Introduction
Hospital-based in a rural area is significantly affected by Medicare laws and legislation (Kaiser Family Foundation, 2007). These legislations are enacted not only to create parity among the Medicare providers but also to show a clear guideline in payment of individual hospitals. A Balanced Budget Act (BBA) of 1997 has laid a platform under which Medicare-dependant hospitals, as well as rural referrals centers, are established (Matthews & Berman, 2010). According to Matthews and Berman, (2010), “The critical access hospital classification implemented through the BBA makes available on a national level the former rural primary care hospital classification.”Four classifications provide different payment programs. In this regard, there is the Sole Community Hospital (SCH), Medicare-dependent Hospital (MDH), Rural Referral Center (RRC) and finally Critical Access hospital (CAH).
These categories of rural hospital classification offer distinctive medical programs and payments (Wolters, Marmouget &Eddie, 2002). However, these classifications are not strictly meant for rural hospitals since urban hospitals can also apply for this classification so as to be treated as rural hospitals. To qualify for this classification, the criteria is that the hospital seeking this classification must be located in an area that is legally designated rural by the state but fall under urban center. This paper succinctly analyses three classifications of rural that take part in the Medicare Program and how they qualify for different Medicare programs.
Sole Community Hospitals
This is the highest rating a rural hospital can obtain for hospital classifications. It is a status given to a hospital that is situated more than thirty-five miles from the next hospital which qualifies to manage short-term acute care services. The advantage of hospitals receiving this status is based on their calculation of Medicare inpatient payment. In this case, the hospital is allowed to use updated historical operating costs in the calculation of Medicare inpatient payments.
Medicare-Dependant Hospital
It is a classification rating given strictly to rural hospital which has no more than 100-bed space and has clearly demonstrated that Medicare patients make up at least 60 percent of its inpatient who is diagnosed with acute–care medical-related complications (American Institute for Preventive Medicine,2008). The advantage of this status is that they are allowed to request a special payment adjustment in case of a reduction of inpatient discharge by more than 5 percent. Furthermore, the hospital receives a higher payment rate than the Federal Payment Rate.
Rural Referral Center
This is a classification granted to large rural hospitals that offer specialized services than any typical rural hospital. The application of this status should be applied within 90 days before the fiscal year it will start operating. It requires that a hospital applying for this status have at least 275 beds and 50 percent of its Medicare patients are referred from other hospitals. In addition, more than 50 percent of its active doctors and medical staff are accredited medical specialists and are also board-accredited.
The advantage of Rural Referral classification is that the hospital qualifies for additional disproportionate share payment. In this regard, an RRC with Medicaid and SSI use of more than 30 percent is entitled to disproportionate reimbursement of 0.6 percent for every percent of low-income use exceeding 30 percent.
Graduate Medical Funding
This is a trust fund given to support all medical graduates seeking full-time medical licenses and board certifications to practice medicine in a given specialty. An institution qualifies for this fund under the following conditions: Organizations must be teaching hospitals that support Graduate Medical Program (GME) programs.
Indirect Medical Education (IMP)
This is hand training in a given specialty in medicine which a graduate student has to undergo before he or she is certified to practice medicine. To receive this fund, an organization must be certified to be involved in teaching medicine or offer on-hand training to graduate students to equip them with relevant skills before they are certified to practice medicine. The fund that supports this program is meant for the cost of internship.
Disproportionate Share Hospital (DSH)
Disproportionate Share (DSH) payment adjustment is to subsidize the high cost of operation in treating and giving medical care to several low-income patients (Center for Health Improvement, 2008). To qualify for this fund, the hospital must be a medical-independent hospital classified and treat several low-income patients. This funding pays for the operation cost of the hospital and is thus considered as a subsidy for cost of operation.
Conclusion
With the increase in the need for Medicare services, hospitals should strategically position themselves and evaluate their operational cost alongside the Medicare payment environment. This will make them take full advantage of available Medicare payment options.
References
American Institute for Preventive Medicine (2008). The health and economic Implications of Worksite Wellness Programs. Web.
Center for Health Improvement (CHI, 2008). Controlling Health Care Costs with Strategic Worksite Wellness Programs. Web.
Kaiser Family Foundation. (2007). Trends in health care costs and spending. Web.
Matthews, J. and Berman, D.M. (2010) Social Security, Medicare & Government Pensions: Get the Most Out of Your Retirement & Medical Benefits Social Security, Medicare and Government Pensions.
Wolters, T., Marmouget, P. and Eddie, C. (2002). Medicare payment options for rural hospitals: The name game: All Business. Healthcare Financial Management.