Recognizing that the health system is experiencing a period of fundamental change, careful attention should also be paid to ensuring the financial stability of rural health care delivery systems. Although significant steps have been taken to correct historical underpayment of rural providers under Medicare, the operating margins of many rural hospitals are still low, and concerns about the equity of physician payments persist. Rural providers have been heavily impacted as states have modified eligibility criteria or lowered provider payments under Medicaid and the Children’s Health Insurance Program in response to worsening state financial conditions.

Recommendation 6. Rural health care delivery systems must be sufficiently stable financially to underwrite investments in human resources and information and communications technology and to implement pay-for-performance initiatives. The Agency for Healthcare Research and Quality should produce a report by no later than fiscal year 2006 analyzing the aggregate impact of changes in the Medicare program, state Medicaid programs, private health plans, and insurance coverage on the financial stability of rural health care providers. The report should detail specific actions that should be taken, if needed, to ensure sufficient financial stability for rural health care delivery systems to undertake the desired changes described in this report.

The IOM committee also wants to draw special attention to the very limited availability of mental health and substance abuse services in many rural communities, which is likely attributable in part to a lack of adequate funding. The committee recognizes that this is a complex area. The mental health needs of populations are diverse, and mental health care services are provided in both general and specialized settings and by a plethora of health care professionals. Patients likely have different preferences for settings and providers, and there may well be differences in the quality, accessibility, and cost of services by type of setting and provider. The financing of mental health services is equally complex, consisting of a patchwork of direct service programs financed through federal and state grants and public and private insurance programs.

Recommendation 7. The Health Resources and Services Administration and the Substance Abuse and Mental Health Services Administration should conduct a comprehensive assessment of the availability and quality of mental health and substance abuse services in rural

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