In his recent op-ed, “Urban hospitals are exploiting government programs for rural ones,” Joe Grogan argues that large urban hospitals are exploiting federal rural-hospital programs by claiming “administratively rural” status and thereby diverting benefits meant for genuinely rural facilities. This loophole, the authors warn, is driving consolidation, raising prices, and undermining healthcare access in rural America.
In his op-ed, Joe writes:
At first glance, this might appear to be mere semantics. However, it opened a loophole in practice that transformed well-intended rural support programs into profit centers for large urban hospitals.
Many were quick to take advantage. The number of urban hospitals that obtained dual classification exploded from just three in 2017 to 425 in 2023. The arrangement allowed urban hospitals to simultaneously harvest the high urban wage index for Medicare payment rates while qualifying for rural-only perks, including bonus reimbursement policies and expanded graduate medical education slots.
The most lucrative way hospitals have leveraged dual classification is through easier access to the 340B Drug Pricing Program. This federal program allows qualifying hospitals to buy medications from drug companies at steep, government-mandated discounts and then bill patients, employers, insurers, Medicare, or Medicaid at full price. Hospitals then pocket the difference, using the revenue however they want without any oversight.
Read the full version of “Urban hospitals are exploiting government programs for rural ones,” at www.washingtonexaminer.com.