Today, standing at the Orleans Community Health Center, U.S. Senator Charles E. Schumer joined hospital officials and employees to announce a major victory through his legislation to extend two Medicare payment programs that are critical to rural hospitals in the GLOW region, which has passed as part of the year-end fiscal cliff deal. These programs, which are crucial to the hospitals, their employees and the rural communities that they serve, expired on September 30th. During a trip to Orleans County three months ago, Schumer vowed to hospital and public officials who depend on this vital funding that he would restore and extend this funding as one of his top end-of-year priorities.
The Low Volume Hospital Program impacts 18 New York hospitals, providing Medicare support to hospitals that are very important to rural communities, but do not necessarily serve a high volume of patients. The Medicare-Dependent Hospital Program provides support to nine hospitals in New York that treat a high number of Medicare patients. If not for Schumer's efforts, specifically related to the Low-Volume program, Orleans Community Health would have lost an estimated $560,000, Nicholas H. Noyes Memorial Hospital in Dansville would have lost an estimated $233,000, and Wyoming County Community Hospital would have lost an estimated $817,000 in 2013. Schumer's legislation, which he introduced with Senator Chuck Grassley (R-IA), extended these programs for one additional year, and made payments retroactive to September 30th when the programs expired.
"Three rural hospitals in the "GLOW' region have something to celebrate in 2013, with the extension of two critical Medicare programs that help make high-quality health care a continued reality in our local communities," said Schumer. "Orleans Community Health, Nicholas H. Noyes Memorial and Wyoming County Community Hospital are doing top rate work to serve local residents of all ages, and finally this network of rural hospitals again has the critical support from the federal government that it deserves.
"The extension of the Low-Volume and Medicare-Dependent hospital programs will help ensure that the doctor is in for Genesee, Livingston and Orleans county residents, and I'm thrilled to have helped preserve these resources that are pivotal to our community and local economy."
Schumer was joined by Jim Sinner, President and CEO of Orleans Community Health; Amy Pollard, President and CEO of Nicholas H. Noyes Memorial Hospital; and Don Eichenauer, CEO of Wyoming County Community Hospital. This cut would have particularly affected residents and patients across the GLOW region as three hospitals in Orleans, Wyoming, and Livingston counties would have lost an estimated combined $1.6 million annually. These hospitals rely on the Low Volume Hospital Program for their stability and ability to provide high quality healthcare and maintain employment.
"We greatly appreciate the support that Senator Schumer has shown for the people of our region and, in particular, Orleans Community Health," said James Sinner, FACHE, President and CEO of Orleans Community Health. "Last October, he personally stood alongside us and vowed to make this funding a priority. Today, he delivered on that promise. The $560,000 that he preserved will help provide critical funding for the quality of health care our community deserves, while helping ensure that we can retain important jobs within our health system to deliver that care. And the timing of this couldn't be better as we begin a new fiscal year. We can count on this funding for the coming year."
Low Volume Hospital Program:
Low volume hospitals are those that are critical to the community but may not serve a high volume of patients, including Orleans Community Health Center, Nicholas H. Noyes Memorial Hospital, and Wyoming County Community Hospital. Since 1988, the Medicare program has recognized that these hospitals need additional support so that they can continue to provide high quality care to rural communities. A low-volume hospital is defined as one that is more than 15 road miles from another comparable hospital and has fewer than 1,600 Medicare discharges a year.
Medicare seeks to pay efficient providers their costs of furnishing services. However, certain factors beyond providers' control can affect the costs of furnishing services. Patient volume is one such factor and is particularly relevant in small and isolated communities where providers frequently cannot achieve the economies of scale possible for their larger counterparts.
There are approximately 18 hospitals in New York that qualify for the low-volume hospital program.
Schumer's bill extends the additional payments for low volume hospitals for one year.
There are many economic benefits of rural hospitals, as they are often some of the largest employers in rural areas. According to the National Rural Health Association, a closed hospital can mean as much as a 20% loss of revenue for its local economy, a drop in the per capita income and an increase in local unemployment.
Medicare-Dependent Hospital Program:
Congress established the Medicare-dependent hospital (MDH) program in 1987. There are approximately 200 MDHs in the United States and 7 in New York State. These NY hospitals receive $6.9 million annually from this program. These hospitals are paid by Medicare with a special rate to address the fact that most of their patients are Medicare patients. These payments allow MDHs greater financial stability and leave them better able to serve their communities. A hospital qualifies for the MDH program if it is located in a rural area, has no more than 100 beds, is not classified as a Sole Community Hospital, and has at least 60 percent of inpatient days or discharges covered by Medicare.
This program expired September 30 2012. Schumer's bill extends the program for one year.
The network of providers that serves rural Americans is fragile and more dependent on Medicare revenue because of the high percentage of Medicare beneficiaries who live in rural areas. Additionally, rural residents on average tend to be older, have lower incomes and suffer from higher rates of chronic illness than their urban counterparts. This greater dependence on Medicare may make certain rural hospitals more financially vulnerable to prospective payment.