Rural Healthcare in Crisis: Capturing a $100 Million Rural Reimbursement Opportunity
By Ronald A. Paulus, MD, MBA Senior Advisor, VersaBadge
Key Takeaways:
● Rural critical access hospitals are in crisis, which is worsening as the federal political and policy landscape deteriorates
● Accurately and comprehensively capturing clinician standby time offers a clear, proven path to increased reimbursement and enhanced compliance
● Traditional approaches to standby time measurement create significant compliance risk and fail to capture the full scope of clinicians’ downtime
● Manual logs and audits irritate clinicians and distract from their focus on patient care, while creating more work for finance and reimbursement teams
● VersaBadge is purpose-built to solve this exact problem, automatically producing complete and compliant time studies with no manual effort
● VersaBadge literally pays for itself and can be used for other important use cases, like staff duress alerting and asset tracking
Background and Overview
According to Chartis,¹ 18 more rural hospitals closed or converted to an operating model that excludes inpatient care over the past year alone. That brings the total to 182 rural hospital closures or outpatient-only conversions since 2010. And Chartis’ most recent analysis shows that 46% of all remaining rural hospitals have a negative operating margin, with at least 432 vulnerable to closure.²
Nearly ten years ago, while serving as CEO of Mission Health in western North Carolina, I faced a similar challenge with our own critical access hospitals (CAHs). Wanting to preserve important care for these valued communities, I decided to focus on a persistent, but often invisible problem: underreported Emergency Department Part A (standby) time. This issue, while seemingly small in scope, actually has enormous financial impact, costing hospitals millions in unrealized reimbursement every year.
For years, like many CAHs, my team had performed manual time-and-motion studies to determine standby time. Unfortunately, that approach produces two forms of harm:
1) Inconsistent measurements that create significant audit risk
2) Understated Part A cost report filings that fail to capture the true scope of provider standby activity.
To both improve our compliance and to generate critical resources for patient care, I decided to partner with a nimble, innovation-focused team to co-develop an automated, location-aware time tracking system that eliminated all ambiguity and manual effort.³˒⁴ The resulting solution became the foundation for what is now VersaBadge. Novel at the time, a decade later, more than 250 rural hospitals now rely on VersaBadge to accurately measure standby time. This approach directly impacts the bottom line by generating significant new reimbursement that helps sustain access to care in communities that so desperately need their local hospitals to remain open.
The Financial Impact of Emergency Department Standby Time
For CAH Emergency Departments (EDs), CMS cost report reimbursement depends on accurately documenting provider time across both Part A (standby) and Part B (direct care) classifications. For CAHs, underreported standby time directly translates into substantial lost reimbursement that compounds year-over-year. Traditional time studies—whether self-reported logs or periodic audits—are inherently inconsistent, inaccurate, and difficult to defend in compliance reviews. The result is not just underpayment, but also increased audit exposure. Moreover, the need to generate self-reported logs irritates clinicians and takes their attention away from their core patient care focus.
VersaBadge replaces all of those manual, error-prone processes with a simple, automated, real-time location system (RTLS) that can be installed in less than one week. Providers wear lightweight Bluetooth badges that communicate with receivers installed in key locations. The VersaBadge system then identifies provider location in real time, automatically allocating time accurately between patient care and standby classifications. VersaBadge’s desktop software further refines classifications in dual-purpose areas, such as provider offices or nurses’ stations, ensuring a complete, defensible time study without any manual input or EMR integration.
In 2024 alone, this approach helped VersaBadge’s clients secure an estimated $23 million in additional Medicare reimbursement for Emergency Department standby time⁵— without even accounting for related Medicaid or Medicare Advantage payment impacts.
Policy Pressures are Intensifying Financial Pressure
Recent federal legislation, including the One Big Beautiful Bill Act (OBBBA), or H.R.1, injected even greater uncertainty into Medicaid funding and hospital reimbursement. Much of OBBBA’s projected $900 billion in savings⁶ depends on stricter eligibility enforcement, increased enrollee cost-sharing, and reductions in supplemental payments—all of which disproportionately impact CAHs where Medicaid patients comprise a larger share of their payer mix.
At the same time, proposed federal budget reductions—potentially exceeding $1.5 trillion in healthcare-related spending⁷—are prompting cuts to Medicaid programs, often among states’ largest budget line items. For many CAHs, even a 10% reduction in Medicaid reimbursement would result in millions of dollars in annual losses. While these dark storm clouds gather, rural Emergency Departments are seeing rising patient volumes as primary care provider shortages continue, especially for patients with behavioral health needs. Behavioral health patients in particular often remain in the ED for prolonged periods while awaiting scarce placement options. For hospitals relying on more conservative time study methods like EHR logs, substantial standby hours can go unrecognized. In these cases, reimbursement for legitimate provider availability risks being lost entirely.
Simply put, failure to accurately document Part A time poses a dual threat: loss of eligible reimbursement and heightened audit risk. Hospitals lacking detailed, verifiable time study data like that generated by VersaBadge’s automated system face potential denials or lost reimbursement. And those missed hours have direct consequences for maintaining essential services, retaining staff, and even keeping inpatient facilities open.
Beyond Reimbursement: RTLS as Critical Infrastructure for CAHs
Although VersaBadge was originally designed to solve reimbursement and compliance challenges, its underlying RTLS platform has proven to be a powerful, multipurpose operational asset in rural hospitals nationally. Once deployed, the simple infrastructure enables functions that further enhance safety, efficiency, and quality, including:
● Staff duress alerting – allows personnel to discreetly summon help during escalating events, reducing response time to help keep team members safe
● Hand hygiene monitoring – passively tracks handwashing events without manual audits
● Asset tracking – locate equipment quickly, reducing inventory waste and loss
● Provider-patient interaction reporting – live rounding dashboards that can improve satisfaction, care quality, and workflow efficiency
● Cost allocation reporting – data supports the allocation of staff time across cost centers (hospitalists, RHC, EMT, EVS, etc.)
For CAHs with limited staffing and capital challenges, VersaBadge delivers measurable ROI across multiple departments. The system literally pays for itself while improving compliance, enhancing staff safety, and supporting quality initiatives—all with minimal IT overhead.
Closing Perspective
The challenge that first led me to invest in developing VersaBadge nearly a decade ago—accurately capturing provider standby time for reimbursement—has become even more critical today. Policy uncertainty, reimbursement compression, and escalating care demands have created extraordinary financial strain just as rural healthcare needs continue to grow.
As leaders responsible for preserving and expanding care in our valued rural communities, it’s incumbent upon each of us to take all steps possible to preserve resources and protect our staff. As financial pressures intensify and expectations rise, tools that combine automation, compliance integrity, and operational intelligence will define the future of sustainable rural care. VersaBadge offers a proven, purpose-built solution for critical access hospitals’ operational realities across multiple use cases.
¹The Cecil G. Sheps Center for Health Services Research, University of North Carolina at Chapel Hill, January 8, 2025. https://www.shepscenter.unc.edu/programs-projects/rural-health/rural-hospital-closures/
²2025 Rural Health State of the State. https://www.chartis.com/insights/2025-rural-health-state-state
³Improving CAH Medicare Part-A payment accuracy using Bluetooth-based RTLS
⁴Analyzing Manual vs. Electronic Time Study Methods
⁵VersaBadge, 2024 Estimated Impact Assessment
⁷Eliminating the Medicaid Expansion Federal Match Rate: State-by-State Estimates
