As the calendar turns to February, Congress begins in earnest the fiscal year 2017 appropriations cycle.  President Obama’s final budget request should be delivered to Congress on February 9.  The budget request is expected to adhere to the discretionary spending levels established by the two-year budget deal Congress agreed to last fall.  While the non-binding budget request will be declared dead on-arrival by House and Senate Republicans, it does offer a glimpse of Democratic priorities for 2016.

Below is a look back at some of things Congress did in January related to rural health care and health care in general.

Senate Prepares to Re-Introduce Rural Hospital Reform Bill:  One of the primary goals of the Senate Rural Health Caucus is the re-introduction of the Craig Thomas Rural Hospital and Provider Equity (R-HoPE) Act.  In the last Congress, Sens. Al Franken (D-MN) and Pat Roberts (R-KA) introduced the measure, which is intended to help rural communities address the challenges they face when it comes to providing quality health care.  The bill recognizes that rural health providers have different needs than their urban counterparts and attempts to place rural providers on an equal playing field with doctors and hospitals throughout the nation.

In past years the R-HoPE bill has sought to reauthorize the State Office of Rural Health Program, which technically expired in 2002.  In the House of Representatives, similar legislation was introduced last July by Rep. Sam Graves (R-MO).  Among other provisions, the Senate legislation is expected to:

  • Equalize Medicare disproportionate share hospital (DSH) payments. Medicare’s DSH payments are currently capped at 12 percent for most rural hospitals.  In past years, this legislation would remove that limit to provide additional Medicare funding to rural hospitals serving large numbers of low income patients;
  • Eliminate Medicare sequestration for rural hospitals;
  • Eliminate the 35-mile “isolation test” requirement, ensuring that critical access hospitals are appropriately reimbursed for providing emergency medical services. Under current law, critical access hospitals only receive cost-based reimbursement for ambulance services if they are the only provider within a 35-mile drive;
  • Include a provision that would direct the Secretary of HHS to work with stakeholders to adopt regulations to facilitate telehealth services across state-lines;
  • Permanently extend the current low-volume and Medicare dependent hospital payment levels in addition to reinstate sole community hospital “hold harmless” payments.

Rural Hospital Demonstration Program Approved in the Senate:  On January 20, the full Senate approved a five-year extension of Medicare’s Rural Community Hospital Demonstration program, S. 607.  The bill, which was sponsored by Senator Charles Grassley (R-IA), requires HHS to allow rural community hospitals participating in the demonstration program as of December 30, 2014, to continue during the second half of the 10-year demonstration program.  In the House of Representatives, Rep. Don Young (R-AK) introduced companion legislation (H.R. 672) that is still pending at the committee level.

Initiated in 2004 as a five-year program, the Rural Community Hospital Demonstration Program was created to help rural hospitals in the country’s 10 most sparsely populated states.  The program was renewed for another five years in 2010 and expanded to include 20 of the most sparsely populated states.

The program, which currently has 23 participating hospitals, tests the feasibility and advisability of a cost-based payment model for acute-care inpatient services.  Eligible hospitals must be located in a rural area and within one of the 20 most sparsely populated states, must offer 24-hour emergency care services, and must not be eligible for designation as a Community Access Hospital.

Senate Holds Hearing on Mental Health Reform:  On January 20, the Senate HELP Committee held a hearing to discuss legislation to improve the country’s mental health system.  The primary legislation considered was the Mental Health Reform Act (S. 1945), introduced by Sens. Bill Cassidy (R-LA) and Chris Murphy (D-CT). The bill includes a provision that would create an exception to the Medicaid Institutions for Mental Diseases (IMD) exclusion for short-term psychiatric care and require Medicaid to pay for stays at residential mental health facilities that last less than 20 days. The legislation also requires HHS to award Innovation and Demonstration grants to states for the expansion of mental health programs that target early detection, intervention, and treatment with respect to mental illness.

The HELP committee is expected to markup S. 1945 in mid to late February.  The Senate is also expected to consider Sen. John Cornyn’s (R-TX) mental health bill, S. 2002, that Democrats have criticized for its gun control provisions.  At the hearing, Chairman Lamar Alexander (R-TN) said the committee will work to move comprehensive bills to the Senate floor this year.  Whether the Senate will be able to reconcile their differences with the major House mental health bill, H.R. 2646, this year is uncertain.

CMS Announces New Medicare ACO Participants:  On January 11, CMS announced 121 new Medicare Accountable Care Organization (ACO) participants. The agency’s ACO program, which now includes 477 organizations across five different models, is intended to lower healthcare costs and improve the quality of care that patients receive by holding providers accountable for certain quality and performance measures.

21 provider groups will participate in the Next Generation ACO model which introduces a prospectively-set benchmark and tests beneficiary incentives for seeking care from participating providers, including the increased availability of telehealth services. The Next Generation model allows providers to take on up to 100 percent of financial risk to share in more of the model’s savings through better care coordination and management.

CMS also announced 39 ACOs that will participate in the ACO Investment Model, which is expected to provide $83 million in investments to participants. The model builds on the Advance Payment and Shared Savings Program ACOs and encourages new ACOs to form in rural, underserved areas. The agency’s report shows that 64 of the 477 participating ACOs are accepting higher risks and penalties for the opportunity to gain bigger bonuses.

For more information on any policy issues, contact Andrew Coats and Hall Render.

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