Any reform of Medicare should address the payment gap between rural and urban providers and move toward greater equity of benefits between rural and urban areas, a new report by the National Advisory Committee on Rural Health says.

Historically, Medicare has spent less per beneficiary in rural than in urban areas. The difference stems from the belief that the cost of providing care is lower in rural areas. Smaller reimbursements, however, make it harder for rural providers and hospitals to keep operating, especially since they rely more heavily on Medicare payments as a source of income. In 1998, Medicare patient expenses accounted for 47 percent of total patient care expenses for rural hospitals, compared to 36 percent of urban hospitals.

The report, Medicare Reform: A Rural Perspective, A Report to the Secretary, U.S. Department of Health and Human Services, also calls for protecting the viability of Medicare=s fee-for-service program, which remains the primary source of coverage for rural beneficiaries. Rural enrollees make up less than 4 percent of Medicare beneficiaries in managed care plans, which typically offer more expansive benefits to enrollees. Managed care plans, for example, usually offer prescription drug benefits that are unavailable under fee-for-service arrangements.

The committee says Medicare payment policy should ensure a basic benefit package - available regardless of where the beneficiary is located - that would include current benefits as well as access to preventive care and prescription drugs.

These and other recommendations in the committee=s report argue for inclusion of a rural perspective in any redesign of Medicare. The report looks at Medicare issues in four key areas: finance, access, quality and workforce.

A 16-member panel of nationally recognized rural health experts, the committee was chartered in 1987 to advise the Secretary of Health and Human Services on ways to address health care problems in rural America. Chaired by former Kansas Sen. Nancy Kassebaum Baker, it meets three times annually.

The committee issues an annual report on a key rural health issue, along with recommendations. Last year=s report focused on strengthening the rural public health infrastructure; next year=s topic will be the rural health care safety net. Read Medicare Reform: A Rural Perspective, A Report to the Secretary, U.S. Department of Health and Human Services on the Web at: ftp://ftp.hrsa.gov//ruralhealth/reform.pdf.