• Michelle M Casey, Ira Moscovice, G Mark Holmes, George H Pink, and Peiyin Hung.
• Michelle M. Casey (mcasey@umn.edu) is a senior research fellow in and deputy director of the Rural Health Research Center, Division of Health Policy and Management, School of Public Health, University of Minnesota, in Minneapolis.
• Health Aff (Millwood). 2015 Apr 1; 34 (4): 627-35.

AbstractSince the inception of the Medicare Rural Hospital Flexibility Program in 1997, over 1,300 rural hospitals have converted to critical-access hospitals, which entitles them to Medicare cost-based reimbursement instead of reimbursement based on the hospital prospective payment system (PPS). Several changes to eligibility for critical-access status have recently been proposed. Most of the changes focus on mandating that hospitals be located a certain minimum distance from the nearest hospital. Our study found that critical-access hospitals located within fifteen miles of another hospital generally are larger, provide better quality, and are financially stronger compared to critical-access hospitals located farther from another hospital. Returning to the PPS would have considerable negative impacts on critical-access hospitals that are located near another hospital. We conclude that establishing a minimum-distance requirement would generate modest cost savings for Medicare but would likely be disruptive to the communities that depend on these hospitals for their health care. Project HOPE—The People-to-People Health Foundation, Inc.

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