11.23.22

SCHUMER ANNOUNCES, AFTER YEARS OF FIGHTING TO PROTECT FEDERAL CRITICAL ACCESS STATUS FOR RURAL DELAWARE COUNTY HOSPITALS, FEDS HAVE NOW OFFICIALLY CHANGED RULES SO IMPACTED RURAL NY HOSPITALS CAN KEEP DESIGNATION TO RECEIVE OVER $35M IN REIMBURSEMENTS & MAINTAIN CRITICAL SERVICES IN UPSTATE’S MOST UNDERSERVED RURAL COMMUNITIES

Critical Access Hospital (CAH) Status Provides Rural Hospitals Enhanced Reimbursement Rates To Keep Healthcare Services In Underserved Communities Like Those In The North Country, Finger Lakes & Other Upstate Communities; BUT A Rules Change Risked Arbitrarily Making Many Rural Upstate Hospitals Ineligible Putting Healthcare Providers At Risk

Schumer Immediately Began Leading The Charge To Protect Rural Upstate Hospitals, Writing Multiple Letters, Calling HHS Sec Personally To Fight The More Restrictive Definitions; Feds Said They Would Heed His Call Earlier This Year, And Now The Rules Change Has Officially Been Enacted Allowing Impacted Upstate Hospitals Continue To Receive Over $35M Annually To Maintain Essential Care – And Making It So Other Hospitals Can Apply For This Program

Schumer: Delaware County Rural Hospitals & Families Can Breathe A Sigh Of Relief, CAH Is Here To Stay!

Today, standing at A.O. Fox Hospital Tri-Town Campus, U.S. Senate Majority Leader Charles E. Schumer revealed that the Centers for Medicare and Medicaid Services (CMS) has officially finalized the reversal of its previous rules change for the eligibility criteria for rural hospitals that put many Delaware County and Upstate New York hospitals at risk of losing their Critical Access Hospital (CAH) status. In total, this is expected to save Southern Tier hospitals over $5.4 million annually, $2.4 million for Margaretville Hospital, $3 million for O’Connor Hospital, along with other Upstate hospitals, for a total of $35 million across Upstate NY. Schumer explained that rule reversal is now expected to go into effect on January 1, 2023, which will allow current hospitals to maintain their CAH status, and other hospitals, like those previously denied, to reapply for this designation to potentially receive millions in critical reimbursements. 

“After years of advocacy, Southern Tier families can breathe a sigh of relief knowing their local hospitals will continue to receive the funding they need to provide lifesaving care in underserved rural communities. I promised Delaware County doctors and rural hospitals across Upstate New York that I would not stop fighting until these rules changes were fixed and their Critical Access Hospital designation was preserved, and now I can say a promise made is a promise kept,” said Senator Schumer. “This rule reversal will ensure our most vulnerable hospitals get the federal help they need to maintain essential healthcare services in the Southern Tier and will give hospitals who were previously denied the opportunity to reapply and potentially get more federal support in the future. Our hospitals are critical to keeping our communities safe, which is why I will always fight for them to cut through the bureaucracy and deliver aide for our hospitals that need it most.”

“On behalf of O’Connor Hospital and the entire Bassett Healthcare Network, we are grateful to Senator Schumer for his leadership in urging the Centers for Medicare and Medicaid Services (CMS) to clarify its “location requirement.” Left unchanged, there would have been significant negative impacts for a number of Critical Access Hospitals, including O’Connor Hospital. This clarification provides the people of Delaware County the comfort of knowing their local hospital is no longer in jeopardy of closing. Without the Critical Access designation, an estimated increased financial burden of at least $3M annually would have likely forced O’Connor Hospital to close or significantly curtail services,” said Dr. Tommy A. Ibrahim, President & CEO of Bassett Healthcare Network. “Our elderly, low income and chronically ill patients would have suffered the most, countless patents’ lives would have been jeopardized, and over 200 high quality jobs would have been lost. Thankfully, O'Connor Hospital is now able to continue providing a full range of acute, preventive, and specialty health care services. Bassett is appreciative of Senator Schumer’s understanding of these significant impacts and his leadership to resolving this vital issue.”

“Margaretville Hospital is a Critical Access Hospital (CAH) and an essential and necessary provider supporting the health and welfare of the rural and underserved communities in Delaware and western Ulster County”, said Dr. Michael Doyle, Executive Director and Chief Medical Officer of HealthAlliance of the Hudson Valley. “Thanks to Senator Schumer’s advocacy, Margaretville Hospital will be able to maintain CAH status, making it eligible for critical reimbursements, and continue to provide vital healthcare and emergency services to patients in rural communities.”

Schumer explained that the CAH program allows smaller rural providers, like those in Delaware County, with the designation to receive greater federal reimbursements for care to keep these otherwise financially vulnerable rural hospitals in the communities that need them most. In 2015, the CMS issued a new policy change without going through the proper notice and rulemaking required by law that would enact more restrictive eligibility definitions for the CAH program, costing rural hospitals millions. Schumer immediately began leading the fight to maintain CAH status for Upstate’s rural hospitals, sending multiple letters highlighting the issue and the impact it would have on rural residents, and personally called HHS Secretary Xavier Becerra to fix this bureaucratic mistake that could cost thousands of rural family’s critical healthcare services. As a result of Schumer’s advocacy, CMS announced earlier this year it would propose to reverse this disastrous policy and clarify the language that would have caused New York’s CAH’s to lose their status, which was finalized this month. The A.O. Fox Hospital Tri-Town Campus in Sidney is a branch of A.O. Fox Memorial Hospital, one of Bassett Healthcare Network’s four area community hospitals that includes CAH-designated O’Connor Hospital.

The CAH designation was created by the Balanced Budget Act of 1997 to give small rural healthcare providers greater financial reimbursement for servicing Medicare and Medicaid patients, as well as provide other resources, in order to keep vulnerable rural hospitals financially stable. One factor for CAH eligibility requires that a hospital be a certain distance from another hospital by either a primary or secondary road and provide around-the-clock emergency services. Previously, CMS regulations stated that a CAH hospital must be at least 35 miles from the nearest hospital by “primary road”, defined as any road in an interstate system or a US-numbered highway, or at least 15 miles in areas with mountainous terrain or only “secondary roads”, defined to include single lane state routes.

In 2015, however, CMS issued a memo that changed the definition of primary road to include any road that is in the National Highway System, which would include single lane NYS routes. This significant expansion to language and more restrictive definition of “primary road,” if enforced, would have led to dozens of CAHs in multiple states, including at least nine in New York, to lose their CAH status and hundreds of millions of dollars of needed funding to keep them in business serving rural patients.

At the onset of the COVID-19 pandemic, Schumer fought to get CMS to not enforce this policy change, maintaining this funding stream through the height of the public health emergency, although it remained on the books ready for enforcement. The senator continued to write multiple letters to HHS and CMS demanding for them to change this policy, and personally called HHS Secretary Xavier Becerra to push for these protections for rural hospitals in New York and across America. In July 2022, because of Schumer’s efforts, CMS issued a notice of proposed rulemaking to revise this policy and clarify that single lane NYS interstate routes would not count as primary roads, thereby saving NYS CAH’s from losing their status. The decision to undo the previous ruling that changed the guidelines was finalized this month. The rule reversal is expected to go into effect on January 1, 2023, which will allow current hospitals to maintain their CAH status, and other hospitals, which were previously denied, to reapply for this designation to potentially receive millions in critical reimbursements. 

Specifically, if this change were to have been fully enacted and enforced, it would cost Upstate New York hospitals over $35 million a year. Some of the impacted New York hospitals would have included:

Hospital

Reimbursement received from CAH program in 2020

Carthage Area Hospital

$9.7M

Community Memorial Hospital

$4.1M

Ellenville Regional Hospital

$4.7M

Gouverneur Hospital

$3.3M

Lewis County General Hospital

$5.3M

Margaretville Hospital

$2.4M

O’Connor Hospital

$3M

Orleans Community Health (Medina Memorial)

$1.6M

Soldiers and Sailors Memorial Hospital

$1.4M

 

A copy of Schumer’s original letter to CMS appears below:

Dear Administrator Brooks-LaSure:

I write to ask that CMS revise a sub-regulatory guidance issued in 2015 to protect the Critical Access Hospital (CAH) status of more than seventy rural providers nationwide, including nine in New York State.  In your March 31, 2022, letter to the Honorable Antonio Delgado regarding this same issue, you indicated that the Centers for Medicare and Medicaid Services (CMS) would undergo a formal notice and comment rulemaking process to formalize the eligibility criteria for CAH status. Rather than go through a time-intensive rulemaking process, I ask that CMS simply revise Chapter 2 of the State Operations Manual (SOM) to reflect the pre-2015 requirements for CAH eligibility and advise state surveyors not to apply the guidance until the revision is complete.

As you know, CAHs were created by the Balanced Budget Act of 1997 and allow smaller rural providers with the designation to receive greater financial reimbursement for servicing Medicare, Medicaid and Tri-Care patients, access to grant funding and other resources – all designed to keep otherwise financially vulnerable rural hospitals viable. In order to qualify as a CAH, a hospital must be – among other qualifications – a certain distance from another hospital by either a primary or secondary road and provide around-the-clock emergency services. Before June 2015, CMS regulations stated that a CAH hospital must be at least 35 miles from the nearest hospital by “primary road”, defined as any road in an interstate system or a US-numbered highway, or at least 15 miles in areas with mountainous terrain or only “secondary roads”, defined to include single lane state routes. Alongside New York’s eighteen CAH’s, there are 1,353 CAHs nationwide as of 2021 under these definitions.

However, on June 26, 2015, CMS sent a memorandum (S&C: 15-45-CAH) to State Survey Agency Directors, who evaluate CAH eligibilities in each state, advising them of several policy changes regarding CAH status. On page 3 of the memorandum, CMS changes the definition of primary road to include any road that is in the National Highway System, which would include NYS routes that are a part of the System. This expansion of the definition of “primary road” could result in dozens of CAHs in multiple states, including nine in New York State, not meeting the revised distance requirement. Following the issuance of that first memorandum, CMS included this new definition of the “primary road” in Chapter 2 of its State Operations Manual, further solidifying this harmful policy change.

It is very troubling that such a substantial policy change that impacts the care of thousands of rural Americans, was made without going through the proper notice and comment rulemaking procedure. This is a position that CMS has traditionally agreed with. In fact, on October 31, 2019, the Office of the General Counsel (OGC) advised CMS that “any Medicare issuance that establishes or changes a ‘substantive legal standard’ governing…payment for services…, must go through notice-and-comment-rulemaking.” OGC furnished this guidance in response to adverse litigation against the Secretary in Azar vs. Allina Health Services. According to the standard set in that OGC advisement, expanding the definition of “primary road” through a memorandum should also constitute a substantive legal standard changed through a sub-regulatory procedure that ought to have been done through notice and-comment rulemaking.

Prior to the start of the public health emergency (PHE) at least one hospital we know of was closed due to the enforcement of this policy change. Thankfully, CMS has not enforced this policy change during the PHE, although it remains on the books ready for enforcement. In your March 31, 2022, letter to the Honorable Antonio Delgado, CMS indicated that the agency has delayed using the 2015 distance criteria for CAH recertification for the duration of the PHE. I am thankful that the agency agrees that it is inappropriate to pull critical funding streams from rural providers while the COVID pandemic continues to place enormous public health and financial strains on these providers. However, I am concerned your letter implies that enforcement of the sub-regulatory guidance may commence at the end of the PHE prior to CMS undergoing rulemaking. I respectfully request that CMS confirm that it will not enforce the current sub-regulatory guidance changing the definition of primary road in its State Operations Manual while the agency considers potential notice and comment rulemaking.

Further, I request that CMS revise its State Operations Manual to restore the pre-June 26, 2015 definition of “primary road”. As it stands today, the current policy after the definition change is not enforceable as the post-June 26, 2015, definition of primary road changed a substantive legal standard without being adopted through notice and comment rulemaking. 

Restoring the definition of primary road back to the pre-June 26, 2015, language in the State Operations Manual will make clear to State Survey Agency Directors the currently applicable policy that may be enforced when either certifying a new CAH or recertifying an existing CAH. I further ask that CMS provide State Survey Agency Directors with a memorandum analogous to the one on June 26, 2015, advising them of the change to the State Operations Manual and their obligation to apply the pre-June 26 2015 guidance.

Sincerely,

 

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