CAH Cuts- One of Obama’s Better Recommendations

CMS designates some rural hospitals as “Critical Access Hospitals” (CAHs) because they supposedly treat underserved populations. These hospitals are provided additional Medicare reimbursements, and many need the additional extra funds to survive. The original, overly broad, criteria for CAHs allowed hospitals into the critical access program even if they were not the only hospital serving that region. The new criteria are narrower, and based on other provider availability, but some hospitals were grandfathered and are still receiving additional federal money. Kaiser Health News recently wrote about President Obama’s recommendation to cut CAH payments, one of the better health policy proposals made by this administration.

Many believe that government intervention is necessary in healthcare because it is not a true market. Indeed some intervention may be necessary to help providers stay afloat in rural areas. However, in areas where there are other successful hospitals, some CAHs have stayed open on the taxpayers’ dime without providing added value to patients. Area residents could be getting better care elsewhere in their immediate vicinity. The aforementioned Kaiser article points to a JAMA study showing that these CAHs provide a lower quality of care than non-CAHs. This is likely because their lagging financials makes it difficult to invest in the technology and infrastructure improvements necessary to keep up with their competitors.

While certainly unfortunate, many rural hospitals may need to close. The government should not be responsible for propping up failing hospitals if there are successful ones serving the same community. Although the suggested CAH cuts are only a minor part of what needs to be done to slash spending, it’s nice to see the Obama Administration taking aim at a wasteful and unnecessary program in order to get our budget on track.