Rural hospital crisis: Momentum builds in Congress for bipartisan legislation

While bipartisan cooperation is becoming increasingly rare in Washington, a group of Democratic and Republican senators are coming together to help rural hospitals.

U.S. Sens. Mark Warner, a Virginia Democrat, and Marsha Blackburn, a Tennessee Republican, are leading the effort. They said last week they are pushing President Biden’s administration to extend a policy that allows rural hospitals to offer better pay in regions that have typically low wages.

The senators are asking the Centers for Medicare & Medicaid Services for a four-year extension of the Low Wage Index Hospital Policy. Rural hospitals get bigger Medicare reimbursements under the policy, allowing them to offer better pay to recruit and retain workers.

Without action, the policy is slated to expire September 30, 2023. The lawmakers say the policy has been “a valuable lifeline” for more than 800 hospitals in 23 states.

Rural hospitals have long struggled financially, but their difficulties have worsened in the COVID-19 pandemic, industry leaders and analysts say. Because of the pandemic, the administration hasn’t had a chance to truly evaluate the effectiveness of the policy, the lawmakers wrote in a letter to CMS Administrator Chiquita Brooks-LaSure.

“Unfortunately, due to disruptions in the marketplace caused by the COVID-19 pandemic, we have not had the opportunity to see the true impact of the Low Wage Index Hospital Policy envisioned by CMS,” the senators wrote. “Extending the Low Wage Index Hospital Policy for four additional years will allow hospitals and the agency to better understand the policy’s true impact in a more normal environment.”

In addition to Warner and Blackburn, the letter was signed by U.S. Sens. Tim Kaine (D-Va.), Tommy Tuberville (R-Ala.), Joe Manchin (D-W.Va.), John Boozman (R-Ark.), Shelley Moore Capito (R-W.Va.), Roger Wicker (R-Miss.), Cindy Hyde-Smith (R-Miss.), Bill Hagerty (R-Tenn.), James Lankford (R-Okla.), Tim Scott (R-S.C.), Tom Cotton (R-Ark.), and Katie Boyd Britt (R-Ala.).

“I’ve visited a lot of rural hospitals across Virginia, and I routinely hear how hard it is to retain staff,” Warner said on Twitter.

Warner and Washburn also plan to reintroduce a bill, the Save Rural Hospitals Act, that would adjust the Medicare Area Wage Index to offer better payments for rural hospitals. The measure has been introduced in previous sessions of Congress.

Rural hospitals account for about 35% of the nation’s hospitals. Since 2010, 136 rural hospitals have closed, according to a report by the American Hospital Association.

Dartmouth Health CEO Joanne Conroy recently wrote an op-ed detailing how rural healthcare is approaching a breaking point.

“American healthcare was in crisis before the pandemic,” she wrote. “However, based on what we are now seeing, especially in rural hospitals and health systems, the worst may be yet to come.”

Rural hospitals are expected to struggle in the foreseeable future. For smaller, rural hospitals, “the future looks very dim at the moment,” Kevin Holloran, senior director at Fitch Ratings, told Chief Healthcare Executive in an interview in December 2022.

More than 600 rural hospitals are at risk of closing in the near future, according to the Center for Healthcare Quality & Payment Reform.

Lawmakers managed to preserve two critical sources of funding for rural hospitals in the $1.7 trillion spending package approved in December. The programs were slated to expire last year.

The omnibus package provided a two-year extension for the Medicare-dependent Hospital (MDH) program, which funds more than 170 hospitals. The program offers more assistance to smaller hospitals with a large share of Medicare patients.

In addition, the spending package continued Medicare’s Low-Volume Hospital (LVH) designation for two more years. The program offers assistance to rural hospitals with a relatively small portion of Medicare patients, and it supports more than 600 hospitals.

While rural hospitals still face some stiff headwinds, they do retain strong support in Congress.