Site-neutral payment: Potential for rural health transformation

How will the Rural Health Transformation Program affect hospitals, health systems and physicians around the country? Christopher M. Whaley, Ph.D., offers one suggestion — and suggests not every rural hospital may be in a rural area. Whaley is associate professor, health services, policy and practice, and associate director of the Center for Advancing Health Policy through Research at Brown University. He’s the co-author of a Health Affairs analysis of 2026 Medicare physician payment.

Medical Economics: CMS in the last year has come out with some announcements regarding the Rural Health Transformation Program. Have you had a chance to review that program? And if so, what might stand out to you as potentially promising or challenging?

Christopher M. Whaley, Ph.D.: I have. I do think that this is a, important funding mechanism for rural and critical access hospitals. I would be concerned that much, at least some portion of this money may be captured, if you will, and whether that's, say, by private equity companies that have acquired stakes in rural hospitals, or even what we've seen in some of my own work is that many large, what I would refer to as nonrural hospitals can dually classify and for at least some portions of Medicare payment designate themselves as rural hospitals. So for example, we see under formal Medicare payment models there are hospitals in Manhattan, obviously, not a rural area, that have duly classified as rural. And so I think when we're allocating money to rural hospitals and to support rural health care, it's important that it actually ends up in those providers and ends up in those communities.

Medical Economics: Can you elaborate a little bit more on that example? I'm curious about how a hospital in Manhattan lands on a list of rural hospitals.

Christopher M. Whaley, PhD: In I believe 2016 hospitals were given discretion, and how they self-classify, and many hospitals have chosen to, at least, I would, for refer to as take advantage of that, that classification system. And I think it's quite surprising just the number of hospitals that have duly classified, and are not in rural areas, but at least for payment purposes classify themselves as rural. And the financial advantage that is that you receive both higher payments for Medicare, but then also, if you have a teaching hospital, you're allowed to get additional payment bumps for being a classified as a rural teaching hospital.