Lawmakers in the Senate and House of Representatives have introduced bipartisan legislation that would ensure rural hospitals are fairly reimbursed for Medicare.
Reps. David Kustoff, R-Tenn., and Terri Sewell, D-Ala., introduced the Save Struggling Hospitals Act (PDF) April 1. A companion bill (PDF) was introduced by Sens. Mark Warner, D-Va., and Marsha Blackburn, R-Tenn.
“Rural hospitals are closing at an alarming rate due to significant financial strain compounded by the flawed Medicare Area Wage Index that results in rural hospitals receiving lower reimbursement,” Blackburn said in a statement. “Our Save Struggling Hospitals Act would strengthen rural health care by ensuring that hospitals in rural and low-wage areas receive fair payment for the essential services they provide.”
The proposal would codify the Centers for Medicare and Medicaid Services’ (CMS’) low-wage index hospital policy for hospitals with wage indexes in the bottom 25th percentile. The CMS policy increased reimbursements for rural hospitals, which resulted in higher Medicare payouts. It was in place from fiscal years 2020 to 2024, but was overturned by the Court of Appeals for the D.C. Circuit in July 2024.
Former U.S. Rep. A. Drew Ferguson, R-Ga., introduced a version of the bill in November 2024, though it did not pass through legislative hurdles.
Sewell said in a statement that the Act’s introduction “could not come at a more critical moment.”
“By strengthening the financial foundation of vulnerable hospitals, this bill offers a lifeline to communities that have consistently been asked to do more with less,” Sewell said. “It will help hospitals keep their doors open so that patients get the care they need, regardless of their ZIP code.”
Healthcare access in rural communities has taken center stage following the passage of the $50 billion Rural Health Transformation Fund, authorized under the One Big Beautiful Bill Act. Despite the funding, experts warn of looming service cuts.
Moreover, healthcare advisory services firm Chartis warned in February that 41.2% of rural hospitals across the nation are operating in the red, and 417 facilities are “vulnerable to close” based on a model the firm developed.
Earlier this month, Sens. Jerry Moran, R-Kan., and Michael Bennet, D-Colo., introduced the Rural Hospital Revitalization Act. Under the bill, rural hospitals could request a five-year interest-free loan to construct or renovate existing facilities. The Rural Health Transformation Fund restricts the use of funds for most types of construction and renovation.