Medicare dependent hospitals: Who depends on whom?

Small rural hospitals with a large proportion of Medicare patients currently receive special treatment as Medicare dependent hospitals (MDHs) under the prospective payment system (PPS). Other high Medicare hospitals (HMHs)—both urban and rural— have sought to have the additional per case payments extended to them. Current utilization patterns, the availability of alternative facilities, and the socioeconomic and demographic characteristics of the service areas were examined to determine whether either the current MDH or alternative HMH targeting criteria identify hospitals whose closure might impair access to care for Medicare beneficiaries residing in their service areas. Neither MDHs nor HMHs are substantially different from other hospitals in terms of providing access. While some individual MDHs or HMHs might be considered essential access facilities, alternate criteria should be developed to identify these facilities regardless of the proportion of their patients attributable to the Medicare program.