Rural Health in Oregon

The state of Oregon designates rural hospitals based on their size and location. Type A and Type B hospitals must have 50 or fewer inpatient beds, and Type A hospitals are located more than 30 miles from another acute care facility, while Type B hospitals are located less than 30 miles from another acute care facility.  As Type A and Type designation are specific to the state of Oregon, a rural hospital can be a Type A or B hospital and a Critical Access Hospital.

The state designation of Type A or B provides Medicaid reimbursement up to 100 percent of the cost of caring for a patient for some rural hospitals.  Hospitals located in sparsely populated and remote frontier counties, are guaranteed to retain cost-based reimbursement from Medicaid. In year’s past, Oregon’s Type A and B hospitals all received cost-based reimbursement from Medicaid, but changes ushered in under Oregon’s Coordinated Care Organization legislation led to 11 of our hospitals moving away from cost-based reimbursement under Medicaid. In 2017, twenty-one hospitals were determined by a state actuarial review to have high unmet need and challenging financial circumstances -- among other characteristics -- retain cost-based reimbursement for the next two years.

 These rural designations significantly improve the bottom line for many fragile community hospitals. Many rural hospitals lack the operating margins needed to replace or update facilities, purchase necessary health information technology, and make upgrades. Along with tackling financial challenges, small rural hospitals must sustain a highly trained workforce, including medical providers. Even with strong recruitment efforts, rural hospitals have difficulty attracting and retaining skilled workers. Rural hospitals provide a higher volume of Medicare and Medicaid services, and Oregon physician reimbursement rates rank near the bottom nationally.
 

Twenty-five of Oregon’s 33 rural hospitals are Critical Access Hospitals (CAHs), which is a federal program designed to improve rural health care access and reduce hospital closures. To be designated as a CAH, a hospital must meet certain requirements.  All CAHs have 25 or fewer inpatient beds, are located more than 35 miles from another hospital, maintain an average length of stay of 96 hours or less for acute care patients, and provide 24/7 emergency care services.

For their Medicare patients, CAHs receive cost-based reimbursement. As the name implies, cost-based reimbursement pays hospitals what it costs to care for a patient. Oregon’s rural hospitals have long depended on cost-based reimbursement from Medicaid and Medicare to remain viable. Prior to the CAH program and cost-based reimbursement, several rural hospitals around the country shut their doors as a result of inadequate reimbursement.