Federal report recommends change to Critical Access Hospital designation requirements

As work begins on a new St. Charles hospital in Prineville, a recently-released federal report has raised concerns that its funding could face dramatic cuts.

The U.S. Department of Health and Human Services is recommending that Congress decertify all Critical Access Hospitals (CAH) that are less than 35 miles from another hospital.

Currently, Pioneer Memorial Hospital is designated as a CAH, even though they are 22 miles from the Redmond St. Charles Hospital and 27.5 miles from the St. Charles Hospital in Madras.

The study noted that “states could exempt CAHs from the distance requirement by designating them as “necessary provider” CAHs. However, Health and Human Services has concluded that if they had decertified such facilities, and adhered to the 35-mile distance requirement, they would have saved Medicare and its beneficiaries $449 million in 2011.

For Pioneer Memorial Hospital (PMH), and the upcoming St. Charles Prineville facility, the loss of CAH status could hurt because they rely heavily on the funding it provides.

“The problem is we are adding a lot of people onto the insured rolls with the Affordable Care Act, and we need to have access for those folks,” said Bob Gomes, CEO for St. Charles Redmond and Prineville. “I think in rural communities like Prineville, it is going to be tough for us to provide that access without some type of funding support.”

Consequently, after the study was released in August, St. Charles Health System (SCHS) personnel mounted a campaign on behalf of the Prineville facility as well as its fellow CAH in Madras.

In a letter addressed to U.S. Representative Greg Walden (R-Ore.), St. Charles CEO and President James A. Diegel said, “Targeting rural health care as a solution to the nation’s health care crisis isn’t the answer. Medicare expenditures to CAHs are less than 5 percent of the Medicare hospital budget. The big savings are in urban markets with competing hospitals fighting each other for market share . . .”

Robin Henderson, the director of government strategies for St. Charles, has since spoken with a member of Walden’s staff and believes he supports their position. She noted that since the study surfaced, Representatives David McKinley (R-W.Va.) and Ron Kind (D-Wisc.) penned a letter of concern, and she expects Walden to sign it.

“They are very concerned with this issue,” she said.

St. Charles has also sent letters to Senators Jeff Merkley (D-Ore.) and Ron Wyden (D-Ore.), and Henderson spoke with a member of Merkley’s staff.

“He is very supportive of our position on this issue,” she said.

Henderson spoke briefly with Wyden’s office, but has not yet heard what action they might take.

Despite the threat the Health and Human Services recommendation presents, Gomes is not overly concerned at this point. He explained that the report carries no authority and Congress has to pass legislation that changes CAH designation requirements before PMH would lose funding.

“Personally, I don’t see anything happening in the near future.”

Henderson agrees, but nevertheless feels that St. Charles needed to act on the recommendation sooner than later.

“What comes out in a report, it gets put on a shelf, may sit there for a while, and if nobody reacts to it, then it might start to get a little bit of traction (in Congress),” she said.

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