The number of Medicare-dependent hospitals in the U.S. fell 28 percent between 2011 and 2017, the U.S. Government Accountability Office reports.
Medicare-dependent hospitals receive additional payments from Medicare if at least 60 percent of their discharges or inpatient days are associated with Medicare patients, if they have 100 or fewer beds, and if their historic costs in one of three base years are greater than what they would have been paid through Medicare’s inpatient prospective payment system. The Medicare-dependent program was created in 1989 to protect vulnerable small, mostly rural hospitals, and in any given year not all eligible hospitals qualify for additional Medicare payments.
The Medicare-dependent hospital program is neither large nor expensive. In 2017, only 138 hospitals qualified for Medicare-dependent status, down from 193 in 2011. The median additional revenue hospitals derived from the program was $812,000, which accounted for a median of 1.4 percent of their total reported revenue. In 2018, Medicare spent only $119 million for additional payments for eligible hospitals and the number of Medicare-dependent hospitals that actually qualified for the supplemental payments that year declined 15 percent.
Why the decline in the number of Medicare-dependent hospitals? A new GAO report explains that
Our analysis of CMS data shows that the number of MDHs declined from 193 to 138—a 28 percent decrease over the 7-year period from fiscal year 2011 through fiscal year 2017.22 (See fig. 3.) This decline can be due to a number of factors, including hospital closures, mergers, or changes in designation. For example, we previously reported that 16 MDHs closed between 2013 and 2017.23. Moreover, our review of Medicare Administrative Contractor documentation found that some MDHs became ineligible for the program due to no longer meeting eligibility criteria. In addition, the number of MDHs that received an additional annual payment also declined, from 92 MDHs in fiscal year 2011 to 78 MDHs in fiscal year 2017—a 15 percent decrease.
Learn more about Medicare-dependent hospitals – what they are, why they receive this special consideration, and their financial performance in recent years – in the GAO report Medicare: Information on Medicare-Dependent Hospitals.