Proposed OMB Change Could Affect Many Rural & Urban Hospitals

Thoughtware Alert Published: Feb 24, 2021
Healthcare COVID-19

On January 19, 2021, the Office of Management and Budget (OMB) posted recommendations received from the Metropolitan and Micropolitan Statistical Area Standards Review Committee (MMSASRC). One of the many recommendations is to increase the minimum urban area population to qualify a metropolitan statistical area from 50,000 to 100,000. This change could significantly affect hospitals. 

Currently, a metropolitan statistical area must contain a Census Bureau-delineated urban area with a population of 50,000 or more, while a micropolitan statistical area must contain a Census Bureau-delineated urban area with a population of 10,000 to 49,999. Each of these types of areas comprise complete counties, referred to as either a central county or an outlying county. The central county designation is the county within the metropolitan or micropolitan area that includes a majority of the population of that specific urban area, while the outlying county designation is reserved for those counties that qualify based on a certain level of commuting with the central county.

The regulations to define these statistical areas occasionally fall under a specific review process to determine if changes are necessary before applying to the census data. In 2018, the OMB tasked the MMSASRC with reviewing the standards from 2010 and providing recommendations. Among the listed six recommendations was the previously mentioned increase to the minimum urban area population to qualify as a metropolitan area from 50,000 to 100,000.

From a wage index perspective, this change could significantly reshape the landscape of the current urban and rural hospital classifications. A current urban hospital could ultimately end up with a rural designation for wage index purposes. For rural hospitals, it could help if the previously urban areas raise the rural average hourly wage. In addition, these changes, if approved, could affect the reclassification opportunities for hospitals as well as other special designations. 

For more information, see the Federal Register website. The open comment period ends March 19, 2021. Also see the map below, which displays the areas that may be directly affected by these changes.

If you have questions about these recommended changes, reach out to your BKD Trusted Advisor™ or submit the Contact Us form below.
 

2010 Urbanized Area Population Between 50,000 and 99,999

 

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