Growth in the number of Rural Referral Centers (RRCs) has increased rapidly since Centers for Medicare & Medicaid Services (CMS) amended its regulations to allow Prospective Payment System hospitals located in urban areas to reclassify as rural; over 400 hospitals have obtained status as an RRC.

We will use financial data from the 2016-24 hospital cost report data produced by the CMS Healthcare Cost Report Information System to compare hospitals with and without RRC status before and after the change in CMS policy and estimate the financial consequences for hospital Medicare payment and profitability.

A descriptive analysis will include:

• Organizational characteristics - net patient revenue, average daily census, number of full-time equivalents, system affiliation, and ownership
• Medicare reimbursement:
  • Inpatient - wage index, Medicare inpatient payment
  • Medical education – Graduate Medical Education and indirect medical education payment
  • Disproportionate share hospital (DSH) - allowable disproportionate share percentage and DSH adjustment
• Profitability - operating margin, Medicare inpatient margin.

A difference in-differences model will be used to estimate the financial consequences of RRC status.