Rapid Response: Elimination of Bad Debt Payments to Rural PPS Hospitals

Funder:	Office of Rural Health Policy (ORHP)
Research center:	Walsh Center for Rural Health Analysis Phone: 301.634.9300
Lead researcher:	Janet Sutton, PhD
Contact:	Michael Meit, MA, MPH, 301.634.9324, meit-michael@norc.org
Project funded:	October 2006
Project completed:	January 2007
Topics:	Health care financing Hospitals and clinics Medicare Prospective Payment System (PPS)

This study was conducted in two phases. During the first phase Walsh Center staff used data from the Medicare Cost Report to determine current Medicare bad debt payments and calculate the percent reduction for rural PPS hospitals. Estimates were made for PPS hospitals that varied by size, special payment status, location and financial status. Comparisons were also made to urban PPS hospitals with similar characteristics. During the second phase of this study, Walsh Center staff conducted a series of semi-structured interviews with rural hospital CFOs to obtain insight on how they would respond to these reductions in payment and, specifically, how the loss of these funds might affect operations, bad debt collections, and the provision of charity care.

Both quantitative analyses and semi-structured interviews have been completed. Staff are currently in the process of analyzing the results and preparing the final report to ORHP. The draft report will be submitted to ORHP by mid-January 2007.

Publications

• How Will Elimination of Hospital Bad Debt Reimbursement Affect Rural PPS Hospitals?
  Author(s): Janet P. Sutton, Alene Kennedy, Lucia Hammer, Grace Yang
  Report Number: Walsh W Series No. 11
  Date: 07 / 2007
  Policy brief examining the financial effect that changes in current Medicare bad debt payment policy, as proposed in the FY2007 budget, might have on rural hospitals.