In August 2020, the CMS Center for Medicare and Medicaid Innovation (CMMI) announced plans to implement the “Community Health Access and Rural Transformation (CHART) Model” in 15 communities. The CHART Model is supposed to “increase financial stability for rural providers” and “enhance beneficiaries’ access to health care services by ensuring rural providers remain financially sustainable for years to come.” However, the analysis in Why the CMS CHART Model Will Hurt Rural Hospitals shows that rural hospitals and the communities they serve would be harmed, not helped, by participating in the CHART Model:
Rural hospitals would be paid less for services under the CHART Model than under current payment systems, and the payment reductions would increase over time.
Payments would be cut by higher amounts in smaller rural communities, and hospital payments would be reduced if the population of the community decreases.
Since Medicare, Medicaid, and private insurance plans currently pay most small rural hospitals less than it costs to deliver services to patients, the cuts in payments under the CHART Model would likely accelerate closures of rural hospitals.
Payments to rural hospitals under the CHART Model would still be primarily based on the volume of services delivered. In the CHART Model, rural hospitals would still lose money if they reduce avoidable services such as unplanned hospital readmissions or Emergency Department visits.
The CHART Model does nothing to sustain or strengthen primary care services in rural communities or improve rural communities’ access to other high-value services.
More than 800 rural hospitals - 40% of all rural hospitals in the country - are at risk of closing in the near future. Most of these are small rural hospitals that provide not only emergency care, inpatient care, and outpatient services, but also primary care, rehabilitation, and long-term care services for their communities. Moreover, most of the hospitals are located in isolated communities where loss of the hospital could severely limit access to health care services. More than 30 million people could be directly harmed if these hospitals close, and people in all parts of the country could be affected through the impacts on workers in agriculture and other industries.
Saving Rural Hospitals and Strengthening Rural Healthcare identifies the reasons why small rural hospitals face such severe financial problems. It shows that the largest causes of losses are low payments by private health insurance plans, and that many hospitals remain open only because they receive significant supplemental funding from local taxes or state grants.
The report examines the potential effectiveness of several commonly proposed policies for rural hospitals, including:
requiring rural hospitals to eliminate inpatient services in return for higher payments for outpatient services;
providing shared savings bonuses if the hospital can reduce total payer spending on its patients; and
global hospital budgets.
The report describes a Patient-Centered Payment System for rural hospitals that would sustain essential healthcare services in small rural communities. This innovative approach to payment would include:
Standby Capacity Payments to support the fixed cost of essential services;
Service-Based Fees that would be much lower than the high fees charged today;
Patient-Based Payments for primary care management through Rural Health Clinics;
Accountability for quality and spending; and
Value-based cost-sharing for patients.
An Executive Summary of the report is also available.