Fate of rural hospitals more uncertain than ever


Brittney Lofthouse – Contributing Writer

Absent swift action by Congress this week, rural hospitals across the United States, especially in North Carolina, stand to lose billions of dollars in federal funding, which could result in an unknown number having to shut their doors and cease operation.

In 1981, Congress authorized money to assist hospitals defray the costs of caring for patients who couldn’t afford treatment. In 2014, the Medicaid Disproportionate Share Hospital (DSH) payments covered more than half of uncompensated treatment costs for hospitals, which was around $18.2 billion, according to the U.S. Government Accountability Office. Fast forward to 2019, the DHS paid out $22 billion, nearly 60 percent of which came from the federal government. 

The federal money reimburses hospitals for the care they provide to people who can’t afford to pay and offsets the cost of care that hospitals provide to Medicaid patients that Medicaid does not cover. The federal cuts amount to $4 billion this year and $44 billion through 2025.

Congress has authorized those funds to continue through Nov. 21 — then they essentially disappear which would be detrimental for rural hospitals in America, specifically those in states such as North Carolina which did not elect to expand Medicaid under the Affordable Care Act. 

“North Carolina hospitals and health systems support the Disproportionate Share Hospital payment program and oppose any attempts to reduce funding for our most vulnerable,” said Sara Crawford, Marketing and Public Relations for Harris Regional Hospital. “Further, cuts to the DSH program should be restored, especially for those states that did not expand Medicaid and continue to have a large uninsured population. For some, the Medicaid DSH cuts will mean they can no longer provide critical services, threatening local access to care.” 

Harris Regional Hospital is managed by Duke LifePoint, which also serves Haywood Regional Medical Center as well as Swain Community Hospital. While the three hospitals play a vital and necessary role in the community, they could potentially lose millions in federal funding. 

Across the country, similar health systems face unwelcome choices about how to handle the looming funding cuts as a result of the elimination of Charitable Care funding. 

Hospitals in the 14 states that did not expand Medicaid, which includes North Carolina, will be hurt the worst, because they already miss out on the extra federal money that comes with expansion.

The current funding crisis originated with the Affordable Care Act’s passage in 2010. The law’s goal — to extend health care coverage to millions of Americans through Medicaid expansion and affordable commercial health insurance — would have meant less hospital spending for charitable care. So as part of the legislation, the federal government planned to begin decreasing DSH funding in 2014. However, in 2012, the ACA was changed to allow states to determine whether or not they wanted to expand Medicaid. For those like N.C. that did not expand Medicaid, they missed out on federal funding to close the gap for the uninsured or underinsured. Further changes to the ACA to eliminate the provision which required everyone to enroll in insurance also resulted in fewer people insured than originally predicted. Between those two amendments, the needs for continued Charitable Care funding continue. However, Congress has not voted to indefinitely continue providing the funding. Instead, Congress has voted four times to reauthorize the funding while other measures are considered, but the most recent of those reauthorizations expires on Nov. 21. 

In addition to losing the federal funding provided by the Charitable Care fund, rural hospitals will also lose the matching state funds that follow the federal dollars. As one example, the North Carolina Department of Health and Human Services said that if the federal cuts go into effect this year, the state would reduce its contribution by $47 million in addition to the expected $98 million cut in federal money.

Congressman Mark Meadows, whose 17-county district stands to lose a significant amount of funding if the Charitable Care fund isn’t reauthorized, said he has been diligently working with his colleagues to fund a solution. 

“We’re certainly concerned about Western North Carolina’s access to hospitals, community health centers, and health clinics to receive care,” said Meadows.  “Unfortunately, healthcare consolidation is leaving more patients with fewer choices, hurting our rural areas – and we’re looking at ways to address it.”

While hospitals managed by Duke LifePoint are in risk of losing funding, both Macon County hospitals, Angel Medical Center and Highlands-Cashiers hospitals are safe. Because Mission Health System was bought out by the for-profit company, HCA earlier this year, the same federal funding isn’t available to HCA for Charitable Care because of their for-profit status. HCA has its own Charitable Care Program, which is, in part, funded by the Dogwood Trust, which was established when HCA purchased Mission Health Systems.