Rural Primary Care Hospitals:

Experience Offers Suggestions for Medicare's Expanded Program

HEHS-98-60: Published: Feb 23, 1998. Publicly Released: Feb 23, 1998.

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Pursuant to a legislative requirement, GAO reviewed the Rural Primary Care Hospital (RPCH) Program, focusing on: (1) assessing compliance with the requirements that RPCHs have an average length of stay of 72 hours or less and that physicians certify that inpatients are expected to be discharged within 72 hours; (2) assessing whether these two requirements affected the type of patients treated by RPCHs; and (3) comparing Medicare's cost for inpatient services in RPCHs to what those costs would likely have been in hospitals paid under the prospective payment system. GAO also looked at how the experience under the RPCH program could be used in implementing the expanded Critical Access Hospital (CAH) Program.

GAO noted that: (1) RPCHs provide additional and, likely, much more proximate access to health care for Medicare beneficiaries residing in the rural areas where the facilities operate; (2) these facilities treat, on an inpatient basis, beneficiaries with less complex illnesses and furnish important stabilization and transfer services for those with more complex conditions; (3) moreover, RPCHs serve as the source of outpatient care ranging from primary to emergency care; (4) the 13 RPCHs for which complete data were available had 1,708 Medicare inpatient cases since they were certified to participate in the program; (5) the RPCHs provided the full inpatient stay for 1,545 beneficiaries who had less complex needs and stabilized and transferred an additional 163 beneficiaries to full-service hospitals; (6) the RPCHs treated primarily patients (65 percent of the total) who had respiratory ailments such as pneumonia, circulating system problems such as congestive heart failure, and digestive system illnesses such as inflammation of the digestive canal; (7) in addition, during the most recent cost-reporting period, these RPCHs provided more than 28,000 outpatient visits for more than 6,700 beneficiaries; (8) these outpatient visits ranged from those for primary care to emergency treatment for injuries; (9) Medicare payments for the 1,545 cases from September 1993 to May 1996 treated solely by an RPCH were slightly more than if these cases had been treated at full-service rural hospitals and somewhat less than if they had been treated at urban hospitals; (10) a primary reason why RPCH costs were higher than those for rural hospitals was that about 21 percent of the stays exceeded the 72-hour stay limitation in effect at the time; (11) without the extra inpatient days these cases involved, RPCH costs would likely have been lower than those for rural full-service hospitals; (12) the Health Care Financing Administration (HCFA) had not established a way to enforce the 72-hour maximum length-of-stay requirement for RPCHs, and it is important that the agency do so for the replacement CAH program's 96 hour maximum; (13) as is to be expected with limited-service hospitals, RPCHs in the four states GAO studied transferred a higher portion of patients to other hospitals than did full-service rural hospitals; and (14) total Medicare payments for the 163 transfer cases were about $148,000 higher than if a full service rural hospital had transferred the patients to another acute care hospital because of differences in the way payments are determined in the two situations.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: HHS agrees that fiscal intermediaries need to be instructed not to pay for inpatient CAH stays beyond the fourth day unless there is accompanying justification for the extended stay. HCFA established procedures for a peer review organization to follow before waiving the 96-hour stay limitation for a patient at a critical care hospital, which became effective May 3, 1999. HHS is also looking into the feasibility of providing more specific guidance as to what circumstances would justify extended stays.

    Recommendation: The Secretary of Health and Human Services should direct the Administrator, HCFA, to establish a mechanism for ensuring that CAHs do not receive payment for inpatient cases that exceed the 96-hour length-of-stay maximum unless the responsible peer review organization (PRO) waives that limit and defines the conditions and circumstances under which it would be appropriate for PROs to waive the 96-hour limit.

    Agency Affected: Department of Health and Human Services

  2. Status: Closed - Implemented

    Comments: HHS included instructions effective March 5, 1999, in the Medicare Hospital Manual, informing intermediaries that Medicare part A pays for inpatient CAH services only if a physician certifies that the individual may reasonably be expected to be discharged or transferred to a hospital within 96 hours after admission to the CAH. This certification is required no later than 1 day before the date on which the bill for inpatient CAH services is submitted to the intermediary. HHS does not routinely require physician certifications to be submitted with inpatient bills; but they should be retained at the CAH and made available on request to the intermediary or the HCFA regional office.

    Recommendation: HCFA should establish a method to ascertain compliance with the requirement that physicians certify that patients are expected to be discharged within 96 hours of admission.

    Agency Affected: Department of Health and Human Services: Health Care Financing Administration


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