Georgia Legislative Wrap-Up: Rural Healthcare

The latest session of the Georgia General Assembly is in the books, and the healthcare industry has been impacted as usual. Below, we highlight just a few of the successful bills with particular relevance to rural healthcare.

Perhaps more consequential than any single bill passed this session, Georgia is reportedly reconsidering a Medicaid “expansion waiver” in the wake of the Affordable Care Act withstanding a recent Congressional challenge. The benefit of this waiver program could be huge for rural healthcare in Georgia, which suffers from low Medicaid reimbursement and limited Medicaid eligibility. 

SB 180 and SB 14 Tweak Existing Law to Aid Rural Hospitals

Senate Bill 180 passed both chambers of the Georgia legislature and is designed to encourage increased donations to rural hospitals in Georgia. SB 180  was amended to include provisions of unsuccessful House Bill 54. As previously discussed, House Bill 54 sought to raise the tax credit from 70 percent to 90 percent for individuals and corporations who donate money to rural hospitals. These provisions were added to Senate Bill 180.

If SB 180 is signed by the Governor, donors to rural hospitals will receive increased tax credits retroactive to January 1, 2017; eligibility for such tax credits will extend to hospitals in counties of up to 50,000 people (increased from 35,000); and hospital payments to third-parties soliciting, administering, or managing the tax credits will be capped at three percent (3%) of a hospital’s total donations.

Senate Bill 14 amends the Georgia’s Code to make ‘rural hospital organizations’ eligible for monetary grants from the state. Under the current Georgia Code, rural hospitals not operated by a hospital authority are only eligible for state grants in limited scenarios. The legislation defines a rural hospital organization as an acute care hospital, in a rural county that:

1.     Provides inpatient hospital services at a facility in a rural county;

2.     Participates in and accepts both Medicaid and Medicare patients;

3.     Provides services to indigent patients;

4.     At least 10% of their annual revenue is categorized as indigent care, charity care, or bad debt;

5.     Annually files an IRS Form 990;

6.     Maintains a 24-hour emergency room;

7.     Operated by a county or municipal authority, or is designated as a tax-exempt organization by the IRS.

The legislation allows qualifying rural hospital organization to apply for monetary grants for projects ranging from facility renovations, equipment purchases, personnel retention, or nontraditional healthcare delivery systems.

In addition, SB 14 expands the definition of what qualifies as a rural county for both hospital authorities and rural hospital organizations to any county having fewer than 50,000 residents (up from 35,000). Finally, SB 14 raises maximum grant allocations for eligible hospital authorities and rural hospital organizations from $200,000 to $500,000 for strategic planning grants, and from $1.5 million to $2.5 million for grants involving nontraditional healthcare delivery systems. Hospital authorities and rural hospital organizations are eligible for up to $4 million annually in grants from the state under the new statutory revisions.

House and Senate Pass Resolutions Focused on Rural Development

The Georgia House of Representatives adopted House Resolution 389. The resolution creates the House Rural Development Council, which will be composed of 15 House lawmakers appointed by the Speaker of the House, David Ralston. The Georgia Senate passed Senate Resolution 392, creating the Senate Rural Georgia Study Committee. The Senate committee will be composed of 7 Senators appointed by the President of the Senate, Lieutenant Governor Casey Cagle.

The appointed House and Senate members will be tasked with examining problems found in rural communities around Georgia, specifically population loss, lack of doctors or hospitals, poor infrastructure, educational achievement, job scarcity, and overall lack of economic growth. Beginning April 1, 2017, the appointed legislators will begin holding meetings throughout rural Georgia with local officials, educational and business leaders, healthcare providers, civic groups, and other interested individuals for input of how to address the identified issues.

Based upon these meetings and research, the appointed legislators will explore possible legislative solutions to the identified issues for rural Georgia and introduce corresponding legislation during the next session of the Georgia General Assembly in January 2018. In the context of healthcare, H.R. 389 and S.R. 392 represent an opportunity for lawmakers to better understand the healthcare needs of rural Georgians to ensure those needs are met in the coming years.

Multiple Successes in Fight Against Opioids

House Bill 249 is set to become the latest sweeping law aimed at combatting the opioid epidemic. The bill contains various efforts to reduce opioid overdoes, including codifying Governor Nathan Deal’s executive order allowing the sale of overdose antidote naloxone without a prescription, and strengthening the state’s Prescription Drug Monitoring Program, which requires physicians to report opioid prescriptions.

Another successful bill, Senate Bill 88, entrusts the Department of Community Health with substantial licensure and oversight controls over “narcotic treatment programs.” Lawmakers have expressed concern over clinics offering narcotic addiction treatment, which often involves opioid prescriptions to fight the patient’s addiction to other opioids, and placed a one-year freeze on such clinics last summer.

Cancelable Loan Program for Rural Practitioners Expanded

House Bill 427, the ‘Physicians, Dentists, Physician Assistants, and Advanced Practice Registered Nurses for Rural Areas Assistance Act,’ expands the types of healthcare providers eligible for cancelable loans if they agree to practice medicine in qualifying rural areas of Georgia. The legislation now makes dentists, physician assistants, and advanced practice registered nurses eligible for cancelable loans. Cancelable loans for healthcare providers in rural Georgia were previously limited to physicians. The goal of the new legislation is to address the shortage of physicians and other healthcare practitioners in rural Georgia.

Rural Health Under Republicans' Post-Obamacare American Health Care Act

Last month, we posted a blog highlighting the special implications of Obamacare replacement or reform on rural healthcare. With Republicans in the U.S. House of Representatives revealing their first concrete proposal for overhauling the landmark Affordable Care Act last night, how have these possibilities evolved? 

The American Health Care Act, comprised so far of a pair of bills, advances a wide range of post-Obamacare policies, but does not repeal the entire law. Some components that are already receiving ample attention are the shift from income-based tax credits to age-based tax credits, repeal of the individual mandate, penalties for lapses in coverage, defunding of reproductive health services, and the realities confronting President Donald Trump’s statement that the new plan will mean insurance for everybody. 

Here, we focus on a select few provisions of the AHCA keenly impacting rural health providers and their patients:

- Medicaid Reform. Perhaps most important for rural health providers, the AHCA significantly reshapes the Medicaid landscape, albeit more gradually than some had anticipated. The bill calls for substantial reductions in federal matching funds to state Medicaid programs beginning on January 1, 2020, with the caveat that states would continue to receive enhanced Medicaid payments for people enrolled in Medicaid before that date. 

For new enrollees in 2020 and beyond, the federal government would only pay its pre-Obamacare share of Medicaid costs — a move that is sure to lead to cuts in expansion states’ Medicaid programs. States would have until Dec. 31, 2019, to decide whether to expand Medicaid (or implement a waiver program) and get their members enrolled. 

Studies have shown rural hospitals are more impacted by the Medicaid expansion or lack thereof than are city-based hospitals. 

Another major change to Medicaid proposed by the AHCA is a shift to per capita aggregate spending limits beginning in 2020. Notably, the initial per capita lump sum to states would be based on their respective Medicaid spending in FY 2016. Therefore, states that were to expand Medicaid or implement a waiver program between 2017 and 2019 would not receive a corresponding benefit in their per capita allotments.

- Safety Net Funding to Non-Expansion States. In states to have not and will not expand Medicaid, the AHCA would extend $10 billion in safety net funding for Medicaid providers over five years ($2 billion/year). As a rough comparison of budgetary scope, the Congressional Budget Office estimated that the next 10 years of Obamacare’s Medicaid expansion nationwide would have involved $993 billion in federal funding.

- DSH Cuts. Medicaid Disproportionate Share Hospital payments, protecting safety net hospitals that treat a high number of indigent patients, were scheduled to be cut beginning in FY 2018 under Obamacare. The AHCA would repeal Medicaid DSH cuts for non-expansion states in 2018 before they even take effect, and would repeal such cuts in expansion states beginning in 2020. 

- Community Health Center Funding. In recent years the federal government has increasingly supported Community Health Centers, also known as Federally Qualified Health Centers, which are not exclusive to rural areas but do exclusively serve medically underserved areas. The AHCA would offer a one-time increase in funding to Community Health Centers of $422 million. 

- 340b Program. One of the effects of a less-than-wholesale repeal of Obamacare is that some provisions may be simply left alone without much public attention. At least in the first iteration of the AHCA, this appears to be the case for the 340b Drug Pricing Program, which was expanded to include 1,100 rural hospitals under Obamacare. The rural hospital community would surely welcome a continuation of this change. 

- Individual Marketplace. As mentioned above, the AHCA proposes substantial changes to the individual insurance marketplace, including the shift from income-based tax credits to age-based tax credits with older consumers receiving more assistance. These changes would have many direct and indirect impacts on rural healthcare, largely by increasing patient co-insurance and reducing the number of privately insured patients. For example, because the AHCA premium tax credits are not tied to local premiums as under Obamacare, people in areas where premiums are higher (often rural areas) would receive a flat tax credit based on age but would be stuck with the remainder of the higher local premium.

Generally, rural areas have lower-income populations than do urban areas, so premium tax credits that are not adjusted for income level may lead to more uninsured patients in rural areas. This handy interactive map from the Kaiser Family Foundation (adjustable by age and income!) shows that 40-year-olds with an income of $30,000 will often face reduced tax credits under the AHCA in rural America, but will not be as affected in urban pockets. 

The AHCA aims to address some of these private marketplace deficits through lower premiums via health plan competition and increased use of health savings accounts. 

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Overall, the AHCA proposes a handful of measures acknowledging the difficulties of rural health providers, offering safety net funding to non-expansion states, halting impending DSH cuts, increasing funding to FQHCs and leaving the 340b program untouched.

However, the likely reduction in insured patients -- whether by decreased Medicaid funding or changes to the individual marketplace -- threatens to outweigh these potential benefits. The National Rural Health Association has already released a statement expressing concern about the bill. 

Disclaimer: The foregoing materials are provided for informational purposes only, and are not to be construed as legal advice. Please consult an attorney before applying this guidance to any particular facts or circumstances. 

Obamacare Update – Repeal, Repair, Is There a Difference?; Special Implications for Rural Health

Several key Republican lawmakers have reportedly shifted their rhetoric in recent weeks from repealing and replacing the Patient Protection and Affordable Care Act (“ACA”) to repairing it. But with many of the leading ‘repeal’ plans promising to reinstate certain elements of ACA immediately, the differences between these two paths may be academic. 

Throughout the last election cycle, Republicans promised newly insured individuals they would not lose insurance coverage if the ACA were repealed. Facing pushback from the public on certain popular provisions of the law, Senator Lamar Alexander (R – TN), chairman of the Senate health committee, announced the alternative plan could be more accurately described as a “repair” than a replacement. Adding to the mixed message, Speaker of the House, Rep. Paul Ryan, (R – WI) said ‘repairing’ the ACA actually meant repealing and replacing it. 

Semantics aside, it is becoming increasingly clear that the GOP replacement plan will share some characteristics with the ACA. Fundamentally, most prominent GOP alternatives mirror the ACA’s multi-payer system in which consumers are offered tax credits for purchasing private insurance on an individual marketplace, while public programs like Medicaid are bolstered through federal funds. Within this context, differences exist as to how the tax credits will be distributed, how the Medicaid funds will be applied, and how insurers will be restricted in shaping their plans. Also like the ACA, Speaker Ryan’s “Better Way” plan seeks to prohibit insurers from excluding members based on preexisting conditions, and to allow adults up to age 26 to remain on their parents’ plans.  Health and Human Services Secretary nominee Tom Price, who has proposed his own replacement plan, supports a limited form of preexisting condition exclusions and stated in his confirmation hearing that he would considering preserving the CMS Innovation Center that has housed many of the ACA’s value-based payment reforms. 

Possible Implications of a Complete Repeal for Rural Hospitals

An overhaul of the ACA comes at a critical time for healthcare in rural America. A December 2016 report from the CDC found a decline in life expectancy for Americans—particularly among Americans living in rural areas—for the first time in 20 years. The CDC attributed this finding to rural Americans having higher rates of chronic illness, obesity, alcoholism, mental illness, and suicide relative to their urban counterparts. The financial health of hospitals serving rural populations remains dire; an estimated 700 rural hospitals across the country are vulnerable to closure. 

Here are some elements of the ACA that have especially affected rural healthcare and whose repeal would have significant impacts on rural providers. 

Medicaid Expansion

Repealing the ACA’s Medicaid expansion would be a massive blow to rural health providers, but its impact would be greater, naturally, in states that opted to expand Medicaid in the first place. After the U.S. Supreme Court made expansion optional in 2012, thirty-two states including the District of Columbia expanded Medicaid coverage under the ACA. For providers in states that declined to expand Medicaid, a repeal of the expansion will be business as usual. 

In so-called “expansion states,” many hospitals will see an increase in uncompensated care if the ACA’s replacement withdraws federal support for expanded Medicaid programs. The American Hospital Association has estimated repealing the expansion of Medicaid would cost hospitals across the United States more than $160 billion due to reductions in Medicaid revenue received and an increase in unpaid medical bills. These financial losses would impact all hospitals, especially rural hospitals due to a greater percentage of their patient populations gaining coverage under the Medicaid expansion relative to urban and suburban hospitals. 

Medicare and Other Reimbursement Cuts

The ACA contained a variety of Medicare payment cuts that have adversely affected health providers. Repealing some of these cuts, such as the reduction in reimbursement from Medicare Advantage plans, would benefit health providers including those in rural areas. The same goes for repeals of payments that compensate hospitals treating a disproportionate share of uninsured patients (“DSH” payments); however, while cuts to Medicare DSH payments have hurt some rural hospitals, such hospitals would be much more heavily impacted by the ACA’s planned reductions in Medicaid DSH payments, which have been delayed and therefore not yet felt by rural hospitals. 

Of note, the across-the-board 2-percent sequestration cut to Medicare payments, first passed into law in 2011, was not a part of the ACA and would not be undone merely by way of an ACA repeal. 

Value-Based Care

The ACA contained several initiatives aimed at tying providers’ payments to the quality of their care (Accountable Care Organizations; Hospital Value-Based Purchasing Program; Hospital-Acquired Condition Reduction Program, and more) and further directed CMS to test and implement new approaches to compensating providers in hopes of containing costs. Currently, the CMS Innovation Center administers dozens of programs in this “value-based” mold, and private payers have followed suit.

Repealing the ACA without immediately reinstating the statutory basis for these value-based programs would cause significant confusion and disarray in the provider community. While many providers would likely breathe a sigh of relief without the threat of penalties for readmissions and other quality measures, these programs have been widely adopted and their repeal would disrupt delivery and workflow changes and technological investments that providers have made since the ACA’s passage. 

340b Program

The 340b Drug-Pricing Program was enacted by Congress in 1992 to provide low-cost drugs to designated “social safety net” medical facilities in economically distressed areas of the country. A provision of the ACA expanded the 340b Program, causing 1,100 rural hospitals to become eligible to purchase low-cost drugs from drug companies. The expanded 340b Program was a windfall for many rural hospitals, especially when the typical rural hospital operates on small margins. An outright ACA repeal would eliminate these valuable cost-savings.  

Individual Mandate

An increase in insured patients is a benefit to all providers, including rural hospitals. Therefore, the repeal of the ACA’s “individual mandate,” requiring all taxpayers to purchase health insurance or else pay a penalty, will not help rural healthcare to the extent that it raises the uninsured rate. 

However, as discussed above, rural hospitals treat a higher percentage of Medicaid patients relative to urban hospitals, and a lower relative percentage of commercial-pay patients. This will limit the impact of changes to the individual marketplace on rural providers. 

The frustratingly limited benefit of the individual mandate on rural health is especially pronounced in states that have declined to expand Medicaid.  That is because the ACA was never redesigned to account for the optional Medicaid expansion; therefore subsidies for buying private insurance were never extended to patients who would otherwise have been covered under expanded Medicaid programs (a problem known as the “coverage gap”). 

Individuals falling in this coverage gap have incomes that exceed eligibility for Medicaid, but fall below the lowest income eligible for premium tax credits under the ACA. An estimated 2.5 million adults fall into this category. If the coverage gap had been closed through amendments to the ACA, rural providers in non-expansion states would be more affected by possible changes to the private insurance marketplace.  

Listen to the 2016 Georgia Law Rural Healthcare Symposium

In March, Boling & Company co-hosted with the University of Georgia School of Law an academic symposium calling attention to the national rural health crisis. The event was a terrific gathering of rural health advocates and interested students aimed at identifying solutions for rural providers and patient populations. 

The event was also sponsored by the Georgia Partnership for Telehealth and Healthcare Georgia Foundation. 

Listen to and/or download the various panel discussions featuring healthcare policymakers, executives, and entrepreneurs, (full list below) along with a keynote presentation from CEO of the National Rural Health Association Alan Morgan, here. 

Full list of panelists:

• Alan Morgan (keynote speaker), CEO, National Rural Health Association
• State. Rep. Sharon Cooper, Chair of Health and Human Services Committee
• Carol Alexander, Consultant, Stroudwater Associates
• HD Cannington, CEO, Cannington Healthcare Consulting, LLC
• Lisa Carhuff, MSN, RN, Director of Hospital Services, Georgia State Office of Rural Health
• Jim Coleman, SVP of Southeast Hospital Operations, Community Hospital Corporation
• Kay Floyd, CEO, Monroe County Hospital (GA)
• Troy Heidesch, DNP, CEO of Smart House Calls, LLC
• William Kanto, MD, Augusta University 
• Gary Nelson, PhD, President, Healthcare Georgia Foundation
• Robin Rau, CEO, Miller County Hospital (GA)
• Jeff Robbins, Director of Telemedicine, Tift Regional Medical Center (GA)
• Ben Robinson, Executive Director for the Center for Health Planning and Workforce Analysis, University System of Georgia
• Sherrie Williams, Executive Director, Georgia Partnership for Telehealth
• Baha Zeidan, CEO, Azalea Health  

OIG Pushes for Swing Bed Reform

In an increasingly difficult regulatory environment for rural health providers, the U.S. Office of Inspector General has recommended a cut to one of rural health’s few remaining lifelines. The OIG's recent recommendation takes aim at “swing bed” services offered by Critical Access Hospitals, proposing that reimbursements for such services be significantly reduced. 

Swing bed services allow certified Critical Access Hospitals to use their beds to furnish either acute or post-acute Skilled Nursing Facility-level care. Critical Access Hospitals are reimbursed for these services at 101 percent of the reasonable cost of the services — a common adjustment afforded to such hospitals. 

The report recommends that Critical Access Hospitals be reimbursed for swing bed services under the regular payment system for SNF-level services, both as a cost-saving measure for Medicare and because many such services are being offered within 35 miles of adequate, alternative SNF care (effectively defeating the purpose of the special CAH reimbursement). 

The OIG’s report does not address the possible ramifications of the proposed cut on the viability of Critical Access Hospitals. The recommendation still must be implemented by CMS before it becomes law. 

Gov. Deal’s Rural Health Committee Proposes Telemedicine Endeavor, Backs CON Program

Governor Nathan Deal’s new rural health committee has revealed an ambitious program aimed at saving rural healthcare in Georgia. The Rural Health Stabilization Committee, created in March 2014, released a report Monday introducing a pilot program centered on hard-hit rural emergency departments. 

The program would use “hubs and spokes” — i.e. hospital hubs and off-site monitoring/diagnostics — in an effort to “ensure that each patient is being transported to the appropriate setting,” and “monitor chronically ill patients to help them avoid repeat trips to the hospital.” 

According to the report, the “spokes” would include telemedicine-equipped ambulances, school clinics (also relying heavily on telemedicine), smaller hospitals, and local physicians. The Committee’s stated goal in employing these off-site resources is “to prevent the over-utilization of the ED as a primary care access point.”

The Committee requested $3 million for implementation of the program, which would be piloted at four hospitals serving different rural areas.

CON Support

The Committee’s report also contained a formal recommendation in support of Georgia’s Certificate of Need (“CON”) program. This program has often been the subject of legislative debate, but the Committee firmly endorsed the CON process for its role in maintaining and protecting rural hospitals. 

Freestanding EDs No More?

While Monday’s report served primarily to advance the Rural Health Stabilization Committee’s first major project, it also marked a setback for an earlier initiative brought before the Committee. Last year the Committee considered a proposal by the Department of Community Health to facilitate the establishment of freestanding emergency departments in rural areas. While the rules governing such freestanding EDs remain in effect, the Committee’s report all but recalled the program, stating that reimbursement issues made it financially unworkable. 

Medicaid Expansion a Non-Starter

One way of immediately benefiting rural healthcare in Georgia was conspicuously absent from the committee’s report: the Affordable Care Act’s Medicaid expansion. Georgia Health News reports that Gov. Deal has never considered the Medicaid expansion a realistic outcome of the Committee.