Community health centers’ 340B savings have enabled some to maintain access to health care following rural hospital closures, congressional Medicare advisers say.

Health Centers and 340B Play Integral Role In Filling Gaps After Rural Hospital Closures, MedPAC Finds

Federally qualified health centers in some rural communities have stepped up and maintained access to health care following rural hospital closures, advisers to Congress on Medicare reported today.

Health centers’ ability to generate income through the 340B program is one reason they have been able to step into the breach, the Medicare Payment Advisory Commission (MedPAC) said in its annual June report to Congress.

Health center leaders told MedPAC that revenue derived from 340B, along with annual federal grant funding and Medicare payment rates that are higher that standard physician fee schedule rates, enable centers to offer primary care physicians “substantially higher salaries to practice in rural areas” plus additional enticements including loan repayment, relocation bonuses, and paying for moving expenses, MedPAC said.

The U.S. House Ways and Means Committee asked MedPAC last year to update a 2012 analysis of rural Medicare beneficiaries’ access to care, in light of the wave of rural hospital closures since that report came out. The commission included an interim version of the requested update in its annual June report to lawmakers.

To better understand what’s driving rural hospitals to close, MedPAC analyzed 40 that closed between 2015 and 2019. It also interviewed community members, hospital executives, and clinical leaders in three communities that experienced recent closures.

“In the three communities in which we conducted interviews, Federally Qualified Health Centers (FQHCs) were critical to maintaining access to primary care, and sometimes urgent care, after the local hospital closed,” MedPAC found. “Community stakeholders suggested that, after the hospital closure, FQHCs were often the only remaining entity with the financial and organizational capabilities to recruit primary care physicians into the areas, which can be difficult and expensive.”

“In one community, the FQHC moved into the facility once occupied by a provider-based RHC [rural health clinic] and began offering both primary care and urgent care services,” MedPAC said.

In another town, community leaders wanted to open a free-standing emergency department [ED], but state law prohibited them from doing so. MedPAC said a local FQHC responded by opening an urgent care clinic and hiring a board-certified emergency medicine physician to staff it.

“In two communities, FQHCs are in the process of outfitting buses to serve as mobile patient exam rooms,” the commission said. “The buses will be staffed by nurse practitioners and registered nurses and outfitted to furnish office visits and simple diagnostics, such as laboratory tests.”

Among the 40 closed rural hospitals that MedPAC analyzed, it found large declines in inpatient admissions in the years before closure. “Stakeholders suggested the decline in inpatient admissions was due in part to area residents bypassing their local hospitals in favor of larger, regional hospitals generally located within an hour’s drive,” MedPAC said.

In contrast, “up to the date of closure, Medicare beneficiaries continued to use these 40 hospitals to access ED and outpatient care,” MedPAC said. In another part of MedPAC’s rural healthcare report, this one focused on overarching trends, the commission found that rural Medicaid beneficiaries used hospital outpatient departments more than urban beneficiaries. More than 1,100 rural hospitals have enrolled in the 340B program since 2010, when they gained eligibility under the Affordable Care Act. 340B provides eligible hospitals, health centers, and clinics with discounts on drugs dispensed or administered on an outpatient basis.

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