Congress gives rural hospitals a reprieve, for now

Federal programs that provide critical aid to rural hospitals were set to expire at the end of September. Lawmakers approved a provision in the short-term spending bill to sustain funding into December.

It’s not a long-term remedy for rural hospitals, but it is a reprieve.

Congress approved a short-term spending bill late last week to continue funding the government. The package includes a provision extending funding for two Medicare programs that provide $600 million annually to rural hospitals, the American Hospital Association says.

Lawmakers acted just in time, and not just because the federal government was set to run out of money on Sept. 30. The Medicare programs aiding rural hospitals were set to expire at the end of the month, adding urgency to the situation.

The spending bill finances the government, and those rural hospital funding lines, through Dec. 16.

Hospitals and health systems, particularly those in rural areas, have been pressing Congress and President Biden’s administration to continue those programs.

Rural hospitals have struggled financially for years. Since 2010, 136 rural hospitals have closed, according to an American Hospital Association report issued last month.

“Without the appropriate support and evaluation of existing policies by the state and federal government, rural hospitals will continue to be on life support,” the AHA said in its report.

Hospital leaders and analysts say the COVID-19 pandemic has pushed more rural hospitals to the brink. Most hospitals are facing staffing challenges and higher expenses, but rural hospital leaders get the bulk of their money from government sources, which pay less than commercial insurers.

While rural hospitals provide essential care to their communities, they typically have a lower volume of patients. About half of all rural hospitals have 25 beds or less.

The American Hospital Association and other healthcare groups have been pushing Congress to extend the Medicare programs aiding rural hospitals.

Lawmakers in the House of Representatives have introduced a bill to extend the programs for five more years.

The House bill would extend the Medicare-dependent Hospital (MDH) program for five years. The program offers more assistance to smaller hospitals with a large share of Medicare patients. There are more than 170 hospitals with this designation.

In addition, the bill would also continue Medicare’s Low-Volume Hospital (LVH) designation. The program offers assistance to rural hospitals with a relatively small portion of Medicare patients. This program supports more than 600 hospitals.

A similar bill has been introduced in the Senate, with one critical difference: it would preserve both Medicare programs permanently.

The Federation of American Hospitals has urged Congress to reauthorize the Medicare programs.

Chip Kahn, president and CEO of the Federation of American Hospitals, said he was glad to see the Medicare programs get at least a short-term extension. He said on Twitter Friday that it was “a step in the right direction” that will help rural hospitals keep their doors open.

Ultimately, Congress should permanently extend the programs, Kahn said.

Last month, Kahn wrote a letter to congressional leaders to continue the funding.

“Rural hospitals traditionally serve patient populations that are older, lower income, uninsured and more likely to rely on Medicare and Medicaid when compared to the national average and to their urban counterparts,” the letter stated.

Nearly 900 rural hospitals – 40% of America’s rural hospitals – are facing a serious risk of closure, according to the Center for Healthcare Quality and Payment Reform.

The Centers for Medicare & Medicaid Services have proposed a new designation for rural providers to help keep them afloat. Beginning next year, CMS is planning to create a new provider designation dubbed “Rural Emergency Hospitals” to help hospitals with emergency and outpatient services.