Hospitals Scrutinize Oz’s Telehealth Pitch as Medicaid Cuts Loom

Health industry executives are welcoming Mehmet Oz’s embrace of telehealth to aid struggling rural hospitals, but say it may not be enough to stave off the devastating impact that deep cuts to Medicaid funding would bring.

Oz, sworn in April 18 as administrator of the Centers for Medicare & Medicaid Services, will oversee the federal-state program that provides health coverage for 79 million primarily low-income people. He touted telehealth’s potential during his confirmation hearing before the Senate Finance Committee.

Concerns over potential cuts to the program come after the House and Senate’s passage of a budget resolution that calls for at least $1.5 trillion in federal spending reductions. Hospital leaders project Medicaid will account for a large chunk of those cuts, a move that executives fear could bankrupt rural health facilities.

“If they cut Medicaid funding at the levels that they said, rural hospitals will close. It’s not that they may close. They will close,” said Alan Morgan, chief executive officer of the National Rural Health Association.

Hospitals in rural areas often operate with lower margins due to a combination of economic factors such as having lower patient volumes, sicker patients overall, and a greater reliance on Medicaid for reimbursement.

Over 150 rural hospitals have either closed or have been converted to scaled-back facilities since 2010, according to the University of North Carolina Sheps Center for Health Services Research.

Sixty-five of those hospitals have had to convert to facilities without inpatient services during that time, the center said. Additional cuts to Medicaid, no matter the scope, would speed up this process, said Morgan.

‘An Innovative Approach’

Concerns over the viability of rural hospitals have also been on the minds of lawmakers from both sides of the aisle.

That anxiety was on full display during Oz’s confirmation hearing, where the physician and former television star fielded a slew of questions aiming to discern what strategies the new administration planned to take to maintain access to rural facilities.

In his response to questioning from Sen. Steve Daines (R-Mont.), Oz cited the importance of looking at alternative solutions to make rural facilities stronger in the face of financial pressures.

“I don’t want rural hospitals to close unless we have a better option,” Oz said in the hearing.

Oz pointed to telehealth, which he said would be a point of focus for the CMS under his leadership.

“We have to revisit how we deliver rural care in America; we can’t depend on 100-bed hospitals that do one delivery a day to provide state-of-the-art care,” Oz said.

“This is a good example where maybe there’s an innovative approach that might work,” he added.

Helping Out Hospitals

Oz’s statements about adjusting CMS’s focus to expand telehealth were seen as a positive sign that the administration was willing to explore novel ways to work with rural hospitals facing financial headwinds, said John Williams, assistant vice president of telehealth at Intermountain Health, a health-care system operating over 300 clinics and 30 hospitals across mountain states like Utah, Colorado, and Wyoming.

If Medicaid funding is decreased, hospitals can explore telehealth as an option to help staff areas of specialized care such as cardiology, neurology, or oncology, Williams said.

This “hub and spoke model,” where rural hospitals collaborate with larger institutions for specialty care, was one area where Oz said the CMS will be “able to make major inroads.”

“While it cannot replace all inpatient care, it can elevate the services which may not be financially viable to continue on site,” Williams said.

“For example, a hospitalist can staff multiple hospitals virtually, doing admissions and addressing patient concerns, especially at night, thus reducing the burden of each hospital needing to staff a provider,” he said.

Not a ‘Magic Silver Bullet’

One of the most effective ways the new administration could help expand telehealth would be by modernizing physician licensure requirements to better support multi-state telehealth platforms, said Molly McColl, vice president of enterprise virtual health at the Advocate Health, a hospital system employing over 35,000 doctors and aligned medical staff across Alabama, Georgia, Illinois, North Carolina, South Carolina, and Wisconsin.

Many states have licensure requirements that prevent out-of-state specialists from providing online care to rural communities. Creating an inventive structure for states to join multi-state licensure compacts could go a long way toward fixing this issue, McColl said.

“The nuances around the state variability certainly make it challenging. It certainly makes it more costly. We have heard and would support conversations around more incentives around states joining an interstate compact,” she said.

However, telehealth leaders like Stephanie Weatherly, chief clinical officer at Psychiatric Medical Care, the nation’s largest behavioral health-care management company, caution that bolstering telehealth alone won’t be a panacea for issues rural health patients face when hospitals scale down inpatient services.

“Telehealth has its place, but you certainly don’t have your finger on the pulse of that patient. So it can’t replace a hospital, or when a person needs a hospital,” Weatherly said.

Keeping rural hospital doors open will require some form of direct support, Morgan, the NRHA CEO, said. “Telehealth will be an important component of that, but it’s not a magic silver bullet.”

“On one hand, we have heard nothing but strong support from the White House and from Republicans and Democrats for these small rural communities and small rural hospitals,” said Morgan. “So the question remains, how do you move forward with substantial Medicaid cuts and still maintain that support?”

“I don’t know the answer to that. That question has to be answered by the administration,” he said.