Press Releases

SECRETARY SEBELIUS ANNOUNCES AN EXPANSION OF THE RURAL COMMUNITY HOSPITAL DEMONSTRATION UNDER THE AFFORDABLE CARE ACT

HHS Secretary Kathleen Sebelius today announced the expansion of the Centers for Medicare & Medicaid Services’ (CMS) Rural Community Hospital demonstration program, through the Affordable Care Act.  Up to 20 small rural hospitals in selected states will be eligible for enhanced reimbursement for inpatient services, in addition to the 10 hospitals already participating in the program.

            “Improving health care for rural Americans is a top priority in the Affordable Care Act,” said Secretary Sebelius.  “One in five Americans lives in a rural area and small community hospitals are often their only source of care.  This demonstration project and other important investments in hospitals, infrastructure, and the health care workforce, will help ensure that Americans living in rural communities can get the quality health ser vices they need.”

The expansion of the Rural Community Hospital demonstration program comes on the heels of HHS’ Health Resources and Services Administration (HRSA) announcement earlier this week that more than $32 million in FY 2010 funds to increase access to health care for Americans living in rural areas.

In accordance with section 10313 of the Affordable Care Act, CMS is extending the demonstration and expanding the list of eligible States.  The demonstration will now pay participating hospitals under a cost based methodology for inpatient hospital services furnished to Medicare beneficiaries for an additional five years.

 Participating rural community hospitals must be located in one of the 20 states with the lowest population density.    These States are: Alaska, Arizona, Arkansas, Colorado, Idaho, Iowa, Kansas, Maine, Minnesota, Mississippi, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oklahoma, Oregon, South Dakota, Utah, and Wyoming. 

              There are also several other criteria that a hospital must meet in order be classified as a rural community hospital and qualify for participating in this demonstration.  Specifically, a participant must be a hospital that:

          ●  Is located in a rural area;

          ●  Has fewer than 51 beds;

          ●  Provides 24-hour emergency care services; and

          ●  Is not designated or eligible for designation as a Critical Access Hospital under section 1820 of the Act.

The goal of the program is to test the feasibility and advisability of cost based reimbursement for small rural hospitals that are too large to be Critical Access Hospitals.  In recent years, hospitals in this category have experienced negative Medicare margins on inpatient services.  CMS is conducting an extensive evaluation of the demonstration, testing the benefits to the community and financial impact on participating hospitals

             Eligible hospitals that desire to participate in the demonstration must submit an application to CMS. Information about the demonstration and details on how to apply can be found on the CMS web site at: http://www.cms.gov/DemoProjectsEvalRpts/downloads/2004_Rural_Community_Hospital_Demonstration_Program.pdf