Thirty-two of Oregon’s 60 acute care hospitals are in small and rural communities. These hospitals provide essential health care services to more than one million Oregonians and are the cornerstones within the communities they serve. For most areas, they are the largest employer, offering family-wage jobs and economic stability in their towns.
Oregon’s small and rural hospitals are experiencing unprecedented changes in health care delivery and reimbursement, as the Affordable Care Act and Coordinated Care Organizations overhaul the health care system. With Patient Centered Medical Homes and a shift to new payment systems, Oregon’s small and rural hospitals have had to rethink their health care delivery and reimbursement structures.
Rural hospitals are divided into three categories – Type A, Type B, and Critical Access Hospital. These designations help determine how hospitals get reimbursed for the care they provide to Medicare and Medicaid patients. Here’s a rundown of how these programs work.
Twenty-five of Oregon’s 32 rural hospitals are Critical Access Hospitals (CAHs), which is a federal program designed to improve rural health care access and reduce hospital closures. For their Medicare patients, CAHs receive cost-based reimbursement. As the name implies, cost-based reimbursement pays hospitals what it costs to care for a patient.
Oregon’s rural hospitals have long depended on cost-based reimbursement from Medicaid and Medicare to remain viable. Prior to the CAH program and cost-based reimbursement, several rural hospitals around the country shut their doors as a result of inadequate reimbursement.
Oregon’s rural hospitals also have a state designation based on their size and location. Similar to Medicare for CAHs, the state designation of Type A or B provides Medicaid reimbursement up to 100 percent of the cost of caring for a patient. These rural designations significantly improve the bottom line for many fragile community hospitals. Many rural hospitals lack the operating margins needed to replace or update facilities, purchase necessary health information technology, and make upgrades. Along with tackling financial challenges, small rural hospitals must sustain a highly trained workforce, including medical providers. Even with strong recruitment efforts, rural hospitals have difficulty attracting and retaining skilled workers. Rural hospitals provide a higher volume of Medicare and Medicaid services, and Oregon physician reimbursement rates rank near the bottom nationally.