U.S. Representatives Tom Reed (R-New York) and Terri Sewell (D-Alabama) announced Monday they have introduced a bipartisan bill to help rural hospitals stay open by modernizing federal programs.
The Rural Hospital Support Act, would extend and modernize federal programs that rural hospitals rely on, including renewing the Medicaid-dependent Hospital (MDH) and Low Volume Adjustment program. The legislation would also update Medicare reimbursement formulas for Sole Community Hospitals (SCHs) and MDHs.
“In far too many rural communities across New York, there is increasingly limited access to essential medical treatments and hospital services,” Reed said in a statement. “We must act to ensure the rural hospitals that currently act as lifelines for underserved communities have the full resources they deserve to continue providing quality care. Our bipartisan legislation includes a number of common-sense provisions to expand healthcare access and bolster the rural health safety net.”
The National Rural Health Association said they agree with Reed that the bill is necessary.
“It is imperative that these supplemental payment programs continue uninterrupted. It could be the difference between a hospital closing or not,” said Brock Slabach, senior vice president for member services at the National Rural Health Association.
The legislation comes after a record year of rural hospital closures. In 2020, 20 rural hospitals closed, bringing to 180 the number of rural hospitals that have closed since 2005.
Experts said low patient volumes and heavy reliance on government payers are some of the biggest obstacles facing rural hospitals and healthcare operations.
According to the Center for Healthcare Quality and Payment Reform, at least one rural hospital in every state except Delaware, New Jersey and Rhode Island is at immediate risk of closing, and in 22 states, one in every four rural hospitals was at immediate risk – a total of 500 hospitals.
The center found that 300 rural hospitals were at high risk of closing in the future. In all, that’s 800 rural hospitals at risk of closing 40% of all rural hospitals in the country. And, the Center said, it may actually be worse than that.
“These estimates likely understate the severity of the problem that exists today,” the report said. “Margins at many hospitals may be worse in 2020 because of the combination of the higher costs hospitals incurred during the pandemic and the reduction in revenues because patients avoided seeking non-emergency services.”
Representative Sewell said the legislation was key to helping rural hospitals stay open.
“I have seen up close the devastating consequences of historic disinvestment in Alabama’s rural hospitals that have only been made worse by my state’s failure to expand Medicaid,” she said in a statement. “The Rural Hospital Support Act is a critical step toward stabilizing our rural hospitals during this Covid-19 pandemic by updating several key federal programs that will help provide critical funding for rural hospitals across our country and ensure health care is accessible to every American.”
The legislation would make permanent the Medicaid-dependent Hospital program. Started in 1987, the program allows eligible hospitals to receive not only the prospective payment system (PPS) pay rate – or the reimbursement amount pre-determined by Medicaid, but an additional three quarters of the amount that the hospitals would incur to discharge the patient that exceeds the PPS rate.
The legislation would also permanently enhance adjustments to Medicare payment for hospitals with a low volume of patients. For Sole Community Hospitals (SCHs) that receive increased payments based on their cost per discharge in a base year, the legislation would allow them to choose an additional base year from which payments are calculated.
The American Hospital Association applauded the bill.
“These hospitals have maintained their commitment to ensuring local access to high-quality, affordable care during the pandemic and beyond, in spite of unprecedented financial and clinical challenges over the last year,” said Tom Nickels, Executive Vice President of the American Hospital Association in a statement.
According to Nickels, the bill will allow rural hospitals to continue serving their communities, while under the ongoing economic pressure.
Although the recently passed Covid-19 stimulus bill provides $8.5 billion for rural healthcare providers, it’s estimated that the pandemic could cost hospitals (rural and urban) between $53 billion and $122 billion this year alone, according to a study from Kaufman Hall commissioned by the American Hospital Association.
According to the National Law Review, the American Rescue Plan funding would be for eligible rural hospitals to cover healthcare-related expenses and Covid-19 lost revenues. The ARP would also provide $500 million in grants through the U.S. Department of Agriculture to be used to cover Covid-19 related expenses and to increase telehealth capabilities.
NRHA’s Slabach said the $8.5 billion would be “a vital lifeline for many in meeting the demands of the pandemic and to keep their doors open.”
It’s not the first time saving rural hospitals has come up in Congress.
In 2017, Representative Sam Graves (R-Missouri) introduced the Save Rural Hospitals Act that would have enhanced payments to rural hospitals through the Medicare and Medicaid programs. That bill died in Congress without receiving a vote.