Healthcare Policy

We often hear in our travels the opinion that CMS wants to close rural hospitals and have everyone use urban hospitals instead. Many think that CMS believes rural hospitals are too expensive and provide low quality care. They point to the plethora of innovation models focused on urban areas, with almost no rural health system participation, unless the rural member joins as part of an urban system. Sixty percent of rural health systems are supported by local tax dollars and would rather “live free or die.”

Is it that CMS doesn’t care, or is it that they don’t know? Historically, health insurance payment innovation has always come from the private sector first. Commercial insurers created ACOs long before Medicare did. Diagnosis Related Groups (DRGs) were a commercial insurance innovation. Capitation and HMOs were tested in the private sector first. The government needs data and experience before it can implement new payment models, and the private sector is not testing new models in rural America. Furthermore, urban payment models cannot scale down to rural health systems. Everyone remembers when DRGs were implemented in rural hospitals. Hundreds of rural hospitals closed as a result. CMS is wise to be cautious.

As rural healthcare providers, we are going to have to lead innovation if we want to survive. No one else can or will do it for us. We have formed the National Rural Accountable Care Organization so that we can pool our resources, our knowledge, our lives and our ideas to create and test new payment models. The future of our communities depends on us working together. Join us.