Outpatient Payment Policy Under Medicare: Recent Policy Developments from the Rural Perspective

Research center:
Lead researcher:
Project funded:
September 2006
Project completed:
June 2010
This study was designed to examine outpatient payment options for rural hospitals, the advantages and disadvantages of each, and their potential impact on hospital revenue and rural access to health services. Previous reports and studies conducted by staff at CMS and MedPAC will be reviewed and evaluated. Key informant interviews will be conducted with staff at CMS, MedPAC, and representatives of other organizations knowledgeable about the ramifications of changes to the outpatient payment system for rural hospitals. As part of the review and interviews we will discuss and assess how financial performance measures, such as - margins, cash flow, ratio of inpatient to outpatient revenue - may be influenced by alternative outpatient payment strategies. Of primary significance is examining structures of hold harmless and low-volume adjustments, their relationship to financial performance, and the incentives induced by each of these strategies. Consideration of coding changes and how these may affect rural facilities (who are more financially dependent on outpatient revenue than urban facilities) will be discussed. Options for ensuring the financial viability of rural hospitals will be presented. A Working Paper and Policy Brief will summarize findings.