Legislation introduced in the Senate this week aims to fix a flawed formula that results in disproportionately low Medicare payments for hospitals in rural and low-wage areas.
U.S. Sens. Mark R. Warner and Tim Kane (D-VA), John Cornyn (R-TX), Marsha Blackburn (R-TN), and the Rev. Raphael Warnock (D-GA) introduced the Save Rural Hospitals Act of 2021 to provide additional financial support for rural hospitals that are already operating on very thin margins and shutting down at record rates during the COVID-19 crisis – with more than 20 rural hospitals closing their doors in 2020 alone.
“In rural communities all over America, having a local hospital, as opposed to having to travel long distances for care, can mean the difference between life and death. Unfortunately, the COVID-19 crisis has only exacerbated the financial instability many of these facilities were already facing, putting them at greater risk for closure,” Warner said. “That’s why we’ve got to level the playing field for federal reimbursement rates so that rural hospitals have a fighting chance at keeping their doors open and continuing to provide lifesaving care.”
“Too often, rural hospitals don’t have the necessary support they need to continue providing care for their local communities,” Kaine said. “With the increased pressure they’ve faced over the last year, it’s so important for Congress to pass this bipartisan legislation to ensure rural hospitals across the country — including 19 in Virginia— have access to the necessary resources to stay afloat and continue serving their communities amid COVID-19.”
Alarming trend
The Save Rural Hospitals Act of 2021 would help curb the alarming trend of hospital closures in rural communities by making sure hospitals are fairly reimbursed for their services by the federal government. The “Medicare Area Wage Index,” a formula used by Medicare to reimburse hospitals, is currently much lower for health care providers in rural communities, due to the fact that the formula is based on labor costs, which vary across the country.
To make sure rural hospitals are fairly reimbursed, the Save Rural Hospitals Act of 2021 would establish a national minimum “area wage index” of 0.85.
This legislation comes at a crucial time during the unprecedented COVID-19 public health emergency and as hospitals in rural areas already face financial uncertainty. At the onset of the COVID-19 pandemic, hospitals in many places, including Virginia, were ordered to postpone profitable elective surgeries in an effort to conserve hospital capacity and scarce supplies of personal protective equipment (PPE) for the treatment of COVID-19 patients.
Reporting indicates that rural hospitals are now closing at an alarming rate, with more than 130 rural hospitals around the nation having closed since 2010.
Impact
According to 2021 CMS data, 19 Virginia hospitals will directly benefit from the Save Rural Hospitals Act of 2021:
| Johnston Memorial Hospital | Abingdon, VA |
| Lonesome Pine Hospital | Big Stone Gap, VA |
| LewisGale Hospital – Montgomery | Blacksburg, VA |
| Southampton Memorial Hospital | Franklin, VA |
| Twin County Regional Healthcare, Inc. | Galax, VA |
| Buchanan General Hospital | Grundy, VA |
| Sentara Rockingham Memorial Hospital | Harrisonburg, VA |
| Smyth County Community Hospital | Smyth, VA |
| Memorial Hospital | Martinsville, VA |
| Riverside Shore Memorial | Nassawadox, VA |
| Norton Community Hospital | Norton, VA |
| Wellmont Mountain View Regional Medical Center | Norton, VA |
| LewisGale Hospital – Pulaski | Pulaski, VA |
| Clinch Valley Medical Center | Richlands, VA |
| Russell County Medical Center | Russell, VA |
| VCU Health Community Memorial Hospital | South Hill, VA |
| Riverside Tappahannock Hospital | Tappahannock, VA |
| Carilion Tazewell Community Hospital | Tazewell, VA |
| Wythe County Community Hospital | Wytheville, VA |
Support
The Save Rural Hospitals Act of 2021 also boasts the support of the National Association of Rural Health Clinics, National Rural Health Association, Tennessee Hospital Association, University of Tennessee Medical Center (UTMC), Covenant Health and Blount Memorial Hospital, Virginia Rural Health Association, Virginia Hospital and Healthcare Association, and Ballad Health System.
“Medicare payment policies can at times have unintended consequences in rural health,” said Nathan Baugh, Director of Government Affairs for the National Association of Rural Health Clinics. “The Save Rural Hospitals Act will correct one of the flawed formulas contributing to the financial struggles of rural providers.”
“In the struggle to provide health care access, rural hospitals are on the front line nationwide for large numbers of our most vulnerable citizens,” said Alan Levine, Executive Chairman and CEO of Ballad Health, an integrated delivery system in the Appalachian Highlands of Northeast Tennessee and Southwest Virginia. “The Save Our Rural Hospitals Act will fix long-standing problems in Medicare payment policy which has underpaid rural hospitals year after year, leaving many struggling financially or at worst, closing. This bill recognizes that rural hospitals are increasingly having to recruit nationwide for nurses and other staff in short supply, and Medicare’s Area Wage Index adjustments must account for that.”
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