New bill aims to offer permanent support to rural hospitals

U.S. Sen. Chuck Grassley has introduced new legislation to Congress proposing a permanent expansion to a Medicare program that aims to create more financial stability for rural hospitals in Iowa and across the nation. It’s a move that could give some hospitals in Iowa “some certainty,” one official says.

The Rural Hospital Support Act — introduced along with Sen. Bob Casey, D-Pa. to the Senate on Wednesday — proposes a permanent expansion of two rural hospital designations under the U.S. Centers for Medicare and Medicaid Services.

These programs provide additional Medicare payment to qualifying hospitals, which are smaller facilities that often don’t have the patient volume to balance lower reimbursement rates with costs of providing patient care.

“These programs bring a lot of value for rural residents and taxpayers,” Grassley said in a statement. “Small, rural hospitals offer good-quality health care at a cost that compares well with urban hospitals’ cost.

“Congress should extend the programs that help keep the doors open for rural Medicare beneficiaries.”

These Medicare reimbursement programs currently are renewed by Congress every four to five years. Both programs are set to expire Oct. 1.

The bipartisan proposal is supported by Iowa hospital leaders and rural health care advocates across the state, who say the programs help provide long-term financial certainty.

“What that does is it gives these dozen hospitals in Iowa some certainty,” said Bill Menner, executive director of the Iowa Rural Health Association. “They don’t have to worry about that money potentially going away or not being authorized based on the whims of any particular Congress of any particular year.”

The first program that would be expanded under this legislation is the Low-Volume Hospital program, which was first established in 2005 and provides additional payment to hospitals for higher costs associated with a low number of inpatients. There are 633 qualifying hospitals nationwide, all which have less than 3,800 patient discharges annually.

There are six facilities designated as Low-Volume Hospitals in Iowa:

The second program, the Medicare-Dependent Hospital designation, is granted to hospitals nationwide that primarily serve patients on Medicare and primarily rely on the federal health coverage program to finance hospital operations.

This program was first established by Congress in 1990.

There are 174 Medicare-Dependent Hospitals nationwide, including three in Iowa:

In addition, the proposed legislation also would establish 2016 as a new rebasing year for hospitals’ Medicare reimbursement under the Medicare-Dependent Hospital program. And it would apply to facilities that fall under the Sole Community Hospitals designation, given to facilities that are the sole hospital provider in a set geographic area.

Medicare reimbursement traditionally has been less than private insurance. Menner said that poses a challenge to rural hospitals, which primarily rely on Medicare payments because of their older patient base.

Even before COVID-19, rural hospitals faced financial hardships. Dozens of hospitals across the state have closed birthing units and other inpatient service lines in an effort to offset rising costs and declining patient counts.

In addition, about 18 percent of Iowa’s 118 hospitals were at high risk for closure in the near future, according to a 2019 report.

As a result, making these kinds of prospective payment systems permanent for rural hospitals is “critical,” said Kelli Todd, board president of the Iowa Rural Health Association.

"This legislation will help keep the doors open at rural hospitals and allow them to continue serving their local communities during this time of sustained financial pressure and historic changes in care delivery,” Todd said in a statement.

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