The ongoing implementation of the 1997 Balanced Budget Act (BBA) and the 1999 Balanced Budget Refinement Act (BBRA) continues to adversely affect reimbursements to hospitals and post-acute/long-term care providers. Reimbursement incentives in each setting may be having the practical effect of limiting access to care for Medicare patients requiring complex and costly services, thus further fragmenting the fee-for-service (FFS) continuum of care for the most vulnerable Medicare beneficiaries. A fragmented continuum of care is especially problematic in rural areas, where disruptions can leave large gaps in access to care if the strategic options of providers are constrained or inter-provider relationships (e.g., hospital to nursing home) are weak. Although the intended effects of the BBA and BBRA were to control costs, there are a wide range of possible unintended effects on rural hospitals, their hospital-based nursing homes and home health agencies, and the relationship between hospitals and external post-acute and long-term care providers. The unintended effects on rural hospitals may involve their adoption and/or abandonment of integration strategies, which in turn may affect the care of rural Medicare beneficiaries as well as the overall financial performance of rural hospitals. The results of our earlier study of rural hospitals and their post-acute and long-term care strategies offer a unique baseline from which to examine the unintended effects of the BBA and BBRA. We plan to address three specific aims: (1) To assess how the BBA and BBRA have affected the organizational strategies of rural hospitals to either diversify into long-term care or link to external providers of long-term care; (2) To assess the impact of BBA and BBRA-related strategic behavior on the timing and placement of discharges among at-risk Medicare patients treated in rural hospitals; and (3) To assess the impact of BBA and BBRA-related strategy changes on the financial performance of rural hospitals.
