This study was conducted in two phases. During the first phase Walsh Center staff used data from the Medicare Cost Report to determine current Medicare bad debt payments and calculate the percent reduction for rural prospective payment system (PPS) hospitals. Estimates were made for PPS hospitals that varied by size, special payment status, location and financial status. Comparisons were also made to urban PPS hospitals with similar characteristics. During the second phase of this study, Walsh Center staff conducted a series of semi-structured interviews with rural hospital chief financial officers to obtain insight on how they would respond to these reductions in payment and, specifically, how the loss of these funds might affect operations, bad debt collections, and the provision of charity care.

Both quantitative analyses and semi-structured interviews have been completed. Staff are currently in the process of analyzing the results and preparing the final report to the Office of Rural Health Policy.

Publications

• How Will Elimination of Hospital Bad Debt Reimbursement Affect Rural PPS Hospitals?
  Policy Brief
  NORC Walsh Center for Rural Health Analysis
  Date: 07/2007
  This policy brief examines the financial effect that changes in current Medicare bad debt payment policy, as proposed in the FY2007 budget, might have on rural hospitals.