Medicare’s Critical Access Hospital Status Saves Several Rural Hospitals in Iowa

A newly implemented Medicare reimbursement classification is protecting several of Iowa's rural hospitals from insolvency, the Cedar Rapids Gazette reports. The critical access hospital program, which Congress authorized as part of the Balanced Budget Act of 1997 but has just now "fully" taken effect in Iowa, grants full Medicare reimbursement for the costs of services provided by qualifying rural hospitals. The standard Medicare reimbursement formula "often does not cover the cost of providing services, even for large hospitals, which can distribute their fixed costs among a multitude of tests, procedures and other services," the Gazette reports. Iowa's small hospitals, which treat a high percentage of elderly Medicare beneficiaries, lack such economies of scale, and the traditional Medicare reimbursement formula has "shov[ed] them toward insolvency." However, Art Spies of the Iowa Hospital Association said, "Critical access has been a lifeline for small rural hospitals," noting that about 20 of the state's smallest facilities have already qualified for the classification. To be eligible, a hospital must operate a maximum of 25 beds, serve no more than 15 acute care patients and maintain an average length of stay less than 96 hours. Spies estimates that about 30 of the state's 116 hospitals are eligible for the critical access classification (Love, Cedar Rapids Gazette, 3/21).