Definitions of Rural

Federal and state policymakers are often required to define “rural” and “urban” in order to develop and apply policies appropriately. What seems like a simple task, however, can become complicated because agencies at both levels of government use differing methodologies to define these terms depending on the population targeted, geographic determinants, and the specific purpose of the program. There are at least three major federal agencies that define rural: the U.S. Census Bureau, the Office of Management and Budget, and the U.S. Department of Agriculture Economic Research Center. See complete definitions at http://ric.nal.usda.gov/what-rural . Because each agency defines rural differently, it can be a challenge for communities and health systems to know exactly which programs they quality for and how to access resources.

Frontier counties, another designation created for federal programs in 1990, were initially described as counties with very low population densities of no more than six people per square mile (compared with a national average of 73 years). The frontier designation was used inconsistently by the agencies that track rural populations and health, so a national consensus process was implemented by the Frontier Education Center and funded by the Federal Office of Rural Health Policy (FORHP) in 1997. The purpose of the process was to develop a new definition recognizing that “frontier” described not only physically isolated areas but also areas relatively isolated because of geography, weather, or other factors. The final report was published in April 1998 and provides a matrix, based on a maximum of 105 points, that can be used to determine the relative frontier status of any area. The determinants include population density per square mile, distance in miles to services and markets, and distance in time to services and markets. The 2010 U.S. Census includes 445 “frontier” counties with populations of less than 6 people per square mile. See http://frontierus.org/frontier-definitions for complete definitions by application.

Aging Populations

There are multiple challenges regarding the aging population in nonmetro areas stemming from factors such as outmigration of youth, aging in place of the existing population, increased migration of metro population to nonmetro areas, fewer health resources and access points, and declining number of rural health care services.

The role of population aging on Medicare and access to health care will intensify, especially since the large baby boomer generation began to turn 65 years old in 2010. Key issues that will lead to changes include

• •
  

  Nonmetro areas will continue to have an increasing percent of elderly population.

  
  
• •
  

  Compared with metro areas, nonmetro older adults generally have lower incomes, lower educational attainment, and a higher dependence on Social Security income, creating demand for medical, social, and financial assistance.

  
  
• •
  

  There will be continuing difficulty in accessing health care because of a reduced number of primary care and specialty providers and services.

  
  
• •
  

  One of the more recent trends that counteracts the previous information is the increasing number of metro aging populations that have moved and continue to move to nonmetro retirement communities typically adjacent to metro areas. This population group skews the data because they are often more affluent and mobile, have higher education levels, are more likely to be married than living alone, and typically have private insurance. ⁴⁸

Minority Population Trends

Compared with the 2000 U.S. Census, 2010 Census data show that racial and ethnic minorities increased from 18.3% of nonmetro residents to almost 20%, with Hispanics and Asians the fastest growing minority groups. American Indian numbers increased also, but this is believed to be due to the increased number of people reporting American Indian heritage on the census questionnaires. The Hispanic rural population (9.3%) moved ahead of the African American population (8.2%) in the past decade and is now the fastest growing ethnic population in the rural counties, having a 46% increase since 2000. Less than 2% of the rural population is Native American, but that still comprises more than 50% of their total population. Asian, mixed race, and Pacific Islanders total less than 3% of the rural population. It is important to note that Hispanic and African American minorities are tied historically and geographically to large areas of the country: African Americans are significantly overrepresented in the small and rural towns in the southeastern states, and Hispanics in the four states of Texas, California, New Mexico, and Arizona (slightly more than 50%).

Although immigration brings new and diverse populations to nonmetro areas, which can revitalize small towns economically and demographically, those same increases create pressures in the local economic structure and raise concerns about increased demands for social services, education, and barriers to assimilation. The Hispanic population had been primarily a rural-based group, with roughly 90% of all Hispanics living in nonmetro areas throughout the 1990s, but recent census data reflect a wider dispersion across the country and into more urbanized areas (suburban, 12.7%, and urban, 27.3%). Although legal and illegal immigration generated the primary increase in the Hispanic population before 9/11, the subsequent decrease in illegal immigration from Mexico because of multiple major congressional acts significantly reduced the flow of Hispanics into the United States. The Hispanic population had the greatest increase in population by 46% in the past decade primarily because of increased birth rates.

The influx of a broad mix of immigrants and the continuing shift among geographic areas creates significant challenges for rural communities that for generations have had populations based in European cultures, often from the same regions or cities. These changes require a paradigm shift for communities in regard to accommodating language differences in schools and businesses, religious beliefs and the availability of churches, clothing and food purchases, and social and health accessibility.

Rural America will continue to face many challenges with the continuing population shift to metropolitan areas and aging of the rural population, increasing presence of immigrant populations, changing economies, and lack of resources. Health policymakers will need to be creative in recognizing and meeting local, regional, and national health care needs.

Early Models

As the demographics and economic basis of rural communities changed over the past 4 decades, rural hospitals faced significant challenges in maintaining services, staff, and providers. Several federal initiatives were created to assist these hospitals in finding a new way to not only survive but also continue to meet community needs in a more effective and efficient way ( Fig. 46.4 ).

(Courtesy of Steven Meltzer, 2015.)

After World War II, as the nation’s population was rapidly growing in suburban and rural areas, Congress passed the Hill-Burton Act in 1946 that gave hospitals, nursing homes, and other health facilities grants and loans for construction and modernization. State plans were to be developed to encourage expansion of health care facilities so that all people in the state would have access to care. By applying for and accepting the grants, the facilities agreed to provide free or reduced-cost emergency and other services to persons who were unable to pay, they had to serve all persons residing in the facility’s area, and later they had to participate in the Medicare and Medicaid program. The Hill-Burton program stopped providing funds in 1997, but about 300 health care facilities nationwide are still obligated to provide free or reduced-cost care. Many of these facilities are still in their original buildings and struggle to find the capital resources to build new facilities or modernize.

During the 1970s and 1980s, the federal government experimented with a variety of alternative community hospital models to retain as much access to services while reducing costs and need for expansive facilities and staffing. The Medical Assistance Facility program authorized by Congress in 1990 set up a demonstration project in Montana to explore options around a limited services facility on a smaller scale than a fully accredited hospital. There were seven test sites and six control sites in Montana, and the model was deemed a relative success. It was also a significant opportunity for PAs and NPs because the model relied on use of midlevel practitioners to maintain access to care in these communities.

The Omnibus Budget and Reconciliation Act of 1989 established another alternative model: the Essential Access Community Hospital/Rural Primary Care Hospital (EACH/RPCH). This model was also based on a limited service facility staffed primarily by PAs and NPs, and there were test sites in seven states across the nation. The more rural RPCHs and larger EACHs were provided a higher cost-based Medicare reimbursement to improve financial stability, and the development of regional networks was encouraged.

Critical Access Hospitals

Congress later passed the Balanced Budget Act in 1997, which included provisions building on the successes of the MAF and EACH/RPCH models. The Medicare Rural Hospital Flexibility Program was established to continue to allow hospitals to refine the limited-service models, and in October 1999, all MAF and EACH/RPCH programs were grandfathered into the federally designated Critical Access Hospitals (CAH) program. Its purpose was to improve rural health by addressing access and quality of care issues for rural citizens through partnerships among the federal government, state government, rural CAHs, acute care urban hospitals, emergency medical services (EMS), and rural communities.

The Flex Program consists of two separate but complementary components:

• •
  

  A Medicare reimbursement program that provides reasonable cost reimbursement for Medicare-certified CAHs is administered by the Centers for Medicare & Medicaid Services (CMS).

  
  
• •
  

  A state grant program that supports the development of community-based rural organized systems of care in participating states is administered by the Health Resources and Services Administration through the FORHP.

To receive funds under the grant program, states must apply for the funds and engage in rural health planning through the development and maintenance of a State Rural Health Plan that

• •
  

  Designates and supports the conversion of CAHs

  
  
• •
  

  Promotes EMS integration initiatives by linking local EMS with CAHs and their network partners

  
  
• •
  

  Develops rural health networks to assist and support CAHs

  
  
• •
  

  Develops and supports quality improvement initiatives

  
  
• •
  

  Evaluates state programs within the framework of national program goals.

State entities, typically state offices of rural health, could apply for federal “Flex” grants to support the development of CAHs and networks to meet program objectives. As of March 2016, there are a total of 1331 active CAHs overseen by the FORHP.

Modifications to the program have resulted from the enactment of the Balanced Budget Refinement Act of 1999, the Benefits Improvement and Protection Act of 2000, and the Medicare Prescription Drug Improvement and Modernization Act (MMA) of 2003. These changes have been incorporated into the information presented below.

Criteria for Critical Access Hospital Certification

A rural hospital may be designated as a CAH if the following criteria are met:

• •
  

  Owned by a public or nonprofit entity

  
  
• •
  

  Located in a participating State Rural Hospital Flexibility state

  
  
• •
  

  One or more of the following is true:

  
  
  
  
  • •
    

    More than 35 miles from any other CAH or hospital

    
    
  • •
    

    More than 15 miles from another hospital or CAH in mountainous terrain or in areas with only secondary roads

    
    
  • •
    

    Designated a necessary provider under criteria published in the State CAH Plan

  
  
  
  
• •
  

  Offers 24-hour emergency care

  
  
• •
  

  Provides no more than 25 beds for acute care

  
  
• •
  

  May operate distinct part units of up to 10 beds for psychiatric or rehabilitation services

  
  
• •
  

  Keeps inpatients no more than an annual average of 96 hours except during inclement weather or other emergencies

  
  
• •
  

  Meets staffing and other requirements established in General Acute Hospital or Primary Care Hospital licensing and the State Plan for CAHs

  
  
• •
  

  Must have a formal agreement for participation as part of a rural health network. Rural health network defined as an organization of at least one CAH and one acute hospital

Over the past decade, as hospitals faced further implementation costs for new federal policies and regulations, rural and small hospitals again faced financial challenges. To offset these requirements and costs, more recent policy developments include the FORHP’s Small Rural Hospital Improvement (SHIP) Grant Program, which provides funding to small rural hospitals to help them do any or all of the following: (1) pay for costs related to the implementation of Prospective Payment Services (PPS), (2) comply with provisions of the Health Insurance Portability and Accountability Act (HIPAA), and (3) reduce medical errors and support quality improvement.

To be eligible for these grants, a hospital must be (1) small —49 or fewer available beds; (2) rural —located outside a metropolitan statistical area (MSA) or located in a rural census tract of an MSA as defined by the Goldsmith Modification or the Rural Urban Commuting Areas; and (3) a hospital, which is a nonfederal, short-term, general acute care facility. All designated CAHs were included as eligible, as well as hospitals with 50 or fewer beds located in an area designated by any state law or regulation as a rural area or as a rural hospital. Unlike other programs, there is no requirement for matching funds with this program.

More recently, the impacts of the PPACA, such as significantly increased numbers of patients seeking care and changes in reimbursement models, have pushed a number of CAH hospitals to the brink of closure. As of March 2016, there have been 71 hospital closures in the United States, mostly in the southern regions. A variety of factors contribute to the closures, including changing demographics, declining services and inpatient and surgical care, increased Medicare and Medicaid patients (especially in states that did not participate in the Medicaid expansion program), long-standing marginal financial performance, and loss of providers. In addition, several congressional actions related to the PPACA have cut Medicare reimbursement, added more quality and value measures that increase costs, and reduced reimbursement for bad debts—all this in a postrecession environment in which rural areas are still trying to regain their economic footing.

Some facilities have been able to “come back” as rehabilitation centers, nursing facilities, emergency outpatient facilities, or primary care clinics. The FORHP, National Rural Health Association, and North Carolina Rural Health Research Center at the University of North Carolina Chapel Hill are tracking closures and following how communities are responding.

Critical Access Hospitals—Physician Practice Mergers and Acquisitions

Over the past decade, the combination of recruitment and retention difficulties for rural practices, downward spiraling reimbursement payments from public and private payers, and added expense of new federal requirements such as electronic medical records encouraged the merging of rural physician practices with hospitals, many of which were CAH certified. As the overhead costs of owning and managing a practice continued to grow, physicians were more willing and interested in seeking relief through this mechanism. Additionally, such extended hospital linkages help capture market share by creating referral resources within the network. Under the PPACA health care reform requirements, creation of accountable care organizations (ACOs) and accountable community health (ACH) systems and implementation of meaningful use of electronic medical records have pushed more providers to seek collaborations that allow for flexibility and efficient use of resources to maintain adequate levels of local services.

Under the PPACA framework, health care networks (ACOs) would collaborate to lower costs, improve quality of care and services, and improve outcomes. By sharing resources and financial risk, the ACOs would receive better reimbursement, which would be shared proportionately among the partnering entities. In shifting toward a value-based reimbursement model, Medicare and other insurers anticipate overall health care costs will decrease over the next several years, with the difference used to help pay for the increased coverage of uninsured populations.