How Medicare Shaped the Rural Health Crisis, And How to Fix It

Rural hospitals are paid under models that were never built for them. Health economist and former Blue Cross finance VP Tom Campanella explains how to fix how we pay for rural healthcare, and who already has the power to do it. On this episode of The Regional Hospital Voice, host Mark Craig talks with Tom about how payment policy helped create the rural health crisis. Tom has worked nearly every side of healthcare: payer, provider, law firm, medical school and classroom. His core message: a health system is shaped by what you pay for and how you pay for it. In this episode: • Why fee-for-service fails rural hospitals, and why a hybrid payment model has to cover standby costs (staffing a 24/7 ER for its slowest night and its busiest) • What Tom saw at Blue Cross Blue Shield of Ohio: rural hospitals had too few cases and too much risk for DRGs, and percentage of charges didn't work either • A ground-up approach to rural healthcare: primary care, emergency care and transportation first, then services based on community needs • How traditional Medicare, the "800-pound gorilla," pushed physicians toward specialties and away from primary care, which fell from about 70% of physicians to about 30% • Why working-age adults in rural America are now 43% more likely to die from natural causes than their urban counterparts • Rural residency programs, paramedicine and the maternity care gap • Medicare Advantage and Medicaid managed care: how CMS and the states could require a rural payment model as a condition of contracting, and why MA plans should be expected to deliver quality, not paid bonuses for it CHAPTERS 0:00 Intro 1:06 Rural healthcare's 43% mortality gap 2:59 How payment systems shape healthcare: cost-plus to DRGs 6:04 Inside Blue Cross: negotiating with rural hospitals 8:46 Standby costs and the case for a hybrid payment model 11:41 Rural hospital payment models and the Rural Emergency Hospital option 12:36 A ground-up approach to rural healthcare 17:10 Why one-size-fits-all policy fails rural hospitals 21:18 The primary care shortage: Medicare's 800-pound gorilla 27:18 What's driving higher rural mortality rates 30:47 Why the rural health crisis keeps getting worse 31:52 Transportation and paramedicine in rural areas 38:12 Hospital closures and the rural maternity care gap 42:06 Reimbursement: traditional Medicare and Medicare Advantage 54:16 How CMS and the states can fix rural hospital payment LINKS Tom Campanella on LinkedIn:   / thomascampanella   Be a guest on the show: https://podcast.writeoffwarrior.com/p... ABOUT THE GUEST Tom Campanella is President of Campanella Consulting and Professor Emeritus of Health Economics at Baldwin Wallace University, where he directed the Healthcare MBA program. Over 40+ years he has been a VP of healthcare finance at Blue Cross Blue Shield of Ohio, a healthcare attorney at Baker Hostetler, and associate dean and COO over clinical operations for Ohio University's osteopathic medical school in rural Appalachia. ABOUT THE SHOW The Regional Hospital Voice is hosted by Mark Craig, founder & CEO of Write-Off Warrior, featuring hospital CEOs, CFOs and healthcare leaders on the financial realities facing regional and rural hospitals. #RuralHealthcare #RuralHospitals #HealthcarePolicy