The financial performance of small, rural hospitals has
long been a concern to federal and state agencies.
Federal law makers have enacted legislation authorizing
the Medicare program to develop reimbursement methods
that provide higher payments to hospitals that serve
rural communities (Critical Access Hospitals, Sole
Community Hospitals, Medicare-Dependent Hospitals, and
Standard Prospective Payment Systems hospitals). Current
payment methods reflect legislative changes that have
occurred since the rural hospital Medicare payment
classifications were created more than 15-20 years ago.
As a result, current rural hospital payment methods
differ in eligibility criteria, adjustment factors,
formulae, and timeliness of data. These differences may
contribute to the variation in financial condition that
has been found across the four types of rural hospitals.
To inform policy discussions on how complex current
payment models may affect rural hospitals, the North
Carolina Rural Health Research Program studied
differences in financial condition among rural hospitals,
and important determinants of differences in rural
hospital costs. Results are reported in the Findings
Brief: Do Current Medicare Rural Hospital Payment Systems
Align with Cost Determinants?