(Jan. 10, 2025) – In December 2024, the Office of Inspector General released a report recommending Medicare could save billions with comparable access for beneficiaries if Critical Access Hospital payments for swing-bed services were similar to those of the fee-for-service prospective payment system hospitals.
In the report, the OIG contended that swing-bed utilization for skilled nursing services at CAHs increased by 2.8 percent from calendar year 2015 through CY 2020. Meanwhile, the average daily reimbursement amount increased by 16.6 percent over the same period. Based on the OIG sample, they concluded that 87 of 100 sampled CAHs were within a 35-mile driving distance of an alternative facility that had skilled nursing care available and estimated that 1,128 of the 1,297 CAHs had an alternative facility within 35 miles that could have provided care during CY 2020.
However, in the study, the OIG missed a great deal of vital context that paints a much different picture of the essential role swing-beds have in CAHs. The Kansas Hospital Association will reach out to policymakers and the OIG to highlight the five key issues below that need to be addressed.
- CAH closures – The report did not assess how reduced reimbursements would further destabilize CAHs and lead to hospital closures. CAHs provide emergency and other essential health care services to communities that may not have access to different facilities within a reasonable distance. Swing-bed services are a crucial component of a CAH because they allow patients to transition from acute care to skilled nursing facility-level care within the same hospital, minimizing disruptions and allowing easier access to their medical team.
Closing a hospital in a rural community is detrimental because it reduces access to immediate health care, often leaving residents with longer travel distances to reach emergency care, impacting health outcomes and causing a significant economic blow to the community because of job losses and decreased local spending power. Rural communities often have a higher proportion of elderly, low-income and uninsured individuals who may face even more significant barriers to accessing health care when a local hospital closes. The OIG must redefine its study to include the economic impact analysis.
- Cost of total Medicare program – According to recent Medicare Payment Advisory Commission data, only six percent of total Medicare inpatient and outpatient hospital payments go to the 1,396 CAHs, representing around $12 billion in 2022. This includes payments for inpatient, outpatient, laboratory, therapy services and post-acute swing bed services. While it is laudable to make health care affordable, risking the closure of a significant economic component in a rural community and risking worse health outcomes does not provide enough savings to make this a reasonable option. The OIG must redefine its study to quantify the financial and operational consequences of swing-bed savings with the overall loss of spending power in a community and the loss of jobs.
- Proximity of alternative facilities – The OIG failed to prove that alternative facilities had comparable care and the capacity to absorb swing-bed patients. Skilled nursing facilities have been significantly hit with staffing challenges in recent years. This has limited access to SNFs and their ability to find qualified staff to care for swing-bed-level patients. The OIG must redefine its study to include qualified staffing, transportation, capacity, and operational readiness barriers.
- Patient-centered care and quality impact – The OIG failed to understand the health outcomes of patients in a swing-bed CAH with access to continuity of care, higher clinical capabilities and familiar medical staff. KHA has tested quality measures in the Kansas CAH swing-bed programs through the Medicare Rural Hospital Flexibility program. The results show good outcomes and patient satisfaction is high. The OIG must redefine its study to include patient outcomes and mental health stability when service is provided close to home.
- Overlooking the foundational purpose of the Critical Access Hospital program – The OIG failed to understand why the CAH program was created in the first place. The CAH program was created to:
- Improve access to health care: Ensure rural residents have access to basic inpatient (including swing-bed), outpatient and emergency care services;
- Reduce financial vulnerability: Provide financial benefits to rural hospitals to help them stay open; and
- Promote rural health planning: Support network development in rural areas.
Cost-based reimbursement stabilizes rural hospitals while ensuring access. The OIG must look at the complete picture and visit CAHs to understand swing-bed services' vital role in these hospitals.
KHA plans to contact our federal congressional delegation to express our thoughts and concerns with the OIG report. We will be sharing our perspective with the OIG. If you have any further comments or suggestions related to this study, please pass them along to our team at KHA. Thank you!
--Chad Austin