Tucked away in the Affordable Care Act is a provision that may give some rural hospitals a little bit of—and much needed—financial breathing room. The law expands the Rural Community Hospital Demonstration Project, which tests what happens when so-called tweener hospitals are paid on cost-based reimbursement. Tweeners are too big to be a critical access hospital, and thus are ineligible for cost-plus reimbursement, but too small to thrive under traditional Medicare PPS. The demonstration actually started in 2004 and was slated to fade into the sunset, but it was given an extra life thanks to the ACA.

CMS earlier this month started naming the 20 hospitals that will participate in the program, including Grinnell Regional Medical Center and four hospitals in Maine. Only time will tell how effective the program is in addressing the financial strain facing rural hospitals, a strain that is very likely to grow in the coming years. A new TrendWatch report released earlier this week by the American Hospital Association peers into the unique challenges facing rural hospitals in a post-recession, post-reform era. "The recent economic downturn put additional pressure on rural hospitals as they already operate with modest balance sheets," the report states, noting that rural Americans are more likely to be uninsured and have lower incomes than those in the city. While the ACA expands coverage to 32 million people, "many rural hospitals will have to make upfront investments in order to handle the influx of new patients." The report goes on to point out that "limited financial and workforce resources present significant ACA implementation challenges for rural hospitals. As more rural Americans gain access to health coverage through Medicaid and the commercial markets, rural hospitals will experience greater patient demand that may strain already limited staff and capital resources."

It's not all doom and gloom though. The TrendWatch points out that the ACA boosts aid and services to rural communities. For instance, $1.5 billion for the National Health Services Corp for scholarships and loan repayment for primary care practitioners who work in health professional shortage areas. The law also extends outpatient hold harmless provisions for rurals. Still, there's ample concern that rurals will not be able to fully participate in some of the law's most substantial delivery system reforms, including accountable care organizations and value-based purchasing.

I'd encourage you to take a look at the TrendWatch. It is an enlightening read about one of the nation's most critical safety nets.

Email your thoughts to mweinstock@healthforum.com.