Bill Introduced in Senate to Improve Rural Hospital Reimbursement Rates

WASHINGTON, D.C. (May 4, 2016)—U.S. Senators Johnny Isakson, R-Ga., Lamar Alexander, R-Tenn., Mark Warner, D-Va., and Sherrod Brown, D-Ohio, introduced bipartisan, budget-neutral legislation last week to ensure hospitals are fairly reimbursed for their services by the federal government so they are able to remain open and functioning, especially in underserved and economically struggling regions.

The Fair Medicare Hospital Payments Act of 2016 (S.2832) would correct a flawed formula that results in disproportionately low Medicare reimbursement payments to hospitals in rural and low-wage areas.

“Rural hospitals are the lifeline of their communities, but too many Georgia hospitals have been forced to close their doors in recent years. These hospitals serve some of the least economically developed areas in Georgia, and unfortunately, as a result, they receive some of the lowest Medicare payments in the country” said Isakson, a member of the Senate Finance Committee. “Establishing a national minimum level for hospital payments will help to prevent future closures of hospitals in these medically underserved areas and ensure patients have access to emergency and needed care.”

“Like many hospitals, Tennessee hospitals are getting less and less from Medicare, while hospitals in other areas of the country get more and more for the same services, because of a flawed formula,” said Alexander, chairman of the Senate health committee. “This bill will protect Tennessee hospitals, and others around the country, from shrinking Medicare reimbursements that make it harder for them to recruit skilled doctors and nurses, make payroll, pay bills and care for patients.”

“Rural hospitals are a lifeline to hundreds of thousands of Virginians, and are at the heart of many of our communities,” said Warner. “However, hospitals in rural areas face unique challenges, and many struggle to stay afloat—challenges that are exacerbated by the federal government’s skewed payment system for services provided to Medicare beneficiaries at these hospitals. The bipartisan Fair Medicare Hospital Payments Act would do much to help keep Virginia’s rural hospitals financially viable, by ensuring that the Medicare funding they receive is reflective of their costs of providing care. Under this bill, hospitals in five of Virginia’s 11 statistical areas would receive readjusted reimbursements that more accurately and fairly reflect their costs to provide care.”

“To ensure that seniors on Medicare—especially those in Ohio’s rural and underserved area— can continue to get the care they need, the hospitals serving them must be fairly reimbursed for the care they give,” said Brown. “Under the current system, many hospitals in Ohio are paid less for the same lifesaving care they provide as their counterparts in other states across the country. This legislation will help protect the health and safety of all Ohioans by making sure all hospitals in Ohio receive sufficient reimbursement for the services they perform so they can continue to serve our communities.”

Specifically, the Fair Medicare Hospital Payments Act of 2016 would establish a national minimum “area wage index” of 0.874. The area wage index is based on the relative hospital wage level in the hospital’s geographic area compared to the national average. Over the past three decades, legislative and regulatory changes have combined with broader economic trends to create an uneven playing field that has resulted in hospitals losing out on millions of dollars in Medicare payments annually.

Additional co-sponsors of the Fair Medicare Hospital Payments Act of 2016 are U.S. Senators Jeff Sessions, R-Ala., and Tim Kaine, D-Va.

You can follow the bill’s progress here.