WASHINGTON – U.S. Sens. Mark R. Warner (D-VA), John Cornyn (R-TX), Marsha Blackburn (R-TN), Rev. Raphael Warnock (D-GA), and Tim Kaine (D-VA) today introduced the Save Rural Hospitals Act of 2021 to fix a flawed formula that results in disproportionately low Medicare payments for hospitals in rural and low-wage areas. The bill would 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,” said Sen. Warner. “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.”

“Rural hospital closures mean a loss of access to medical care for the millions of Americans who chose to live in those areas. In addition, when a rural hospital closes, a community often loses one of its largest employers. Rural hospital closures are devastating to those communities. Rural hospitals have closed in record numbers in recent years and Tennessee is at the top of the list for the number of facilities lost. One contributing facture is an unfair reimbursement system that favors urban hospitals over rural, the Medicare area wage index. The Save Rural Hospitals bill is bipartisan legislation to create a floor to this calculation that will be a lifeline for the 1 in 4 rural hospitals that are in danger of closing. According to CMS, over 50 hospitals in TN stand to benefit from this legislation. When the rural hospitals benefit, communities benefit. This legislation will protect access to health care for millions of Tennesseans,” said Sen. Blackburn.

“Rural communities in Georgia and across the nation have been devastated by the public health and economic consequences of this once-in-a-century pandemic, and hospitals in these areas that were already struggling to make ends meet have been some of the hardest hit by this crisis. Health care is a human right, and the federal government has a deep role to play in making sure all Georgians, regardless of income or zip code, have access to the care they need to stay healthy and thrive, and so I’m glad to join my colleagues in supporting this common-sense, bipartisan legislation that will help target federal health care dollars to the communities where these investments are most sorely needed,” said Sen. Rev. Warnock.

“Too often, rural hospitals don’t have the necessary support they need to continue providing care for their local communities,” said Sen. Kaine. “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.” 

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.

According to 2021 CMS data, 19 Virginia hospitals will directly benefit from the Save Rural Hospitals Act of 2021:

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.”

“It is critical that we protect rural hospitals so individuals and families in less populated communities in Virginia, and across the United States, can access essential medical services when they need them 24/7/365,” said Sean T. Connaughton, President and CEO of Virginia Hospital & Healthcare Association. “The COVID-19 pandemic is a stark reminder of the importance of access to hospital-based acute care services at a moment’s notice when seconds and minutes truly matter. Across the country, 180 rural hospitals have closed in the past 17 years, including two in Virginia since 2013. Senator Warner’s Save Rural Hospitals Act of 2021 is a welcome proposal that recognizes the challenging conditions facing many rural hospitals and offers a common sense solution to appropriately adjust reimbursement rates so hospitals aren’t unfairly penalized under an outdated payment methodology that fails to account for current realities.”

“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.”

Sen. Warner has been a champion for rural health care in Virginia. Earlier this week, Sen. Warner introduced the bipartisan Strengthening Rural Health Clinics Act that would protect nearly 30 rural health clinics in Virginia from unexpected payment cuts. Sen. Warner has also led efforts in Virginia to reopen the closed rural hospital in Lee County, Virginia. The Lee County hospital has now reopened as an urgent care facility and is on track to fully reopen as a hospital later this year.

A copy of the bill text can be found here. A one-page summary can be found here.

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