Save America’s Rural Hospitals Act
- Sponsor
- Rep. Graves, Sam [R-MO-6]
- Committees
- Budget Committee (primary)
- Last action
- Jun 3, 2025
Bottom line
The "Save America's Rural Hospitals Act" seeks to financially bolster rural healthcare infrastructure and access by increasing Medicare and Medicaid payments and reducing regulatory burdens for rural providers.
What it actually does
This bill aims to stabilize and enhance payments to rural health care providers under Medicare and Medicaid, reverse previous cuts, and provide regulatory relief. It includes provisions to eliminate Medicare sequestration for rural hospitals, restore bad debt reimbursement, permanently extend payment levels for low-volume and Medicare-dependent hospitals, and adjust area wage indexes. Additionally, it makes permanent increased payments for ground ambulance services in rural areas and telehealth services for Federally Qualified Health Centers and Rural Health Clinics, while also restoring state authority for certain Critical Access Hospital designations.
Proponents argue
Proponents argue that rural hospitals and providers are facing severe financial distress, leading to closures that jeopardize access to essential healthcare for over 60 million rural Americans. They contend that these measures are critical to ensure the survival of rural healthcare facilities, improve health outcomes for rural populations who are often older, poorer, and sicker, and prevent further erosion of emergency and primary care services in underserved areas.
Opponents contend
Opponents might argue that these payment enhancements and regulatory rollbacks could significantly increase federal healthcare spending without sufficient accountability for improved patient outcomes or efficiency. They might also raise concerns about the long-term fiscal sustainability of permanently extending certain payment adjustments and the potential for some provisions, like the reintroduction of the 35-mile rule waiver, to dilute the original intent of Critical Access Hospital designations.
The bill is moderately complex due to its numerous amendments to existing law, requiring careful reading to understand the full scope of changes.
Section 101(a) of the bill, amending 2 U.S.C. 906(d)(7)
Exemption of Rural Hospitals from Medicare Sequestration
This provision exempts Critical Access Hospitals (CAHs), Sole Community Hospitals (SCHs), Medicare-Dependent Small Rural Hospitals (MDHs), and other rural subsection (d) hospitals from Medicare sequestration cuts. Sequestration is an automatic, across-the-board spending cut mechanism. By exempting these rural providers, the bill ensures they receive their full Medicare payments without reduction, effective 60 days after enactment.
Supporters argue
Supporters argue that rural hospitals operate on thin margins and sequestration disproportionately harms them, making it harder to provide essential services. This exemption provides crucial financial stability.
Critics contend
Critics might argue that broad exemptions from sequestration undermine fiscal discipline and contribute to the national debt, and that targeted relief might be more appropriate than a blanket exemption.
Tradeoffs
Balances the need for fiscal responsibility (sequestration) against the critical need to support vulnerable rural healthcare providers.
Section 102 of the bill, amending 42 U.S.C. 1395x(v)(1)(T)(v) and (W)(ii)
Enhanced Reimbursement for Uncollectible Medicare Debts
This provision increases the percentage of uncollectible Medicare beneficiary debts (bad debt) that rural hospitals and Critical Access Hospitals (CAHs) can be reimbursed for. For rural hospitals, it restores the reimbursement rate to 85% of the allowable amount, reversing previous cuts. For CAHs, it explicitly includes them in the 85% reimbursement rate, ensuring they are not subject to lower rates, applicable to cost reporting periods beginning more than 60 days after enactment.
Section 103 of the bill, amending 42 U.S.C. 1395ww(d)(5)(G), 1395ww(b)(3)(D), 42 U.S.C. 1395ww note, and 42 U.S.C. 1395ww(d)(12)
Permanent Extension of Enhanced Payments for Vulnerable Rural Hospitals
This section makes permanent several temporary Medicare payment adjustments for Medicare-Dependent Hospitals (MDHs) and Low-Volume Hospitals (LVHs). These adjustments, which were set to expire, provide higher reimbursement rates to these hospitals, recognizing their unique challenges in serving rural populations with limited patient volumes. It also permanently extends the ability for hospitals to decline reclassification as urban.
Section 106 of the bill, amending 42 U.S.C. 1395ww(d)(3)(E) and 42 U.S.C. 1395l(t)
Adjustments to Area Wage Index for Rural and Low-Wage Hospitals
This provision introduces two key adjustments to the Medicare area wage index, effective for discharges on or after October 1, 2025. First, it increases the wage index for hospitals with an index below the 25th percentile, boosting payments for low-wage hospitals in a budget-neutral manner. Second, it establishes a floor of 0.85 for the area wage index for hospitals not in frontier states for both inpatient and outpatient services, also in a budget-neutral manner by establishing a maximum wage index.
Section 113 of the bill, amending 42 U.S.C. 1395i-4(c)(2)
Reinstatement of State-Certified Critical Access Hospital Designations
This provision restores the ability for states to certify certain hospitals as Critical Access Hospitals (CAHs) even if they do not meet the standard 35-mile distance requirement from another hospital. This applies to specific types of vulnerable rural hospitals (e.g., sole community hospitals, MDHs, low-volume hospitals, or small subsection (d) hospitals) that demonstrate financial distress and are located in underserved areas. There is a national cap of 175 such designations, with no more than 10 per state, and a sub-cap for facilities that previously met the 35-mile rule.
Section 301 of the bill, amending 42 U.S.C. 1395f(a) and 42 U.S.C. 1395i-4(c)(2)(B)(iii)
Removal of Inpatient Stay Duration Limits for Critical Access Hospitals
This provision eliminates the requirement that Critical Access Hospitals (CAHs) maintain an average annual inpatient length of stay of 96 hours or less per patient. It also removes the physician certification requirement related to this 96-hour limit. This change provides CAHs with greater flexibility in managing inpatient care without the constraint of an average length of stay, applicable to services furnished during a year beginning more than 60 days after enactment.
The bill mandates that the area wage index adjustments for low-wage hospitals and the floor for non-frontier states must be applied in a budget-neutral manner. For the floor, this means the Secretary must establish a "maximum area wage index" to offset the increases, ensuring aggregate payments remain the same.
Section 106(a) and (b), amending 42 U.S.C. 1395ww(d)(3)(E)(v) and (vi), and 42 U.S.C. 1395l(t)(23)
Why it matters:This is standard legislative practice for Medicare payment adjustments to avoid increasing overall program costs, but it means the benefits to some hospitals are offset by reductions to others.
Case for: Proponents argue budget neutrality is essential for fiscal responsibility, ensuring that targeted support for vulnerable hospitals doesn't inflate overall Medicare spending.
Case against: Critics contend that budget neutrality means some hospitals will inevitably see reduced payments to fund others, potentially creating new financial pressures elsewhere in the system.
Estimated impact: Redistributes potentially billions of dollars in Medicare payments among hospitals without increasing the overall Medicare budget.
The bill limits the number of new Critical Access Hospital (CAH) designations that can be made under the restored state waiver authority. Specifically, it caps the total at 175 facilities nationwide, with no more than 10 facilities per state. Furthermore, only 20% of these 175 facilities can be those that previously met the 35-mile rule but are now seeking CAH status under the new criteria.
Section 113(a)(1)(B), adding new subparagraph (G) to 42 U.S.C. 1395i-4(c)(2)
Why it matters:These caps are likely included to address concerns about uncontrolled growth in CAH designations and their associated cost-based reimbursement, making the provision more palatable to fiscal conservatives.
Case for: Proponents argue that the caps ensure the program remains targeted to the most vulnerable hospitals and prevents an explosion of CAH designations, maintaining fiscal prudence while providing essential flexibility.
Case against: Critics might argue that the caps could limit the effectiveness of the waiver, potentially leaving some deserving hospitals unable to achieve CAH status if the national or state limits are reached.
Estimated impact: Limits the expansion of cost-based reimbursement to a defined number of facilities, controlling potential Medicare spending increases from this provision.