Trends in Special Medicare Payments and Service Utilization for Rural Areas in the 1990s

By Donna O. Farley; Lisa R. Shugarman et al. | Go to book overview

1.
INTRODUCTION
The Centers for Medicare and Medicaid Services (CMS, formerly the Health Care Financing Administration) contracted with RAND to analyze special payments that Medicare has been making to rural providers and the implications for access and costs of care for rural Medicare beneficiaries. Although the special payment provisions are diverse, they all are intended to support the rural health care infrastructure to help ensure access to care for Medicare beneficiaries residing in rural areas. These provisions were introduced at various times during the past decade or earlier. CMS is interested in developing information for use in formulating future Medicare policy for rural health care services and payments.The purpose of this research was to provide a comprehensive overview of Medicare special payments to rural providers over the last decade, including documentation of the supply of providers, trends in payments made by Medicare, and resulting Medicare costs per beneficiary. One focus of the study was on services in geographic areas designated by the Health Resources and Services Administration (HRSA) as either Health Professional Shortage Areas (HPSAs) or Medically Underserved Areas/Populations (MUA/Ps). The special payment provisions examined were:
Special payments for Sole Community Hospitals (SCHs), Medicare-dependent hospitals (MDHs), and Rural Referral Centers (RRCs);
Reimbursements to Rural Health Clinics (RHCs) and Federally Qualified Health Centers (FQHCs);
Bonus payments to physicians in rural HPSAs; and
Capitation payments in rural counties, especially in underserved areas.

In addition to the trend analyses, we estimated the relative contribution of special payments for rural hospitals to the Medicare per capita costs in rural counties, which are the basis for capitation rates. Similar analyses were not performed for RHC/FQHC services or for physician bonus payments because the trend analyses showed that both of these payment provisions had quite small effects on Medicare costs per beneficiary.


BACKGROUND

The ability of the rural elderly to access health care services has been a continuing source of concern for policymakers. This concern is driven by a number of factors that combine to make the rural elderly population more vulnerable and service delivery organizations less stable compared to their non-rural counterparts. (Many of these issues also affect the Medicare disabled population.) Elderly people live in rural areas in disproportionate numbers (Rogers et al., 1993). Second, although the incidence of acute conditions among the elderly does not appear to be any greater, a larger proportion of them (41 percent versus 36 percent) suffer from activitylimiting chronic diseases, such as diabetes and arthritis (Schlenker and Shaughnessy, 1996). Third, rural elderly people travel farther and wait longer for outpatient care and use fewer preventive services than their non-rural counterparts (Taylor et al., 1993; Van Nostrand et al., 1993).

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