NRHA TALKING POINTS ON THE PRESIDENT’S FY06 BUDGET PROPOSAL Global Talking Points The Administration has cut or zeroed out a number of critical rural health grant programs including, the Rural Health Care Services Outreach Grants, Network Grants, Delta Networking Grants and the Rural Hospital Flexibility grants. These cuts have two immediate impacts. o First, communities that have been working on applications to apply for this funding will not be able to apply for it. From 1994-2003, the Administration and Congressional requests for this program were largely level funded or increased. The grants became a lifeline for rural communities seeking to improve access to care in their communities. o Second, there are more than 300 rural communities that had been expecting funding in 2006 as part of grants that have already been awarded that will not receive this funding if the Congress goes along with the Administration request. In 2006, there are approximately 40 communities that will be going into either second or third year of their grants that will have to terminate their Rural Health Care Services Outreach projects due to these cuts. There are approximately 16 communities involved in rural network development that will have to prematurely end their projects. There are eight grants in the Delta region that will also cease operations if these cuts are permanent. In addition, there are more than 200 projects supported by the Rural Hospital Flexibility grant program that will not be funded in the 45 States that take part in this program. The Administration has noted that there is no longer a need for these programs because the Medicare Modernization Act of 2003 (MMA) included rural provisions that meet all the needs of rural communities. The MMA did include $19 billion in rural provisions spread over 10 years, all of which were sorely needed. However, this investment by the Congress was intended to address long-standing inequities within the Medicare program that had paid rural providers significantly less than urban and suburban providers for the same services. The MMA provisions significantly narrowed the gap in those payment differentials but it was by no means a panacea for rural communities. The MMA investment certainly didn’t end the need for the small $78 million investment in these two Federal grant programs targeting rural communities. The MMA provisions target only Medicare reimbursement, meaning the benefits of the legislation focus solely on Medicare beneficiaries. Those provisions will have no direct impact on continuing needs in rural communities due to higher rates of childhood poverty and uninsurance, higher rates of uninsured adults, few jobs offering health insurance, higher rates of chronic disease and a shortage of health care providers particularly in mental health and oral health. Program Specific Talking Points Programs Affected: Cuts in these line items affect multiple programs. The $40 million Rural Hospital Flexibility Grant program includes grants for the Flex program and for the Small Hospital Improvement grant program The $38 million Rural Health Care Services Outreach Grant Program authority includes the following grant programs: o Rural Health Care Services Outreach grants o Rural Network Development grants o Rural Network Planning grants o The Delta Initiative The Rural Health Care Services Outreach Grant Program The Rural Health Care Services Outreach grant program, or Outreach for short, is a unique program within the Federal government. It is the only non-categorical health care grant program within the U.S. Department of Health and Human Services. Of the more than 220 programs within HHS that serve rural communities, this is the only one that lets the community determine the focus of the grant rather than dictating that the focus be on a particular disease, condition or population. That is a critical point because the needs of rural communities are diverse. The challenges facing a small town in New Hampshire are far different than those facing a Native American tribe in Arizona or logging community in the Pacific Northwest. The Outreach grants were created to specifically meet the diversity of need in rural communities. These three-year demonstration grants are, in effect, venture capital for enterprising rural communities. For those communities that can clearly identify a need and develop a consortium of local health care providers to jointly address it, this grant program provides up to $600,000 over a three-year period to test out new ideas for improving access to health care in rural communities. A 2002 study by the University of Minnesota found that 80 percent of grants continue on after Federal funding In the Administration’s FY 2005 budget request, it recommended dramatic cuts to the programs within Rural Health Care Services Outreach Grant authority, reducing the funding from $38 million to $11 million. The Administration justified its request by noting that the MMA investment obviated the need for this program. Ironically, an analysis of current grantees shows that only four of the 118 grants funded between 2001 and 2003 focused on the Medicare population. The grants tended to focus on the kind of intractable health challenges that have long plagued rural communities such as access to oral health care services, access to mental health services, access to care for the uninsured and underinsured. : The Medicare Rural Hospital Flexibility Grant Program This program focuses on supporting the 1050 Critical Access Hospitals (CAHs) in the country though financial performance analysis, network development, quality improvement and integration of emergency medical services. The Administration, in its FY 2005 budget request, also recommended no funding for this program saying that due to the investment of rural provisions from the MMA there was no longer a need for this program. Of the $19 billion in rural provisions from the MMA, only 0.9 billion of that has any impact on CAHs. The remainder of the $19 billion focused on other rural hospitals, physicians and ambulance services. The Rural Network Development and Network Planning Grant Programs The Rural Network Development and Network Planning grants, like the Outreach grants, are unique within the Federal government in that they are noncategorical. While Outreach grants focus on actual service delivery, the Network Development and Network planning grants focus on getting rural providers to work together to build better systems of care. The Congress created these grants in 1996 because of a belief that given the isolation of rural providers and the limited resources in rural communities, it is essential that providers work together to improve health care services. The Network grant program’s primary strength is the flexibility of the funding. Because of its non-categorical nature, the Community, not the Government, determines the focus of the project. As a result, current Network grants are focusing on a wide range of activities ranging from financial management to continuing education, quality improvement, case management, health information technology and mental and behavioral health care services. And while the Administration’s 2005 budget request cut this program, saying that the MMA investment meant there was no longer any need for this program, the current range of activities shows that the funding supports projects that were not beneficiaries of the legislation. There are currently 34 Network Development grantees focusing on a wide range of key rural health issues. This includes: o Eight network grants seek to redesign their system in order to better coordinate delivery of care o Seven network grants focus on helping their providers to improve delivery of mental health or substance abuse services o Nine network grants are focusing in improving health information technology efforts by linking rural providers together to share patient data, increase billing efficiency and better manage care o Five network grants focus on improving financial management o Four network grants focus specifically on quality improvement and reduction of medical errors o Four network grants focus on health promotion or disease management activities The Delta Initiative: For the past three years, the Congress has funded a Delta initiative that provides approximately $6.8 million to the rural communities in the eight-State Delta region, which faces some of the starkest health care challenges in the country. The eight States in this region are Alabama, Arkansas, Illinois, Kentucky, Louisiana, Mississippi, Missouri and Tennessee. The funding supports two key activities: o The Delta Network grant program provides grants to grass roots community health projects in the rural Delta communities focusing on a range of issues including indigent care, access to pharmaceutical drugs, recruitment and retention of health care providers, access to oral health services and access to mental health services. o The Rural Hospital Performance Improvement (RHPI) Project works with small rural hospitals (49 beds or less) to improve financial, quality and operational performance o The 118 eligible hospitals have consistently had negative operating margins. This project provides them with the financial, administrative and clinical expertise they need to compete strongly in the marketplace. o From 2001 through 2004, this project has provided services to 59 hospitals. Future funding will ensure that the remaining 59 eligible hospitals will receive the services they need to improve their operations and continue serving as key access points in their communities.
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