, what we’re saying is we need relief. We need to reinstate some of that bad debt. Let rural hospitals write off some of that bad debt.”

Todd Nelson— FHFMA, MBA, director, partner relationships and chief partnership executive, Healthcare Financial Management Association, Westchester, Ill.—says “Rural hospital viability has always depended on special classifications within the public sector programs as they typically have a much higher percentage of their population in programs, such as Medicare and Medicaid. Because of this, any payment cuts coming out of sequestration have a higher negative impact on rural hospitals than others,” he adds.

Seamon confirms his hospital’s heavy reliance on state and federal insurance programs, saying “Thirty-one percent of our patients have Medicaid compared to the Arizona average of 20 percent; 21 percent have Medicare compared to Arizona average of 16 percent; and 16 percent patients are uninsured compared to the Arizona and national average of 10 percent.

“CQCH participates with all insurance companies, including those on the Affordable Care Act (ACA) exchange. We also rely on state and federal grant funding and special payments for CAHs and recently established a foundation to raise funds for capital needs,” he adds.
Elehwany cautions “As strongly as we support ACA, it’s not working out in rural America as envisioned. We need to help with Medicaid expansion and affordable insurance,” she says.


Seamon calls hospitals and healthcare services “extremely important to the economy. CQCH currently employs 340 people, one of the largest employers in the area. I am currently working with the Arizona Hospital and Healthcare Association, Phoenix, to determine the specific economic impact of CQCH on the communities we serve,” he says.
Murphy confirms that “In most rural communities the hospitals are the economic engine. Rural hospitals not only supply jobs, they also fuel the local economy’s businesses,” she observes.

Nelson seconds this saying, “Hospitals in rural communities are traditionally the largest employer in their service area. They provide jobs and serve as an economic stimulus for goods and services that they, and their employees, purchase. Access to healthcare is also an important factor when new businesses seeks to move to an area,” he says, noting that “Hospital employees provide much of the community leadership in rural communities in service clubs, religious organizations, non-profit community organizations and athletic teams, key to growth and vitality of these communities.”

Seamon describes COH model as “absolutely necessary to curtail rural hospital closures across the country. If both political parties truly care about health care and their rural constituencies, they should revive and fully support the bill,” he says.

Elehwany concurs. “Despite the divided Congress, we still have hopes that Congress and the administration will act on the urgent need for a new rural payment model. The increase in closures during the last couple of months is high,” says Elehwany, who notes when rural hospitals close “they almost never come back.

“You instantly lose 20 percent of the rural economy.” Elehwany continues. “You lose that professional element of the community. What people in rural America don’t understand is that the physician is almost always hospital based. So, when the hospital closes, the doctors leave. The nurses leave. Medical deserts form.”