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49–479 PDF 2009

S. HRG. 110–821 

AGING IN RURAL AMERICA: PRESERVING SENIORS’ 

ACCESS TO HEALTHCARE 

HEARING 

BEFORE THE

SPECIAL COMMITTEE ON AGING 

UNITED STATES SENATE 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

WASHINGTON, DC 

JULY 31, 2008 

Serial No. 110–34 

Printed for the use of the Special Committee on Aging 

( 

Available via the World Wide Web: http://www.gpoaccess.gov/congress/index.html 

SPECIAL COMMITTEE ON AGING 

HERB KOHL, Wisconsin, Chairman 

RON WYDEN, Oregon 

BLANCHE L. LINCOLN, Arkansas 

EVAN BAYH, Indiana 

THOMAS R. CARPER, Delaware 

BILL NELSON, Florida 

HILLARY RODHAM CLINTON, New York 

KEN SALAZAR, Colorado 

ROBERT P. CASEY, Jr., Pennsylvania 

CLAIRE McCASKILL, Missouri 

SHELDON WHITEHOUSE, Rhode Island 

GORDON H. SMITH, Oregon 

RICHARD SHELBY, Alabama 

SUSAN COLLINS, Maine 

MEL MARTINEZ, Florida 

LARRY E. CRAIG, Idaho 

ELIZABETH DOLE, North Carolina 

NORM COLEMAN, Minnesota 

DAVID VITTER, Louisiana 

BOB CORKER, Tennessee 

ARLEN SPECTER, Pennsylvania 

DEBRA WHITMAN, Majority Staff Director 

CATHERINE FINLEY, Ranking Member Staff Director 

(II) 

C O N T E N T S 

Page 

Opening Statement of Senator Gordon H. Smith ................................................. 1 

Opening Statement of Senator Elizabeth Dole ..................................................... 2 

Opening Statement of Senator Ron Wyden ........................................................... 27 

PANEL I 

Statement of John Hammarlund, Regional Administrator, Region X, Centers 

for Medicare and Medicaid Services, U.S. Department of Health and 

Human Services, Seattle, WA ............................................................................. 4 

Statement of Tom Morris, Acting Associate Administrator, Office of Rural 

Health, Health Resources and Services Administration, U.S. Department 

of Health and Human Services, Washington, DC ............................................. 16 

PANEL II 

Statement of Margaret Davidson, Board Member, National Association of 

Area Agencies on Aging, LaGrande, OR ............................................................ 34 

Statement of Bill Finerfrock, Executive Director, National Association of 

Rural Health Clinics, Washington, DC .............................................................. 49 

Statement of Scott Ekblad, Director, Oregon Office of Rural Health, Oregon 

Health and Science University, Portland, OR ................................................... 60 

Statement of Dennis Burke, President and CEO, Good Shepherd Medical 

Center, Hermiston, OR ........................................................................................ 69 

Statement of Tim Size, Executive Director, Rural Wisconsin Health Cooperative, Sauk City, WI .............................................................................................. 78 

APPENDIX 

Prepared Statement of Senator Robert P. Casey, Jr. ........................................... 99 

Testimony of the American Academy of Physician Assistants ............................ 100 

(III) 

(1) 

AGING IN RURAL AMERICA: PRESERVING 

SENIORS’ ACCESS TO HEALTHCARE 

THURSDAY, JULY 31, 2008 

U.S. SENATE

SPECIAL COMMITTEE ON AGING

Washington, DC. 

The committee met, pursuant to notice, at 10:37 a.m. in room 

SD–106, Dirksen Senate Office Building (Hon. Gordon H. Smith) 

presiding. 

Present: Senators Smith [presiding], Wyden, and Dole. 

OPENING STATEMENT OF SENATOR GORDON H. SMITH 

Senator SMITH. Good morning, ladies and gentlemen. We thank 

you all for being here today for this very important hearing as it 

relates to healthcare for elder Americans who live in rural places. 

I particularly want to thank Margaret Davidson, Scott Ekblad, 

and Dennis Burke for flying across the country from Oregon to be 

with us today. Each of them has invaluable knowledge to share 

with us about caring for some of the 60 million Americans living 

in rural areas of the country. 

As each of our witnesses can attest, access to healthcare and support services in rural areas remains a great challenge for our Nation. Today’s hearing will examine many of the programs that are 

vital to our seniors’ ability to remain healthy and independent in 

their rural communities. Along with examining these programs, we 

will also highlight some of the new and innovative approaches used 

to increase accessibility to meet rural healthcare needs. 

As some of you know, I am from a rural place as well. I am from 

the community of Pendleton, OR. I personally understand the difficulties that can arise when one lives in a remote region. Large geographic areas, small numbers of patients, and difficulties in recruiting, training, and retaining healthcare providers are just some 

of the problems that lead to reduced healthcare access. 

Often, rural healthcare clinics or small rural hospitals are a community’s only resource for healthcare services. Further, individuals 

living in rural areas disproportionately rely on Medicare, Medicaid, 

and the State Children’s Health Insurance Program for coverage. 

In my home State of Oregon, the Critical Access Hospital Network ensures that hospital care is available in small communities. 

To support these hospitals, I have introduced a bill with my colleague, Senator Wyden, that would give critical access hospitals a 

layer of flexibility by allowing them to serve patients in times of 

high need without losing essential Medicare funding. When the flu 

seasons strikes a community, we should not force our rural hosVerDate Nov 24 2008 11:02 May 21, 2009 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 H:\DOCS\49479.TXT SAG PsN: JOYCE
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pitals to divert their patients for fear of losing their critical access 

hospital status. 

Further, Oregon is home to over 50 rural health clinics whose 

sole mission is to provide care for Medicaid and Medicare patients 

living in rural communities. Several weeks ago, my State’s primary 

care office notified me of a proposed rule that could adversely affect 

many rural health clinics located in rural places throughout the 

country. 

To that end, Senator Wyden and I introduced legislation that 

would ensure Federal health programs use consistent standards in 

determining rural health clinic status. The change will protect 

these clinics from funding losses. 

Additionally, the recent and dramatic increase in gas and food 

prices has placed a huge burden on local programs that support 

seniors through the 650 area agencies on aging. These agencies 

provide vital home-delivered meals, support senior centers, provide 

in-home help to the daily activities, and support family caregivers. 

They work to ensure that seniors can live in their homes safely and 

help alert the community when there is a problem. 

I look forward to continuing to work closely with my colleague, 

Senator Lincoln of Arkansas, to ensure that our senior network has 

the funding it needs. Every time I return to Oregon, I hear about 

these issues and how the loss of our county timber payments exacerbates these problems. 

Many Oregon counties are economically landlocked by Federal 

land. Their county budgets heavily rely on Federal timber receipts. 

As timber harvests dropped and the safety net expired, county 

funded healthcare programs have been put in peril. I continue to 

work to extend these payments to prevent entire communities from 

closing their doors to those in need. 

As we discuss the challenges facing rural communities, it is important to keep in mind that by 2030 the number of older adults 

in the United States will nearly double. This happens to be as 78 

million members of the baby boom generation begin turning 65 in 

the year 2011. 

Our help and support systems, especially for those living in rural 

America, are lagging behind where we should be at this point in 

time. I hope that today’s hearing will shine a light on the unique 

healthcare needs of those living in rural areas and on the innovative programs that strengthen and buildupon our rural healthcare 

delivery system. 

Again, I thank all of our witnesses for coming today. We proceed 

with the blessing of Chairman Kohl, who is in a Judiciary Committee markup and will be in and out of this hearing, we expect. 

With that, I turn to my colleague, Senator Dole of North Carolina. 

OPENING STATEMENT OF SENATOR ELIZABETH DOLE 

Senator DOLE. Thank you so much, Senator Smith, for holding 

this morning’s hearing to discuss seniors’ access to healthcare and 

support services in rural America. I would also like to thank today’s panelists for joining us. 

My home State of North Carolina has so many beautiful and desirable places to live, from our mountains to our coast, and for that 

3 

reason, a growing number of people are retiring to all parts of our 

State, including rural areas. At the same time, millions of North 

Carolina seniors have spent their entire lives in rural communities, 

many of whom are poor and medically underserved, with above-average rates of health problems such as cardiovascular disease, diabetes, and obesity. This is a real problem in North Carolina. 

Access to high-quality healthcare and services is critical to our 

senior population, and we must ensure that rural communities 

have access to quality services. According to Jeff Spade, the Executive Director of the North Carolina Rural Health Center and Vice 

President of the North Carolina Hospital Association, there are 110 

acute care hospitals in the State, 60 of which are rural hospitals 

serving 2.8 million residents in 61 of our 100 counties. This means 

that nearly one third of North Carolinians rely on rural healthcare 

providers. 

Mr. Spade, in recent testimony, laid out key issues facing North 

Carolina rural hospitals. These include, one, financial instability, 

mostly due to dependence on Government payers and a lack of 

commercially insured residents; second, the inability to access critically needed investment capital for medical technology; third, the 

increasing burden of chronic disease and the rising number of uninsured patients; fourth, the withering effects and expenses of substantial and chronic workforce shortages, both physicians and allied health; and fifth, the absolutely vital need for consultation and 

assistance to continually improve the quality, efficiency, and performance of our rural hospitals and healthcare organizations. 

Many of North Carolina’s rural residents rely on Medicare for 

their health coverage. With physicians’ practices and hospitals 

struggling to keep their doors open, thanks in part to the inadequacy of Medicare reimbursements, this contributes to accessibility challenges. 

Furthermore, it is very difficult to attract young physicians and 

other allied healthcare professionals to live and serve in these already medically underserved areas. I am pleased that Congress recently passed, with my strong support, the Medicare Improvements 

for Patients and Providers Act, which included and extended provisions important for rural hospitals and Medicare providers. 

Perhaps most important is that this bill delayed a 10.6 percent 

cut in Medicare reimbursements to physicians. The proposed payment cuts would have severely limited access to care for seniors, 

especially in rural communities. 

Recently, Congress also acted to extend the moratorium on a 

CMS regulation that would have narrowed the definition of public 

hospital. In fact, I think in North Carolina it would have narrowed 

our hospitals from 45 to 4 in that particular designation. 

I was proud to work with a bipartisan coalition of Senators to 

delay these cuts, which would have cost North Carolina hospitals 

more than $330 million annually, costs that would have resulted in 

cuts to services and jobs and further limited healthcare access. 

Let me add that with skyrocketing gas and food prices, seniors, 

particularly those in rural areas, are dealing with greater hardships. In fact, earlier this year, this Committee held a hearing examining the struggles of hunger-stricken seniors and the difficulties that programs like Meals On Wheels face when their volunVerDate Nov 24 2008 11:02 May 21, 2009 Jkt 000000 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 H:\DOCS\49479.TXT SAG PsN: JOYCE
4 

teers, who use their own vehicles, can no longer afford to help deliver a meal. 

The ripple effects of high gas and food prices are particularly 

hard on the Medicare population since many are on fixed incomes. 

The challenges of ensuring affordable, accessible healthcare to seniors living in rural America are complex and multifaceted, we 

know. As a Senator from a rural State with a rapidly growing senior population and as a member of the Rural Health Caucus, I very 

much look forward to hearing from the witnesses today. 

Again, thank you, Senator Smith, for this hearing today. 

Senator SMITH. Thank you, Senator Dole. 

Our first panel will consist of John Hammarlund and Tom Morris. John Hammarlund is the Regional Administrator of Regions V 

and X for CMS, and he is located in Seattle, WA. He will discuss 

Medicare and Medicaid reimbursement policies for rural providers 

intended to improve access for beneficiaries. 

Tom Morris is the Acting Associate Administrator of the Office 

of Rural Health in Health Resources Services Administration, 

known as HRSA. He will describe HRSA’s rural health programs 

that help meet the needs of rural populations. 

So, John, why don’t we start with you? 

STATEMENT OF JOHN HAMMARLUND, REGIONAL ADMINISTRATOR, REGION X, CENTERS FOR MEDICARE AND MEDICAID SERVICES, U.S. DEPARTMENT OF HEALTH AND 

HUMAN SERVICES, SEATTLE, WA 

Mr. HAMMARLUND. Thank you. Good morning, Senator Smith. 

Senator SMITH. You may want to turn on your mike there. 

Mr. HAMMARLUND. Thanks a lot. Good morning, Senator Smith. 

Good morning, Senator Dole, and distinguished members of the 

Committee. 

Thank you so much for the opportunity to testify today regarding 

the role of CMS in issues impacting seniors in rural America. I am 

John Hammarlund, Regional Administrator of the Seattle and Chicago offices of CMS. As Senator Smith noted, I am based out of Seattle. 

My focus is local outreach and education about CMS programs to 

our stakeholders in 10 States in the Midwest and Pacific Northwest. I am also the national lead for rural health issues on behalf 

of all of CMS’s regional offices, which offers me an opportunity to 

coordinate messaging with my other regional colleagues. 

Thank you so much for bringing attention to this important topic 

and to the needs of seniors in rural America. The Medicare program, as you know, provides coverage to approximately 9 million 

beneficiaries in rural and frontier areas of this country. We are the 

primary payer of healthcare services in geographically rural areas. 

We understand and take seriously our obligation to ensure the 

quality of and access to healthcare in these areas. 

As someone who implements our agency’s programs at a local 

level, I can assure you that we strive to ensure that rural beneficiaries are informed about their healthcare choices and the quality of healthcare services available to them. Likewise, we do our 

best to keep rural providers informed about our policies and help 

5 

them understand and comply with them. All of this is to ensure access to quality healthcare. 

While Medicare’s benefit design and statutory payment systems 

generally follow a uniform nationwide approach, we recognize the 

special needs of rural beneficiaries and providers. In early 2008, we 

formed the Rural Health Council, an internal CMS council designed to more effectively respond to legislation that affects rural 

beneficiaries and address issues of concern from rural health practitioners. 

This new cross-cutting council creates an opportunity, for example, for environmental scanning—information gathered at the local 

level—to inform our policies and policymaking. CMS regularly exchanges information with national and State rural health associations, the State Offices of Rural Health, and other such organizations to ensure that we understand the environment where rural 

healthcare providers and beneficiaries are working and living. 

We also work quite closely with HRSA’s Office of Rural Health 

Policy, represented here today by my colleague Tom Morris, to ensure that healthcare providers in rural America can function to the 

best of their ability within the boundaries of our statutory and regulatory frameworks. Clearly, both the Congress and CMS are 

mindful of the special nature of rural areas. Congress has established and CMS has implemented a number of key rural payment 

programs and incentives for fee-for-service providers to ensure 

quality and access. 

An example of this is the critical access hospital designation, 

where certain small hospitals can receive 101 percent of cost as reimbursement for treatment of Medicare beneficiaries. CMS also 

makes bonus payments to physicians furnishing services in health 

professional shortage areas, or HPSAs. It is vitally important to 

rural communities that they can attract and retain physicians, especially primary care doctors, and we hope the HPSA bonuses can 

have a positive impact. 

We also strive to ensure that rural beneficiaries, like all beneficiaries, have choices in health plan coverage. Medicare Advantage 

enrollment in rural areas has grown significantly. Up until 2006, 

plan options were concentrated in largely urban areas, and now 

plans are available in every region of the country, including rural 

areas, and virtually all beneficiaries have access to at least one 

Medicare Advantage plan option. 

CMS also recognizes the utility and necessity of telehealth in the 

delivery of certain healthcare services. Since 2001, Medicare has 

paid for professional consultations, office visits, psychotherapy, and 

other services delivered via telecommunications systems. We provide a process whereby providers can recommend new services to 

be included for telemedicine reimbursement to ensure that we 

maximize the opportunity that this technology provides. 

With the passage of the new MIPPA law, more types of health 

facilities will be added to the list of covered telehealth facilities, 

such as hospital-based renal dialysis facilities, skilled nursing facilities, and community mental health centers. Telemedicine obviously holds a lot of promise to increase access to care in rural 

areas, and we look forward to the opportunities to expand its reach. 

6 

Finally, Medicare recognizes the unique challenges facing rural 

ambulance providers. The Medicare fee schedule takes into account 

these challenges through bonus payments for certain kinds of ambulance trips. 

Thank you again for the opportunity to testify today. CMS appreciates the Committee’s ongoing interest in this important issue. We 

believe that by continuing to support the unique needs of 

healthcare providers in rural areas through the initiatives described today, we will ensure seniors and disabled persons with 

Medicare will maintain access to quality services. 

We are continually considering initiatives to improve access and 

quality within Medicare, such as value-based purchasing, electronic 

health records, and e-prescribing, and look forward to continued 

work with the Committee and our partners represented here today 

to further strengthen our stewardship of Medicare. 

I look forward to any questions you may have. 

[The prepared statement of Mr. Hammarlund follows:] 

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Senator SMITH. Thank you, John. 

Tom Morris. 

STATEMENT OF TOM MORRIS, ACTING ASSOCIATE ADMINISTRATOR, OFFICE OF RURAL HEALTH, HEALTH RESOURCES 

AND SERVICES ADMINISTRATION, U.S. DEPARTMENT OF 

HEALTH AND HUMAN SERVICES, WASHINGTON, DC 

Mr. MORRIS. Mr. Chairman, Senator Dole, members of the Committee, thank you for the opportunity to meet with you today to 

discuss rural access issues and the challenges individuals face as 

they age. 

We appreciate your interest and support of rural healthcare. I 

am here today representing the Health Resources and Services Administration, commonly known as HRSA. 

HRSA helps the most vulnerable Americans receive quality medical care, regardless of their ability to pay. We work to expand 

healthcare to millions of uninsured Americans, mothers and children, those with HIV/AIDS, and residents of rural areas. 

HRSA to recognize the needs of the elderly population in rural 

areas and continues to focus and evolve its programs to best meet 

those needs. We take seriously our obligation to implement enacted 

legislation. We help train future nurses, doctors, and other clinicians, and we try to place them in the greatest areas of need. 

Our efforts stress cost-cutting alliances within the agency and 

across the department to deliver quality services. The agency also 

collaborates at the Federal, State, and local level with communitybased organizations to seek solutions to rural healthcare problems. 

My testimony will describe several HRSA activities that touch millions of people in rural America, particularly the elderly. 

HRSA’s Office of Rural Health Policy (ORHP) is the leading proponent of better healthcare services for the 55 million Americans 

who live in rural areas. Housed in HRSA, ORHP has a department-wide responsibility to analyze the impact of healthcare policy 

on rural communities. In that role, we inform and advise the Secretary, and work to ensure that rural considerations are taken into 

account through the policymaking process. 

Some of our efforts include the administration of the Medicare 

Rural Hospital Flexibility Grant Program, the Rural Healthcare 

Services Outreach Program, and the State Offices of Rural Health 

Grant Program. We also fund the Rural Health Research Center 

Grant Program, which is the only HHS program specifically devoted to rural health services research. We also support the Rural 

Recruitment and Retention Network, which links providers to rural 

communities in need. 

We collaborate with CMS on a number of levels, as John mentioned, including trying to emphasize the use of the Program of Allinclusive Care for the Elderly (PACE) in rural areas. This program 

is important because it takes duly eligible Medicare and Medicaid 

beneficiaries and keeps them out of nursing homes so they can receive their care in a home-based setting. 

The Health Center Program is a major component of America’s 

safety net. Due to the efforts of the health centers and the generous support of Congress, we recently completed a Presidential 

17 

initiative that created over 1,200 new or expanded health center 

sites. 

Health centers served 16 million patients in 2007, and as part 

of a renewed focus on high-poverty areas last year, 80 new health 

center sites serving 300,000 people were created. As you know, poverty is higher in rural areas than it is in urban. 

In the past year, rural health centers served 654,000 elderly patients. Today, find that over half of the health centers serve rural 

populations. 

Since its inception in 1970, the National Health Service Corps 

has placed more than 28,000 health professionals, committed to 

providing improved access to primary care, oral healthcare, and 

mental health services in underserved areas. The NHSC is a service program, and its clinicians go wherever the need is great. Approximately 60 percent of NHSC placements are in rural areas. 

HRSA also responds to the growing needs of the elderly in rural 

areas with. 

Comprehensive Geriatric Education Grant, which supports nursing personnel by preparing nurses and faculty to care for the elderly. 

In an era of high gasoline prices, travel costs have become an 

even greater barrier to rural patients, especially the elderly. In 

2007, HRSA provided 140,000 telehealth visits for 46 different specialty services to patients in rural communities, meaning they did 

not have to travel to a distant medical center to receive specialized 

care. We estimate that this has saved 14 million miles in travel or 

approximately $7 million in travel-related costs. 

In conclusion, HRSA takes great pride in the work we do to provide quality healthcare for rural Americans. We thank you for the 

opportunity to discuss the agency’s programs, and we are happy to 

answer any questions you might have. 

[The prepared statement of Mr. Morris follows:] 

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Senator SMITH. Thank you very much, Tom. 

We have been joined by my colleague from Oregon, Senator 

Wyden. We have already done our opening statements, Senator. If 

you have one, we would be happy to receive it now. 

OPENING STATEMENT OF SENATOR RON WYDEN 

Senator WYDEN. Mr. Chairman, I apologize for the bad manners. 

I was prosecuting the Healthy Americans Act cause in the Finance 

Committee, and I would just make a couple of very quick comments 

because I know both of you want to go to your questions. 

First, I want to commend you, Mr. Chairman, for holding this 

hearing, and Senator Dole and I have talked also often about 

healthcare. 

I think, for Oregonians, we all remember the account recently 

about one of our physicians traveling 5 hours recently to Elgin, OR, 

twice a week to keep the Elgin Family Clinic open. If the clinic 

closes, Elgin residents—and as we both know, lots of those folks 

are seniors—would then be driving to La Grande, another big trek 

for medical care. 

So on the November ballot, the mayor and the residents of Elgin 

are considering creating a health district so that they can, in effect, 

impose yet another tax on themselves to keep this small clinic 

open. We both remember that 30 years ago in Condon, that is what 

they had to do. 

It seems to be that we can do better by our folks in rural communities. The three of us are committed to that. Under the Healthy 

Americans Act, for example, we would make it possible for all those 

folks in rural communities, tiny communities to be part of larger 

groups when they purchase their healthcare. 

So they would be in a position to get more for their healthcare 

dollar. They would be protected if they had a pre-existing condition. 

Because we make changes in the tax code, there is money for lowincome folks in these rural areas to get subsidies. 

So I am interested in working with both of you on that legislation. Senator Dole knows, she—her husband and I have talked 

often about these causes, and I think it is very constructive this 

morning, Mr. Chairman, that you are looking at a number of other 

issues that are causing great hardships for the rural health clinics. 

I commend you for your efforts, look forward to working closely 

with you and Senator Dole on it. 

I want to apologize to the Oregon witnesses. I am going to be 

running in and out because the Finance Committee continues its 

hearing. But to commend you for this effort, and to have the opportunity to work with both of you is something I appreciate. 

Senator SMITH. Thank you very much, Senator Wyden. 

John, as you probably know, I am a strong supporter of ensuring 

critical access hospitals have the ability to serve rural populations. 

I think you probably know that the designation and its requirements are not perfect. You have got to draw the line somewhere, 

but I am very concerned with the lack of flexibility in drawing that 

line. 

Dennis Burke is a good friend of mine from Hermiston. At his 

hospital, Good Shepherd in Hermiston, they have recently had to 

transfer 17 patients since they became a critical access hospital 

28 

due to the daily 25-bed limit rule. That adds up to a cost of about 

$1,200 per person, per patient to move them around. 

That just seems irrational to me, and I wonder if you have a rationale for not allowing a more flexible approach to the bed limit 

cap so that hospitals can avoid these kinds of expenses and inconveniences to patients? 

Mr. HAMMARLUND. Senator Smith, I want to let you know, first, 

that one of the duties I take very seriously in my role as a regional 

administrator is to get out of Seattle and to meet with hospital administrators and clinic administrators in rural areas. In fact, every 

year, I take a van of experts from my office, and we get out into 

rural areas of Washington and Oregon and Idaho. 

In fact, we were in Pendleton just about a year and a half ago, 

listening to the concerns of administrators such as critical access 

hospital administrators. I am and I know CMS is very much aware 

of and understand the issue of the 25-bed limit. At this time, that 

limit is set by statute. 

I understand that you and Senator Wyden have offered a legislative fix to address that issue. At the moment, the administration 

doesn’t have a position on that bill. 

Senator SMITH. You are not opposed to Senator Wyden and my 

bill to add some flexibility to the standard? 

Mr. HAMMARLUND. Well, we are always interested in entertaining comments from the Congress, obviously. I understand that 

our staff had been providing some technical assistance to your staff 

and Senator Wyden’s staff to look at the bill. The administration 

just simply doesn’t have a position at this moment. 

But I do understand the pressures on critical access hospitals. As 

you know, in certain very limited circumstances, such as the flooding that we had recently in the Midwest, the Secretary does, under 

limited circumstances, have authority to waive that limit. 

Senator SMITH. Was it done in the Midwest? Was it waived? 

Mr. HAMMARLUND. It was. 

Senator SMITH. Well, as Senator Wyden points out the example, 

of Elgin, OR. Now that refers to a health clinic, but look, I know 

it is hard to draft rules that fit every circumstance. It is hard to 

write statutes that do. But I think we desperately need to have 

more flexibility in this because if you have a rural community, you 

have a flu outbreak, or you have a flood. You have an earthquake 

or a volcano going off, it just seems irrational that this is not more 

flexible. 

So, I would certainly plead with CMS to support our bill and support its hasty enactment because it is, literally, life and death to 

some small communities when they have to shuttle patients around 

or lose critical access designation. 

Mr. HAMMARLUND. Well, I understand, Senator, and I know that 

CMS staff are very happy to come and work with your staff and 

Senator Wyden’s staff on the bill to provide technical assistance. 

Senator SMITH. Now as it relates to proposed changes in rural 

health clinics rules and regulations, the new rule, as I understand 

it, would apply this standard—let me see here. You are going to 

update the shortage area designation every 4 years. Is that correct? 

29 

Mr. HAMMARLUND. We actually use the definition of a shortage 

area as defined by HRSA. But in our particular rule, we require 

a 3-year look-back time period. That is correct. 

Senator SMITH. In the past, you have only applied this to new 

applicants, but now you are going back and applying it to existing 

rural communities. Is that correct? 

Mr. HAMMARLUND. At its core, the proposed rural health clinic 

rule requires that all rural health clinics be located in non-urbanized areas and requires that all of them be located in an area that 

has been designated or certified by the Secretary within the past 

3 years as having an insufficient number of needed healthcare 

practitioners. 

So it is our interest to ensure that the rural health clinics that 

receive a special payment are, indeed, meeting the definition and 

the policy goal of rural because we want to make sure that the 

beneficiaries in those rural areas are getting the best care they can 

and that the rural clinics serving them are doing so appropriately 

under the law. We want to make sure that we don’t risk treating 

some rural health clinics differently than other rural health clinics. 

Senator SMITH. Tom, I understand HRSA has withdrawn a proposed rule on the methodology dictating health professional shortage area designation, and I applaud you for withdrawing that. But 

I wonder if you can tell me what the HRSA’s timeframe is for addressing the shortage designation methodology? 

Mr. MORRIS. Yes, sir, Mr. Chairman. 

We have got over 600 comments on this rule, and so it is going 

to take us a while to go through all of those comments and figure 

out how we might respond to them. Then factor that into writing 

a new proposed rule that takes into account some of the issues that 

have been raised. 

I don’t have a specific timeframe for you because the next few 

months will just be spent going through those comments. But it is 

our expectation that eventually we would move to a new proposed 

rule that I think would use all these comments as technical assistance for us to make sure that we come out with something that 

balances the needs a little bit better. 

Senator SMITH. Well, I appreciate that, and I just note, before I 

turn the questions over to Senator Dole and then Senator Wyden, 

you know, our population is aging. We need to get ahead of this 

curve and not just be reacting to a shortage all the time. We are 

sure prepared to do our part here in Congress, and we hope that 

the rules that you all propound will be reflective of that. 

Senator Dole. 

Senator DOLE. Thank you. 

Mr. Hammarlund, rural hospitals, of course, are very dependent 

on Medicare and Medicaid reimbursement to stay operational, and 

some rural hospitals in my State depend on the Federal Government for up to 70 percent of their revenue. Rural hospitals also 

have a significant uncompensated care burden. As a result of this 

burden, the average North Carolina rural hospital received 2.2 percent less revenue than it actually costs to provide their valuable 

services. 

This dire financial situation is simply not sustainable, of course, 

in the long run. In fact, two of our North Carolina rural hospitals 

30 

closed their doors recently, and two have declared bankruptcy. 

Well, I can’t speak for the rest of the country, but I assume there 

are similar problems happening across America. 

Would you review any recommendations regarding what policies 

could be put in place to ensure that hospitals serving high numbers 

of Medicare patients don’t have to close their doors? 

Mr. HAMMARLUND. Well, thank you very much, Senator Dole, for 

that question. 

We certainly want to protect the access to care of the beneficiaries in rural and frontier America like we do throughout the 

country. CMS is ever vigilant in trying to understand the nature 

of challenges of the providers such as the ones you have in your 

State. 

I know, from the perspective of somebody who works in a regional office, we are on the phone an awful lot talking to the constituents in your State and others, trying to help them cope, if you 

will, with the environmental challenges, the economic challenges, 

as well as to understand our laws and to comply with them. 

Medicare does have in place, thanks to Congress, a variety of 

special payment mechanisms for certain rural providers, and those 

are in place, of course, because we recognize the special needs of 

the rural communities. We recognize the special economic challenges of rural providers, and so we have designations such as critical access hospitals or Medicare-dependent hospitals or sole community hospitals or rural referral centers. These are all programs 

designed specifically for rural areas to help keep them functioning 

within the law. 

We always, of course, are interested in entertaining other proposals that the Congress might have, and of course, I can always 

assure you that we will do the very best to deal with specific problems that we might have in your State by talking to providers and 

understanding their concerns. 

I don’t have any new proposals today, but I am very much aware 

that the Congress and our agency does pay special attention to the 

needs of rural providers through these special payment mechanisms. 

Senator DOLE. Could you tell me a little bit about a new concept 

that is being promoted called the medical home, which has shown, 

I think, early signs of success in North Carolina? The recently 

passed Medicare bill included increased funding for the medical 

home demonstration program, and I would be very interested in 

hearing how you see that working into existing programs. 

Mr. HAMMARLUND. Thank you, Senator. 

I will confess to you I don’t know an awful lot about the current 

demonstration. I am aware of its existence, and I know that some 

of my other colleagues in other parts of the country are supporting 

that more directly than I am out in Region X. 

I do think that it holds a lot of promise, and I am glad to know 

that the MIPPA law expanded its reach. We have not yet done all 

of the analysis of the new MIPPA law and its impacts, so I can’t 

really speak to how it may change the demonstration program. I 

would be happy to get you a detailed answer to your question about 

the medical home demonstration for the record and for your information. 

31 

[Information submitted by Mr. Hammarlund:] 

CMS is currently designing the Medical Home Demonstration. The demonstration 

was mandated by Section 204 of the Tax Relief and Health Care Act of 2006 

(TRHCA) in up to eight states to provide targeted, accessible, continuous and coordinated family centered care to Medicare beneficiaries who are deemed to be high 

need (that is, with multiple chronic or prolonged illnesses that require medical monitoring, advising or treatment). 

The recently enacted Medicare Improvements for Patients and Providers Act of 

2008 (MIPPA) increased the funding available to conduct the medical home demonstration to $100 million in excess of the amount that we would otherwise have 

had available to spend under TRHCA. The TRHCA did not specify a dollar amount 

for the demonstration, but did provide language that presumed savings would accrue and be shared with medical home practices. We read the MIPPA language to 

permit us to spend up to $100 million in excess of project savings, that is, the demonstration can go $100 million over budget neutrality. 

MIPPA also gave the Secretary discretion to expand the duration and scope of the 

demonstration, if the Secretary determines that the expansion would improve the 

quality of patient care or reduce Medicare spending. Site selection will be followed 

by a solicitation of practices to participate in the demonstration. We expect to announce site selection in December. 

Senator DOLE. Great. Thank you. 

Mr. Morris, like many other States, North Carolina is facing that 

growing shortage of physicians in rural places, and this includes 

general surgeons as well as primary care physicians. I am concerned about what this will mean for access to care. Are Title VII 

and Title VIII program funding enough to address the workforce 

shortage, and how can we help get more trained professionals into 

rural areas? 

Mr. MORRIS. Yes, ma’am. The Title VII, Title VIII, in particular 

the nursing education—basic nursing education practice grants we 

think are an important tool in addressing workforce shortages. Also 

the National Service Corps, where more than half of the placements go into rural areas, and they can be both primary care, and 

that would be in family medicine, internal medicine. We think that 

is probably our most effective tool at addressing long-standing 

workforce challenges. 

In addition to those programs, I mentioned briefly in my testimony the Rural Recruitment and Retention Network is a network 

of 46 States, rural recruitment and retention specialists at the 

State level who work together to link providers who are looking to 

practice in a rural area with rural areas that are trying to recruit 

a provider. 

Over the last 4 years, that service has placed 2,900 clinicians 

into rural areas. If you consider that it costs about $20,000 to recruit a physician, that has generated, I think, a substantial savings 

for the rural communities that use this. 

In addition, Congress, about a year and a half ago, expanded the 

Conrad 20 program to the Conrad 30 program, which allows J1 

visa physicians to practice in underserved areas, and the great majority of these folks end up in rural areas. 

So, I think those are the tools we have available to address the 

workforce challenges. 

Senator DOLE. Great. Thank you very much. 

Thank you, Mr. Chairman. 

Senator WYDEN. Mr. Chairman, thank you, and I share many of 

the concerns you and Senator Dole have brought up. 

32 

I would say to Senator Dole, I think you are very much onto a 

key issue in terms of the medical home. In fact, one of the policies 

we advocate in the Healthy Americans Act we call the ‘‘health 

home’’ so that you can, in effect, get more practitioners—and they 

are especially important in rural areas—like the nurses and physician assistants into the coordination of care. That seems to have 

been well received by both doctors and nurses and PAs. But I share 

your view that it is an extraordinarily important part of the 

healthcare future. 

Question for you, Mr. Hammarlund. I understand that you all 

are civil servants, and some of these judgments we are asking 

about are largely political kinds of questions. I share Senator 

Smith’s view about the critical access hospitals and getting the 

flexibility. We want to work with you until we can get that right. 

But it is an urgently, urgently, urgently needed piece of legislation. 

I think that what you are hearing from us is that, to some extent, if you don’t get rural healthcare right, you turn rural communities into sacrifice zones. They can’t survive without healthcare. 

On our watch, the three of us are just saying that is unacceptable. 

So that is what is behind it, and let us expedite the process of negotiating the critical access hospitals legislation that we have been 

talking about, S. 1595. 

One technical question that I wanted to ask you, Mr. 

Hammarlund, something I think you can do something about, and 

that is that with respect to the processes you use for calculating 

reasonable cost, what our providers tell us is that you are always 

light-years behind their real costs. For example, it seems that the 

Oregon Office of Rural Health indicates that for the average cost 

of a Medicare visit in Oregon, it is $105, about $106, and your reimbursement rate is capped at just over $70. 

So, essentially, these hard-hit communities are falling behind 

every single time a rural resident walks in the doors, and we just 

can’t stand by and let that go unaddressed. So what is being done 

specifically at your level to keep the Medicare payments in line 

with the realities of what these rural health clinics have to spend 

in terms of caring—giving high-quality care to a rural resident? 

Mr. HAMMARLUND. Thanks for that question, Senator Wyden. 

I may ask that I will provide a more expert and detailed explanation for the record that would be more helpful to you. But let me 

take a crack at it. 

As you know, reasonable costs are one mechanism by which 

Medicare can reimburse providers. In fact, in the olden days, we 

were reimbursing most providers by reasonable costs. But in the 

case of many provider categories now, we now pay a prospective 

payment rate rather than reasonable costs. 

So there are a few providers still that are paid under a reasonable cost basis. You are absolutely right, they are based on historical costs, which we then attempt to trend forward to bring them 

to a currency that would be allowed for appropriate coverage of cost 

for the providers. So that is to say, payments are built on a historical cost base that is trended forward to try to keep up with current 

costs. 

I imagine you are correct in that providers will tell us that reasonable cost-based payments aren’t quite as current as need be, 

33 

and that is certainly something that I am happy to take back to 

the agency’s experts and policymakers to see what we could possibly do. 

Senator WYDEN. First of all, this is the agency’s language. This 

is not something that we have concocted because we have got a 

handful of problems. Because if we were somehow seeing a more 

modern system that met the needs of these clinics, we wouldn’t be 

asking any questions. But in the June 27th proposed rule, the rule 

that you all have been talking about, the agency uses the term 

‘‘reasonable cost.’’ That is the agency’s characterization of what is 

going on. 

What Senator Smith and I find when we go home, these clinics 

are getting clobbered every time they have a visit because they are 

not keeping up. So why don’t you get back to us for the record? Can 

you do that within 10 days? 

Mr. HAMMARLUND. Be happy to. 

Senator WYDEN. OK. So get back to us within 10 days with respect to, first, how reasonable costs are being calculated, and then 

I would like to know how you would address this shortfall and particularly whether you can address it administratively? Because this 

goes right to the heart of how rural clinics keep their doors open. 

Can’t keep the doors open if they get shellacked in terms of meeting their expenses every time somebody comes in the door. 

Mr. HAMMARLUND. I understand. 

Senator WYDEN. OK. Mr. Chairman, thank you. 

Senator SMITH. Thank you, Senator Wyden. 

I want to clarify one of the problems that we have in these rural 

clinics. As I understand it, when it comes to recertifying, CMS operates on a 4-year timetable and HRSA operates on a 3-year timetable. What we need to do is have you on the same timetable, and 

that is what our bill does. Is there any reason you all wouldn’t support that? 

Mr. HAMMARLUND. Well, I will start with an answer, Senator. 

We have those different time periods because of different statutory 

frameworks, and my understanding is that you and Senator Wyden 

do have a bill moving forward and that we have staff who have 

been providing some technical assistance to your staff on that bill. 

At the moment, my understanding is that the administration has 

not taken a position on that legislation. 

Senator SMITH. Well, we hope to pass it in an expedited way, and 

we look forward to your support of it because I think that is very 

important to be on the same page between your agencies. 

Do you have any further questions? 

Well, thank you very much. We appreciate you very much, John 

and Tom, for your time here and your service to our country. 

Mr. HAMMARLUND. Thank you, Mr. Chairman. 

Senator SMITH. We will now call up our second panel. It consists 

of Margaret Davidson. Ms. Davidson is a board member for the National Association of Area Agencies on Aging, as well as the Executive Director of Community Connections of Northeast Oregon in La 

Grande, OR. She will discuss the important assistance that the 

Older Americans Act programs and agencies on aging provide to 

seniors living in rural areas to help them remain in their homes. 

Welcome, Margaret. 

34 

We will also hear from Mr. Bill Finerfrock. Did I pronounce that 

right, Bill? All right. He is the Executive Director for the National 

Association of Rural Health Clinics. He will discuss services that 

rural clinics provide to individuals living in rural parts of the country. He will also discuss challenges encountered by the States and 

providers when they develop creative healthcare delivery models in 

rural areas. 

Mr. Scott Ekblad will follow him. Mr. Ekblad is the Director of 

the Oregon Office of Rural Health at the Oregon Health and 

Science University. He will discuss the role of the State Offices of 

Rural Health and their work to increase the availability of 

healthcare professionals and quality of care to rural residents. 

Mr. Dennis Burke is the President and CEO of Good Shepherd 

Medical Center in Hermiston, OR, my neighbor. He will discuss the 

role of critical access hospitals in rural areas. 

Finally, Mr. Tim Size. Mr. Size is the Executive Director of Rural 

Wisconsin Health Cooperative. He will discuss how healthcare reform must include rural perspective and address future healthcare 

workforce needs. 

Thank you, all. Margaret, why don’t we start with you? 

STATEMENT OF MARGARET DAVIDSON, BOARD MEMBER, NATIONAL ASSOCIATION OF AREA AGENCIES ON AGING, LA 

GRANDE, OR 

Ms. DAVIDSON. Thank you, Senator Smith. It is an honor to be 

here. 

My name is Margaret Davidson, and as you said, I am the Director of Community Connection of Northeast Oregon in La Grande, 

OR, and I serve as a board member of the National Association of 

Area Agencies on Aging, N4A. 

Thank you for inviting me. It is, like I said, an honor to be here 

representing N4A and the 650 area agencies on aging and 240 Title 

VI Native American aging programs that have successfully delivered aging services across the country for the last 30 years, serving 

more than 8 million older adults with Older Americans Act funding. 

My organization is a private nonprofit corporation that was 

formed in 1969, and in addition to being an AAA, we are also a 

community action program. We have 13,000 seniors in my rural 

area, spread across the vast area of 13,000 square miles. As you 

know, this is a mountainous area, and winter travel conditions persist from November through April. 

Much has been written about the aging demographics that our 

country faces, but not as well known is what the rural areas face. 

In my area, the younger generations leave our areas to go to college and find family wage jobs while the boomers and others move 

in for the quality of life. As a result, the 23 percent senior citizens 

in my area generally have less income. In fact, the poverty rate for 

seniors in my area is 38 percent higher than the State average. 

I can relate to the issues around rural health clinics. One of my 

staff people is the mayor of Elgin and has been very involved in 

addressing the health clinic issue in the city of Elgin that Senator 

Wyden mentioned. So she is very involved in that. 

35 

I think the best way to articulate the challenges that rural area 

agencies face is to tell you about a typical client. Our Mrs. Jones, 

she is 77, widow of a World War II veteran who worked the family 

farm and at the local mill. 

She never worked outside the home, but she was a community 

volunteer with the PTA, the church bazaar, and just an integral 

member of the community. She lives on $900 a month of Social Security. While she can do most things for herself, she knows that 

taking care of her yard and her house is getting to be too much for 

her. While she is proud and doesn’t want to ask for help, she knows 

that the time is coming. 

As her budget gets tighter, costs continue to escalate. She is 

being pinched more and more. Last year, she heated only two 

rooms of her home, and still the energy bills were too much for her. 

She often has to choose between food and medicine when it comes 

to stretching her monthly budget, and it is not uncommon for her 

to eat cold cereal for both breakfast and lunch. 

This is where the area agencies on aging come in offering information and assistance and direct services to their clients like Mrs. 

Jones. I believe that we are the best-kept secrets across the country. Many people know that senior meals are our flagship programs, but what we really do is lend a knowledgeable ear and provide support and find solutions to the common and not-so-common 

problems that we each will face as we age. As my grandmother 

liked to say, we find a way or make one. 

Through our meals program and transportation, we continue to 

stretch the dollars further and further. Costs are escalating. Our 

meals costs alone—cost to prepare the meals has increased 18 percent in the last year. Fuel surcharges from our food distributors 

have doubled. 

As Senator Dole said, our Meals On Wheels volunteer drivers 

are, for the first time, asking for a gas subsidy, and we have had 

to increase the suggested donation at our meal site for the first 

time in 3 years just to help forestall any service cutbacks. Our 

transportation fuel costs have increased by 25 percent over the last 

6 months. 

So I am very supportive of the action that we see Congress taking in the supplemental appropriations bills. We would encourage 

you to add supplemental funding for the area agencies to address 

the food and energy costs that we are facing and our clients are 

facing through the Older Americans Act and LIHEAP program. 

Also would encourage you to fulfill the promise made last year in 

the 2006 Older Americans Act reauthorization by actually funding 

those enhanced community-based care provisions. 

Also, the importance of the surface transportation bill cannot be 

overstated and encourage that to be fully funded again. 

Thank you. 

[The prepared statement of Ms. Davidson follows:] 

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Senator SMITH. Thank you, Margaret. 

I think your testimony just points out how difficult a place we 

find these vital programs to seniors. I mean, the funding has been 

stagnant for a decade now, but your costs and the population you 

serve and the miles you cover have not been diminishing. We are 

doing everything we can to move these programs to higher levels 

of funding so that you can accommodate these terrible increases 

that all Americans are facing, but particularly vulnerable seniors 

in rural places bear the brunt of this. 

So thank you for being here. 

Ms. DAVIDSON. I appreciate that. I appreciate being here. 

Senator SMITH. Bill, take it over. 

STATEMENT OF BILL FINERFROCK, EXECUTIVE DIRECTOR, 

NATIONAL ASSOCIATION OF RURAL HEALTH CLINICS, 

WASHINGTON, DC 

Mr. FINERFROCK. Thank you, Senator. 

Senator SMITH. Hit your mike, too. 

Mr. FINERFROCK. Sorry. On behalf of the National Association of 

Rural Health Clinics and the more than 3,000 federally certified 

rural health clinics in the United States, I want to thank you for 

the opportunity to talk with you today. 

The Rural Health Clinic Program is one of the largest and oldest 

programs to try and improve access to healthcare, primary 

healthcare in rural underserved areas. It was established in 1977 

by an act of Congress and provides enhanced payments to practices 

that get certified as RHCs through a cost-based reimbursement 

methodology and mandates the utilization of physician assistants 

and nurse practitioners in the delivery of care. 

It has been a very successful program, but we have a number of 

challenges that confront us. As far back as the mid 1970’s, we recognized that traditional fee-for-service payments weren’t adequate 

to sustain rural providers. You have heard from a number of folks, 

the previous witnesses indicating, and as you know, Medicare and 

Medicaid payments are considerably more significant in rural communities than they are at other locations. So, having adequate payments from those programs is critical to the survival of those clinics. 

But it is not even often enough. I think a good example, and you 

have heard it referenced here today, is Gilliam County, OR. Back 

in 1980, they had had a succession of providers through the National Health Service Corps, none of whom were able to stay in the 

community, and they decided upon the idea of establishing a rural 

health clinic and staffing it with two physician assistants because 

one of the problems that you have in rural communities is the 

burnout factor, where providers are there 24 hours a day, 7 days 

a week and simply cannot sustain that level of work. 

So, they created the rural health clinic, staffed it with two PAs. 

But they determined that there wasn’t sufficient revenue, and they 

came up with a very creative idea, which was referenced during 

Senator Wyden’s comments about Elgin. They created a tax district 

where, in essence, similar to a property tax—well, it is a property 

tax that they levy on themselves. But instead of going to schools, 

the more traditional concept, it goes to support healthcare. 

50 

This past year, that property tax covered 22 percent of the budget for the Gilliam County medical center. That meant that the 

Medicare and Medicaid payments fell that far short that they, in 

essence, had to tax themselves in order to generate sufficient revenue. But it has worked. I am pleased to be able to tell you that 

that clinic, the PAs and physician who started that clinic in 1980, 

David Jones and Dennis Bruneau and Dr. Carlson, are still working with that clinic 30 years later. 

So something that went through a succession of changes is a successful model, but it can’t continue to work. You made reference before to reasonable cost. Their average cost per visit in that clinic 

is $89 a visit, but they only get paid $75.63 by Medicare. If Medicare were to pay adequately for that clinic, the community wouldn’t 

have to subsidize it to the extent that they do. But because Medicare doesn’t pay, they at least have that tax subsidy. But that is 

just not right. It can’t continue. 

Senator SMITH. Bill, does Medicare Advantage play into this at 

all? Is it helping? 

Mr. FINERFROCK. I don’t know whether Medicare Advantage was 

in that particular part of Oregon. It was interesting. We did see a 

number of Medicare Advantage plans that were actually paying 

rural health clinics more than what Medicare was paying them. 

They came in and said we will pay you 101—in one case, we will 

pay you 105 percent of what Medicare paid you. Now part of that 

was because they were getting paid more by Medicare as an incentive to go into those markets. 

One of the ironic issues with regard to Medicare Advantage is it 

is great to put the plans out there, but if you don’t have providers 

who can deliver the care, what is the good to have the card that 

says I have a card that gives me access to all these great benefits 

if I don’t have a provider who can deliver it? 

Senator SMITH. That is a point I am sure many here recognize. 

I just simply emphasize that Senator Wyden has authored the 

Healthy Americans Act, and I am a co-sponsor of that. We are just 

looking for every way that we can to get people insured. 

I am not sure there is a perfect plan out there, but we want all 

Americans to have healthcare. But there is another side to that 

coin, and that is simply if everybody has a healthcare policy, but 

there are no providers— 

Mr. FINERFROCK. That is right. 

Senator SMITH [continuing]. We have got a problem. 

Mr. FINERFROCK. That is right. 

Senator SMITH. We have a problem. 

Mr. FINERFROCK. I have a piece of paper that is worthless. I have 

a card that looks great, but I don’t have anybody. I don’t have a 

hospital. I don’t have a clinic. I don’t have a provider. So you are 

not doing me any good. 

Senator SMITH. Exactly right. 

Mr. FINERFROCK. What we are saying is we need to focus as 

much attention on ensuring that there is a provider in that community to make that card valuable as we have on making sure that 

they have the card. That is where we have fallen short. 

Our frustration on a provider side is that there has not been a 

recognition—I know, with all due respect to the previous panel, 

51 

there was discussion about Medicare does this or Medicare—very 

often a critical access hospital was not created by CMS. It was created by Congress. 

Senator SMITH. Right. 

Mr. FINERFROCK. The Rural Health Clinic Program was created 

by Congress. The health professional shortage area payments were 

created by Congress because the agency itself does nothing 

proactively to try and recognize its own problems. It takes an act 

of Congress to do it. 

States have historically come up—they are considered the incubator of great ideas out there. They come up with creative and innovative ways of trying to deliver healthcare in their States and in 

their communities. But yet we get to the Federal level, and the 

Federal Government says, well, we are not going to pay for that. 

Senator SMITH. So they are killing good ideas. 

Mr. FINERFROCK. I think that that is—they are not killing it. 

They are dying by neglect. Now because every time somebody 

comes up with a new idea, they have to come to Congress. The flip 

side of that, and this is the irony, and you mentioned before the 

rural health clinics role, in this proposed rule, they proposed a dramatic change in the way they want to calculate rural health clinic 

payments. 

Now the statute for rural health clinics and how those are to be 

calculated is the same today as it was in 1977 when it was passed 

by Congress. We have been getting paid the same way for the last 

30 years. But now in this proposed rule, they say, ‘‘well, we are 

going to make a technical change in the way that we are going to 

pay rural health clinics’’ and, ‘‘oh, by the way, it is going to reduce 

the amount that you get paid,’’ but this is the way we now interpret the law. 

Well, if they can interpret the law after 30 years of doing it one 

way, essentially overturn 30 years of interpretation and you go and 

you ask them, ‘‘well, we have got this problem with the critical access hospitals’’ and their response is, ‘‘oh, well, you have to change 

the law.’’ 

Senator SMITH. We are going to change it, give them something 

else to do. 

Mr. FINERFROCK. But why is it that they have the ability to do 

a technical correction to change the payment methodology that 

they have done for one way, but when we bring other problems to 

the attention that for whatever reason they choose they don’t want 

to deal with it? Oh, you have to go and change the law. 

To me, they have the same flexibility to address your problem if 

they feel that they can change our payment methodology after 30 

years. 

Senator SMITH. I couldn’t agree more, and I am sure you all recognize that part of the value of having congressional hearings and 

having these good civil servants come here is to put light and heat 

on them and let them know we are watching them. Frankly, we are 

moving. We are going to change some things here because this is 

not working for rural Oregon. So, your presence here is valuable, 

and it is part of our strategy— 

Mr. FINERFROCK. Well, I want to thank you for all of your work, 

both on this proposed rule, the health professional shortage area 

52 

proposed rule, Senator Wyden’s work on both of those issues. You 

have been really excellent advocates, and we appreciate it. 

We want to go forward to address these problems. We want to 

work with the Congress. We want to work with CMS to try and get 

these. In my office, I have—it has been there for many years, and 

it says—I cut it out of a newspaper, and it says, ‘‘Worry about the 

patients.’’ That has got to be our daily reminder. 

This isn’t about rural health clinics. It is not about critical access 

hospitals as institutions. It is about people, and those institutions 

provide healthcare. They make it available in those communities. 

To the extent that we make it harder for critical access hospitals, 

rural health clinics, rural physicians to provide care, it is the beneficiaries who ultimately lose. 

[The prepared statement of Mr. Finerfrock follows:] 

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Senator SMITH. Thank you very much, Bill. 

Mr. FINERFROCK. Thank you. 

Senator SMITH. Scott, take it away. 

STATEMENT OF SCOTT EKBLAD, DIRECTOR, OREGON OFFICE 

OF RURAL HEALTH, OREGON HEALTH AND SCIENCE UNIVERSITY, PORTLAND, OR 

Mr. EKBALD. Thank you very much. 

For the record, my name is Scott Ekblad. I am the Director of 

the Oregon Office of Rural Health, and I really appreciate being invited to talk here today. 

Senator SMITH. Thanks for coming. 

Mr. EKBALD. I am going to start by talking about the State Offices of Rural Health. As Tom Morris from the Office of Rural 

Health Policy stated, it is a nationwide program. Some may wonder 

why there is a need for something as specific as an Office of Rural 

Health. The answer is really simple. Rural people are generally 

older, sicker, poorer, more likely to be under or uninsured than 

their urban counterparts. 

Healthcare services are relatively few and far between for rural 

people, and many are accessible only in distant urban communities. 

There are far fewer physicians in rural communities, and most of 

them are overwhelmed. In Oregon, there is a physician for every 

327 urban dwellers, and 1 for every 819 rural Oregonians. 

Rural physicians, clinics, and hospitals must survive financially 

with small population bases in an environment in which too many 

of their patients can’t pay for their healthcare and when Government programs such as Medicare pay less than the cost of delivering a service. That is why there are State Offices of Rural 

Health. We help rural providers stay in business and meet the 

needs of their patients. 

There is a State Office of Rural Health in each of the 50 States. 

Most are located within State government. About a dozen are located at universities, like the one in Oregon, and there are even 

a few private, nonprofit Offices of Rural Health. 

But we all share certain core functions, and one is a State clearinghouse for information about rural health. Another is to coordinate the activities in the State that relate to rural healthcare. A 

third is to facilitate participation of rural healthcare entities in 

Federal, State, and local programs, assist in the recruitment and 

retention of healthcare professionals, and strengthen State, local, 

and Federal partnerships. Those are all fairly broad mandates, but 

we are very creative in doing in each State what is needed. 

Oregon’s Office of Rural Health was created by State statute in 

1979 and actually pre-dated the national program. So the Oregon 

Office of Rural Health is one of the oldest in the country. We were 

part of the State government until 1989, when it was relocated to 

Oregon Health and Science University. 

The synergy that results from being located at a health science 

university—the State’s only school of medicine, its only school of 

dentistry, as well as a nursing school and a pharmacy school— 

helps us accomplish our mission, which is to improve the quality 

and availability of healthcare for rural Oregonians. 

61 

The Oregon Office of Rural Health is involved in many activities 

to achieve our mission, including preparation of rural healthcare 

workforce, advocacy for rural providers, and access to oral and 

mental health services. But I will focus today on the services we 

provide that are of particular benefit to Oregon’s rural seniors. 

The first program I want to talk about is the Medicare Rural 

Hospital Flexibility Program. The Flex Program ensures the viability of small rural hospitals by ensuring cost-based Medicare reimbursement for those that qualify to become CAHs. In Oregon, the 

State legislature also guarantees cost-based reimbursement for 

Medicaid services. 

Dennis Burke, the CEO of one of the finest rural hospitals in Oregon, will speak to you about the role of a CAH in a rural community. But I want to talk a little bit about what the office does with 

the Flex Program. The Flex Program does much more than enable 

enhanced reimbursement. 

It also grants funds to each participating State to provide technical assistance and other services to these hospitals and the communities in which they operate. 

These activities help rural hospitals match services to the needs 

of their communities, and I want to give a few examples of what 

the State of Oregon has done with their annual State Flex grant. 

For example, we provide monthly Webcast seminars on topics such 

as preventing surgical infections, effective provider recruitment 

and retention strategies, and updates on CMS regulations. 

We provide innovation grants to communities to foster appropriate solutions for local problems. We provide training for local 

emergency medical technicians, the hospitals that they refer to, 

and the community clinicians to facilitate a collaborative high-quality system of care from pickup by the ambulance to transfer to the 

hospital. 

Senator SMITH. Scott, can I ask you on this, the whole approach 

of innovation, is telemedicine a piece of that? Are you familiar with 

what the VA is doing in terms of telemedicine and— 

Mr. EKBALD. I am familiar with it. Frankly, I think that in Oregon at least, telemedicine has really not quite hit its stride as far 

as applicability to rural communities. The State of Oregon or an 

entity within Oregon, the Oregon Healthcare Network received $20 

million in funds from the FCC, and it is called ‘‘the Last Mile’’ 

funds. That is to lay the cable, literally, to the very most remote 

clinics and hospitals. 

So, once that is in place, I think that we will be able to utilize 

telemedicine quite a bit more. The problem still exists— 

Senator SMITH. Is it going to be one of our answers, or what 

other problems are related to telemedicine? 

Mr. EKBALD. Well, there are a few more steps before I would call 

it a solution, and one of them is accessing the capital that would 

be required to utilize telemedicine. There needs to be a hub where 

services are provided. So far, that doesn’t really exist in one central 

location. 

Senator SMITH. Would that be healthcare clinics? 

Mr. EKBALD. Well, and the healthcare clinics also need to purchase the equipment that is necessary, but I think that it could 

really be tremendously helpful in providing services that are just 

62 

never going to be cost effective to deliver in a very small community. 

Senator SMITH. As you think of innovation and how to keep rural 

Oregon connected, I think watching what the VA has been doing 

is just groundbreaking and very impressive. The quality of care 

may not be the same as if you are sitting in the doctor’s office, but 

I have watched it, and it is pretty darned good. It is better than 

not having it. 

Mr. EKBALD. I also understand that it is particularly useful for 

younger folks. The younger people are the more comfortable interacting in that medium. 

Senator SMITH. Yes, I guess that rules me out. 

Mr. EKBALD. You and me both, Senator. [Laughter.] 

Oregon began its State Flex Program in 2000, and we had lost 

roughly 10 hospitals in the preceding decade due to financial difficulties. I am happy to say that since the advent of the Flex Program, we have not lost one single rural hospital. So that alone is 

a testament to the value of the program. 

Senator SMITH. How important is Medicare Advantage, in your 

view, to rural health? 

Mr. EKBALD. Well, I am not familiar with any examples, such as 

Mr. Finerfrock stated, of a Medicare Advantage program coming in 

and offering more than what they would—the clinic would ordinarily get. So the examples I hear about are ones where the Medicare Advantage plans, and we do have a fairly large penetration of 

Medicare Advantage plans in rural Oregon, are really putting hospitals in particular in a bind because of the payment. 

I want to talk also a little bit about rural health outreach and 

network development grants. They are very important. These are 

grants that go directly to the communities. They don’t come to the 

State Office of Rural Health, but I did want to mention a couple 

examples. 

There is one entity in southern Oregon that has received an outreach grant in order to integrate behavioral healthcare with primary healthcare. A lot of primary care visits, they come to the family practices, for example, and really what they have is an underlying mental health or behavioral health issue. 

This one rural health outreach grant enabled this organization to 

place a behaviorist in a primary care practice so that when the primary care physician identifies an underlying behavioral health 

problem, they can call the behaviorist and consult with the patient 

right on the spot. There is no losing people by having them come 

back for another visit. So that is one example of how an outreach 

grant has been used. 

In closing, I want to talk a bit about provider incentives. The 

State Office of Rural Health in Oregon is also proud to implement 

State-based incentive programs for providers, such as the State income tax credit program for all rural physicians and other providers in our State. We also have a malpractice subsidy program 

in Oregon for rural providers that is implemented by our office. 

Also tax credits for volunteer EMTs— 

Senator SMITH. Scott, tell me about the malpractice piece. Do you 

help them be able to access and afford insurance? 

Mr. EKBALD. We literally help them pay their premiums. 

63 

Senator SMITH. You pay their premiums. 

Mr. EKBALD. As I am sure you know, malpractice premiums in 

Oregon are particularly high, and we were at risk of losing literally 

all obstetrical services in rural Oregon. 

Senator SMITH. When the cap was taken off—did they explode 

then? 

Mr. EKBALD. Actually, they were quite high before that, and now 

the situation is even worse. 

Senator SMITH. But because of the program, your physicians are 

able to get insurance because you help them pay for it? 

Mr. EKBALD. Yes. Yes, that is true. However, it is a finite pot of 

money, so to speak. It is not a funding stream, and so we are due 

to run out of those funds sometime in 2010 or 2011. So we are 

working with the legislature to see how we might be able to continue that program. 

Senator SMITH. Very good. 

Mr. EKBALD. So, in closing, please allow me to thank you and 

your colleagues for inviting us here today and for your support of 

House Resolution 6331. The provisions that were mentioned earlier 

are very important to Oregon and to many other States. 

I hope that we can also count on your support for the funding 

that comes along with the Labor-HHS-Education bill because even 

though, for example, the Flex Program was reauthorized under 

H.R. 6331, the funding comes through Labor-HHS-Education bill. 

For the reasons that I have just mentioned, they are so important 

to our State. 

So thank you very much. 

[The prepared statement of Mr. Ekblad follows:] 

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Senator SMITH. Thank you very much, Scott. 

Dennis, my friend, tell us about critical access. 

STATEMENT OF DENNIS BURKE, PRESIDENT AND CEO, GOOD 

SHEPHERD MEDICAL CENTER, HERMISTON, OR 

Mr. BURKE. Senator Smith, it is nice to be here. My name is Dennis Burke. 

You are very familiar with our community, but for those in the 

room who aren’t, I will just go over a little bit of details about us. 

I am President of Good Shepherd Healthcare System in Hermiston, 

OR, where I have had the pleasure of serving for the past 20 years. 

Hermiston is a rural community with approximately 17,000 residents located in north-central Oregon near the Columbia River. We 

enjoy a mild desert climate and have a lot of recreational opportunities. Good Shepherd Healthcare System serves a population of 

about 50,000, and part of our mission is to improve access to 

healthcare services. 

We offer a broad array of general medical, surgical, and obstetrical services. We have a busy 24–7 emergency room that is designated as a Level 3 trauma center. Our emergency room also 

serves as a major primary care safety net for the region. We provide home health and hospice care and a transportation service to 

assist people in getting to their medical appointments, which, by 

the way, is highly utilized by seniors. 

Our community has seen a significant growth in the number of 

seniors targeting Hermiston and the vicinity for retirement. In fact, 

the city of Hermiston now actively promotes Hermiston as a designation retirement community. We appreciate the supportive programs that have come through our Government that have strengthened America’s smallest hospitals that serve its most vulnerable 

communities. The Critical Access Hospital Program is a prime example of this support. 

Following Good Shepherd Healthcare System’s enrollment in the 

critical access program 21⁄2 years ago, I am pleased to say that 

Good Shepherd Healthcare System is now on solid financial footing, 

following several years of financial losses. 

While much is good, there are opportunities for improving 

healthcare and access in rural America, and I would like to focus 

on our two top priorities in Hermiston. Recruitment and retention 

of professional and technical personnel is our biggest challenge. 

Unless there are system changes, this problem is only projected to 

get worse. 

In our experience, like that of many rural communities, our 

shortages are not for a lack of applicants. We have many interested 

and qualified students that cannot get into healthcare programs 

due to a lack of capacity within the educational system. Our local 

community college has three qualified applicants for every available position in their nursing program. We rely heavily on the college for quality nurses. 

Several years ago, we formed a partnership with our sister hospital in Pendleton to fund an additional instructor position. This 

has provided an additional six to seven new nursing graduates per 

year, which has been very favorable for both our facilities. 

70 

As scarcity of professionals has increased, market pressures have 

pushed their compensation higher, making it difficult for colleges 

to offer the competitive salaries necessary to entice qualified professionals back into teaching. Much more needs to be done across 

our country to increase access and availability for qualified students who wish to pursue healthcare careers. 

Second, I would like to speak to the Critical Access Hospital Program 25-bed cap. Good Shepherd Healthcare System runs an average census of approximately 17 patients per day. But that census 

has varied this past year from a low of 10 to a truncated high of 

25, the point at which in order to be compliant we must transfer 

patients to other hospitals. 

Good Shepherd Healthcare System’s large obstetrical program 

compounds the problem. Over the past year, our OB daily census 

has ranged from 0 to 11 patients. Obstetrical patients count toward 

the critical access hospital 25-bed cap. This means that beds available for other acute care patients in our community can vary from 

the full 25 beds down to 14, depending on the daily OB census. 

While OB services generally have little to do with Medicare patients, they certainly have an impact on our seniors’ access to care 

depending on the luck of the draw when they present for acute care 

services. Not only is a transfer due to the 25-bed limitation disruptive and inconvenient for patients and their families, it also involves a degree of unnecessary risk to the patient and adds significantly to the cost of care. 

We doubt that any of the transfers that we have made have resulted in significant cost savings at another facility, especially 

when considering the additional $1,200, at minimum, of expenses 

that the transport adds. 

I want to thank you, Senator Smith and Senator Wyden, for your 

understanding of the problem that the 25-bed cap has caused and 

your collective efforts in developing the Critical Access Hospital 

Flexibility Act. This bill provides for use of an annual average daily 

census rather than a cap as a determinant for critical access hospital eligibility. Use of an annual average census standard would 

free critical access hospitals from the difficult choice of transferring 

patients and risking goodwill or keeping the patient and risking essential reimbursement. 

We believe this would be a far better delimiter, and we encourage the Subcommittee to support this legislation. This modification 

of the critical access program will strengthen America’s smallest 

hospitals and enable them to fulfill their mission, enhancing access 

in their communities, which we are prepared to do. 

I appreciate the opportunity to be here and would be open to 

questions. 

[The prepared statement of Mr. Burke follows:] 

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Senator SMITH. Well, thank you, Dennis. 

Look, I guess I wouldn’t be in this business if I wasn’t an optimist. But we really do need to get this changed, and we do have 

a good bill that will force the change. I am very hopeful that we 

will get this done sooner than later because I do understand, in a 

very personal way, why you have to have that flexibility or else a 

lot of rural hospitals just simply won’t be there when people need 

them. 

Mr. BURKE. That is right. 

Senator SMITH. Tim Size, thank you for being here from Wisconsin. 

STATEMENT OF TIM SIZE, EXECUTIVE DIRECTOR, RURAL 

WISCONSIN HEALTH COOPERATIVE, SAUK CITY, WI 

Mr. SIZE. Good morning, sir. It is a pleasure. 

I am Tim Size. I am Executive Director of the Rural Wisconsin 

Health Coop. A little background, the coop is a collaborative of 34 

rural hospitals. Twenty-eight are critical access, so six are PPS. 

Before I get into my prepared remarks, I would really like to 

support what Dennis just said. It is exactly what we are seeing in 

Wisconsin. I actually got a call from one of the hospitals last winter. ‘‘What am I supposed to do? I have 25 people in-house, and I 

have a mother coming to the hospital ready to deliver?’’ 

I mean, basically, we are forced to go out of compliance or do 

very inappropriate patient care. 

Senator SMITH. What do you do, Tim? Do you shove them off to 

a clinic somewhere? 

Mr. SIZE. I think in that situation, we just—you do the right 

thing for the patient. 

Senator SMITH. Yes. 

Mr. SIZE. We also had a flu epidemic in some of our communities 

last—exactly what you were talking about was exactly the problem. 

Earlier, under the current law, somehow our regional offices were 

able to be flexible. But then we got the word this year pretty much 

if it is not like on international TV—it is a flood—don’t expect any 

relief. So I am very, very thankful for the bill that you have introduced. 

Senator SMITH. Well, hopefully, it doesn’t take another flood to 

get it passed. 

Mr. SIZE. The flood is all right because it is on TV, and so then 

we get the waiver. It is flu that is not as obvious. 

Anyway, I would like to get to my prepared remarks. I would like 

to address three issues today that I believe, as well as the hospitals 

with whom I work, must have significantly greater attention here 

in the Nation’s capital, but also back in our States. 

We need to make health workforce a priority. I think a number— 

it is a thread through a lot of us who have spoken this morning. 

We need to see that Medicare Advantage plans are held accountable, and my written testimony goes into some detail. But I will 

just highlight a bit in a second. We also need to invest in healthy 

communities. 

I actually testified in this room, I think, about 20 years ago to 

the same committee, and I can tell you today, being a baby boomer 

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and about 62, I guess, I am taking it a lot more personally than 

I did 20 years ago. 

Senator SMITH. Yes. 

Mr. SIZE. So I am hoping you attend to some of these issues. 

Both nationally and in Wisconsin, rural health’s many successes 

are a testament to the endurance and creativity of rural communities. Federal initiatives, whether they be formal reform or informal, need to build on this strength and not weaken it. 

Regarding workforce, the soon-to-explode retirement of baby 

boomers will lead to a critical shortage of workers. Our current approach to growing the next generation of doctors, nurses, pharmacists, et cetera, is in critical disarray, and I don’t use that description lightly. I think you can think about Keystone Cops. We 

don’t know where we need to go, and we don’t know how to get 

there. 

I think Dennis mentioned some really important points about the 

pipeline, and that is a major problem. It is not the only problem. 

Many rural communities already face staff shortages. We are actually even beginning to hear our urban colleagues having problems. But I can assure you, and this is a quote from one of my 

board members at our last strategic planning session, that when it 

starts raining in the suburbs, you can expect a tsunami in rural 

communities. We get the mal-distribution on top of the supply 

problems, and the supply problems are coming. 

The Association of Academic Health Centers has just released, I 

think last week, ‘‘Out of Order, Out of Time: The State of the Nation’s Health Workforce,’’ which focuses attention on the critical 

need for a new collaborative, coordinated national health workforce 

planning initiative. They draw three critically important conclusions, all of which I strongly agree with, and it is what we are seeing in Wisconsin. 

A broader, more integrated national strategic vision than our historic approach to health workforce policymaking and planning is 

needed if complex and urgent health workforce issues are to be addressed effectively. 

Two, a new mechanism is needed to serve the currently unfilled 

integrative role that existing health workforce policymaking and 

planning processes are not designed and are ill equipped to serve. 

Three, it is critically important to act immediately to develop and 

implement an integrated comprehensive national health workforce 

policy before intensifying health workforce needs outpace available 

resources, putting U.S. seniors and the rest of the country at substantial risk. 

Regarding Medicare Advantage, MA plans are gaining rural market share. We are now at actually 23 percent in rural Wisconsin, 

which is the State-wide average. The potential consequences to 

rural health are significant and potentially quite negative. 

I would like to digress for a second and say that I am kind of 

agnostic. I am not here to talk for Medicare Advantage or against 

it, but to talk about current implementation. 

In a 2007 report to the Department of Health and Human Services Secretary, his National Advisory Committee on Rural Health 

noted that rural America cannot wait to see what MA does or 

doesn’t do. Potential problems need to be identified and resolved 

80 

before the MA program becomes entrenched and less readily adjusted. If not, the negative impact on the rural healthcare infrastructure could take a generation to rebuild. 

Medicare beneficiaries should not be required to lose access to 

local services to obtain the promise of increased benefits. The National Rural Health Association has made numerous specific recommendations about how CMS should enhance the accountability 

required of Medicare Advantage plans, and I have detailed them in 

my written testimony. 

Rural health provides care to small communities at some distance from large urban hospitals and clinics. We do so even as patients are attracted out of our communities or forced out of town. 

For example, the 25-bed cap. 

Laws have long been required that insurers respect the right of 

people to receive healthcare locally when they are enrolled in 

closed network plans. These laws will continue to be stretched and 

tested. Protecting access to local care for Medicare Advantage must 

be a high priority. 

Regarding health communities, the American Hospital Association is definitely on target when they call for America’s hospitals 

to get serious about individual and community wellness. In their 

agenda, ‘‘Health for Life: Better Health, Better Healthcare,’’ the 

AHA says without change, America’s healthcare capabilities and finances will be overwhelmed. 

As a society, we must provide access to education and preventive 

care, help all reach their highest potential for health, and reverse 

the trend of avoidable illness. As individuals, we must achieve 

healthier lifestyles, take responsibility for our health behaviors and 

choices, and each one of us must take action. 

Reform is about people getting the care they need at a cost our 

country can afford. Equally important, reform must help individuals and communities to become healthier, to not need as much 

healthcare. If the growing need for care is not reduced, costs will 

explode, whatever the form of reform or adjustments we make. 

Unlike Lake Wobegon, two out of three counties in rural Wisconsin are less healthy than average. But it is no surprise. We predict them to be so. They are less healthy not because of poor rural 

healthcare. It is due to too much smoking, too much drinking, and 

in my case, too much eating. It is due to too little exercise, too little 

education, too few jobs, and too low income. 

Reform without the bigger picture will fail. At the very least, 

healthcare reform must lay down a roadmap to make our seniors 

and communities as healthy as we know they can be. 

Thank you. 

[The prepared statement of Mr. Size follows:] 

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Senator SMITH. That is excellent, Tim. 

Many of you have talked about the shortage of providers, and I 

just wonder—why we don’t have more people in medical school and 

nursing training? I know so many young people with superior 

grades can’t get into these programs. What is holding them back, 

Tim? Is the cost of medical education just so high that— 

Mr. SIZE. I am not an expert on workplace education. We have 

worked a lot with our educational institutions on that very issue. 

There are multiple problems. 

One is to produce graduates is not the same thing as producing 

graduates that are sensitive and able and interested in working in 

rural America. So there is a burden that I think academia needs 

to take on to focus more on their responsibility to produce graduates that will work in a variety of settings. 

My sense that we, over the last few years, have not anticipated 

the baby boomers and what that will do in terms of massive numbers of people exiting the health workforce as well as large new 

numbers of patients coming into our systems. So, in fact, we have 

kind of been holding our own on average, continuing to bump along 

with mal-distribution problems in rural America. 

However, now—and it is something I am really scared about— 

part of the problem is we are not real good planning 5, 10 years 

down. We need to be forecasting today what doctors, nurses, pharmacists, physical therapists, nurse practitioners we need 10 years 

from today. Because if we don’t get them in school today and next 

year, we will have the shortage in 10 years. 

Maybe that gets messed around a little bit with J1 and all that 

stuff, but we have a responsibility, I think, to grow our own. Right 

now, the focus in our State is basically just to get our arms around 

the description of what current problems we have and what we are 

forecasting those problems to be like once the real baby boomer 

bulge starts to work its magic. 

That is one of the big problems with the proposed HPSA rule. It 

assumes a level of data that is simply not there. So we have a lot 

of work. We have got to take it a lot more seriously. I have no involvement with the Association of Academic Medical Centers, I just 

came across their report last week when it was released. It is 

thinking like that that we have to pay attention to. 

I know the Chronicle of Higher Education last winter also had 

a major report on exactly the same issue. We are really, really behind in our planning. 

Senator SMITH. Scott, you are located at OHSU. I know you may 

not have any responsibility for this area, but do you know whether 

the medical school, the dental school, and the nursing school are 

doing more to increase enrollment? They have sure got a lot of applicants. 

Mr. EKBALD. We are trying very hard to increase the pool of candidates, but we are really quite restricted physically with the location of Oregon Health and Science University. 

Senator SMITH. That is why we built that cable car there. 

Mr. EKBALD. As soon as we get the new building at the bottom 

of the cable car, we will be in good shape. 

But I just want to echo what Tim said, it is not just production 

of providers. It is distribution, and most of the problems in disVerDate Nov 24 2008 11:02 May 21, 2009 Jkt 000000 PO 00000 Frm 00099 Fmt 6633 Sfmt 6633 H:\DOCS\49479.TXT SAG PsN: JOYCE
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tribution to rural areas has to do with economic challenges. I mean, 

primary care is the backbone of a rural healthcare system. Yet they 

are the very lowest paid of all the physician specialties. 

There has got to be more incentives for people to choose a primary care specialty and then to choose a rural practice. The research clearly shows that people will end up practicing in close 

proximity to where they were trained. Well, if we can’t train them 

in rural areas, we can’t expect them to go there. 

You can’t spend 8 years training in, you know, Portland is a fairly small city, let alone New York or Boston. So don’t expect them 

to move to a rural area. It is really unrealistic. So— 

Senator SMITH. Any other thoughts? Closing comments? 

Yes, Bill? 

Mr. FINERFROCK. There is a few years ago, there was a movie out 

called ‘‘A Field of Dreams,’’ and one of the seminal lines in that 

was, ‘‘If you build it, they will come.’’ Well, I think what Scott just 

touched on is the corollary in healthcare, which is, ‘‘If you pay 

them, they will come.’’ Part of the problem that we have with rural 

providers is that what we pay rural providers to deliver care in 

rural communities is dramatically less than what we would pay 

them to provide the same care. So if one looks at it from an economic standpoint strictly, then your reaction is I will go provide, 

I will live in suburban Portland. I will have access to more urban 

environment, potentially different school opportunities and options 

than I would have in a rural community. 

We have to overcome those payment disincentives in order to get 

the providers to go out there. It is not the only thing, but it is a 

key part of it. 

Senator SMITH. Tim, you had a— 

Mr. SIZE. Yes, I agree with Bill on the economic incentives. But 

I would also like to get in the record something I think Wisconsin 

is doing right and is a model for other States. We have created a 

rural medical school inside our medical school called the Wisconsin 

Academy of Rural Medicine. We are now beginning our third year. 

When that is fully up and going, that will be 25 rural-focused medical students per year. 

We are basically building on a strategy of recruiting young people from rural communities, who have a particularly community 

and primary care orientation. Then—the first and second year is in 

Madison. But the third and fourth year are with academic partners 

around the State. In fact, they are having a medical school experience in rural areas with rural mentors, and they have been chosen 

for a higher probability of going back to rural. 

Senator SMITH. Do you know whether, either Wisconsin or Oregon, they have incentives in terms of admission if they commit to 

go to rural? 

Mr. SIZE. We have—that was a very interesting question. I mean, 

the University of Wisconsin is a very prestigious medical school, 

and sometimes I think some members of the admissions committee, 

it is all about the so-called ‘‘best and brightest,’’ but very narrowly 

defined with MCATs and the grade point averages. 

We are saying, look, the research is really clear. Once you get a 

certain point of smartness, to be a good doctor, it is as much about 

relationship— 

97 

Senator SMITH. Exactly. I just know a lot of kids in northeastern 

Oregon who wanted to go to medical school, but they were not admitted. Had there been any preferences given to the actual need 

in society would that have benefited them? They are smart enough. 

My heavens. 

Mr. SIZE. Well, we created the slots. Basically, we have 25 slots 

that are being held for rural, and they are plenty smart enough to 

meet and do the work. So, we stopped looking at the grades, 

stopped looking at MCAT, and look at other attributes. 

Senator SMITH. Any other final comments? Yes, Dennis? 

Mr. BURKE. I just wanted to mention, along that same vein, that 

we have the first medical school opening in about 60 years in Yakima, WA. The Pacific Northwest is the most under medical school 

to population area of any place in the country. The new Pacific 

Northwest University of Health Sciences, which focuses on students from rural areas with the idea of returning them to the rural 

areas, they are taking their first class of 30 medical students this 

September. 

Good Shepherd Healthcare System is signed up as a clinical rotation site. Two years after intense academics, we will be looking forward to having them on our campus. 

Senator SMITH. There you go. 

Mr. BURKE. That is a very exciting concept and program. 

Senator SMITH. Well, listen, I thank you all so very much. Your 

testimonies added, I think, greatly to the Senate record, and you 

have helped us to turn up some light and heat on the parties that 

be. So our time is well spent this morning because you have come 

this long way to help us, and thank you. 

We are adjourned. 

[Whereupon, at 12:06 p.m., the hearing was adjourned.] 

(99) 

A P P E N D I X 

PREPARED STATEMENT OF SENATOR ROBERT P. CASEY, JR. 

Senator Smith, thank you for bringing us together today to discuss the important 

issue of health care for our older citizens who live in rural areas. This is an issue 

that too often gets ignored, and I appreciate your drawing our attention to it. 

Rural health care is an important issue that deserves consistent attention, especially with respect to our older citizens who do not always have the means or ability 

to travel the many miles that are often necessary to get the health care they need. 

Many older citizens also live on fixed incomes and the high gas prices of recent 

months underscores this issue. 

In Pennsylvania, 48 or our 67 counties are classified as rural. We also have the 

second highest number of residents over the age of 65 in the country. We must carefully examine whether or not we are meeting the current health care needs of our 

older citizens who live in rural areas, and also continue to be innovative and farsighted in designing new ways to help these individuals, especially as the baby 

boom generation retires and enters this demographic. 

Access to providers continues to be a challenge in rural areas. In 2007, only 12 

percent of primary care physicians in Pennsylvania practiced in rural areas. This 

translates into approximately one physician per 1300 residents. In urban areas, the 

ratio is approximately one physician per 650 residents. We must continue to work 

to increase the number of health care practitioners in rural areas, and examine how 

we can utilize nurse practitioners, certified nurse midwives and other health care 

providers to meet the needs of older citizens in rural areas. 

Providers in rural areas face their own set of challenges. As I mentioned before, 

they have proportionately greater numbers of patient load and often have fewer resources to care for those patients. Furthermore, rural providers tend to see more 

patients covered under Medicare and Medicaid. 

The Medicare Improvements for Patients and Providers Act which became law 

earlier this month included several provisions for rural health care. Telehealth services were expanded, FLEX grants were extended and payments for sole community 

hospitals and critical access hospitals were improved. These were important 

changes, but there is more work to do. 

I would like to thank Senator Smith again for organizing this important hearing. 

I look forward to hearing the testimony of the witnesses and working with my colleagues to find solutions to the challenges of health care for our older citizens who 

live in rural areas. 

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