Save Struggling Hospitals Act
- Sponsor
- Rep. Kustoff, David [R-TN-8]
- Committees
- Ways and Means Committee (primary)
- Last action
- Mar 26, 2026
Bottom line
This bill seeks to permanently embed a policy that provides additional Medicare reimbursement to hospitals in low-wage areas, ensuring these adjustments do not disproportionately harm other hospitals through specific budget neutrality guardrails.
What it actually does
This bill codifies an existing Medicare policy that provides an upward adjustment to the area wage index for hospitals located in areas with a low wage index, specifically those below the 25th percentile. It mandates that this adjustment be applied in a budget-neutral manner, with explicit protections to prevent decreases for hospitals below the 75th percentile wage index and to ensure no hospital's wage index falls below 95% of the prior fiscal year's.
Proponents argue
Supporters argue that codifying this policy is crucial for the financial stability of hospitals in low-wage areas, which often serve vulnerable populations and face unique challenges in attracting and retaining staff due to lower reimbursement rates. They contend that making this policy permanent provides essential certainty and predictability, protecting these facilities from potential future administrative changes that could destabilize their operations.
Opponents contend
Critics, if any, might argue that codifying such a specific payment policy reduces the Centers for Medicare & Medicaid Services' (CMS) flexibility to adapt payment methodologies to evolving economic conditions, labor markets, or healthcare needs. Some could also express concern that despite budget neutrality provisions, the specific protections for certain hospitals might indirectly shift the burden of offsets to a smaller subset of higher-wage index hospitals.
The bill text is very short but highly technical, requiring careful reading and understanding of Medicare payment mechanisms to grasp its full implications.
Section 2, amending Section 1886(d)(3)(E) of the Social Security Act
Codification of Medicare Low-Wage Index Hospital Policy
This provision permanently incorporates a policy into Medicare law that adjusts the area wage index for hospitals located in areas where wages are significantly lower than the national average. Specifically, hospitals with a wage index below the 25th percentile will receive an increase equal to half the difference between their current wage index and the 25th percentile. This aims to boost their Medicare reimbursement rates, providing financial support to these facilities.
Supporters argue
Supporters argue this provision provides essential financial relief and stability to hospitals in low-wage areas, which often struggle with recruitment and retention of staff due to lower reimbursement rates. Codifying this policy ensures a consistent and predictable funding stream, allowing these hospitals to continue providing critical services to their communities.
Critics contend
Opponents, if any, might contend that codifying a specific payment adjustment reduces the flexibility of CMS to respond to changing economic conditions or healthcare priorities. They might also argue that while budget neutrality is mandated, the specific protections for higher-wage index hospitals could still lead to subtle, indirect pressures on other payment factors, or that the policy distorts market-based wage signals.
Tradeoffs
The provision balances the need to support financially vulnerable hospitals in low-wage areas with the imperative of budget neutrality within the Medicare system. It also navigates the tension between providing targeted relief and maintaining administrative flexibility in payment policy.
This subclause mandates that the low-wage index adjustment be applied in a budget-neutral manner. Crucially, it specifies that any adjustments made for budget neutrality purposes cannot decrease the area wage index for a hospital with an area wage index below the 75th percentile, nor can it result in an area wage index for any hospital that is less than 95 percent of its wage index from the preceding fiscal year.
Section 2, new clause (v)(II) of Section 1886(d)(3)(E) of the Social Security Act
Why it matters:This is standard legislative practice to include technical implementation details and guardrails within a broader policy change. These specific protections are often included to garner broader support for payment redistribution policies by mitigating potential negative impacts on other stakeholders.
Case for: Proponents argue these protections are vital to ensure that the benefits provided to low-wage hospitals do not come at the expense of other hospitals, particularly those that might also be struggling but are not in the lowest wage index quartile. This helps build broader support for the policy by limiting adverse impacts.
Case against: Critics might argue that such specific carve-outs for budget neutrality complicate the overall payment system and could limit CMS's ability to achieve true budget neutrality or make other necessary adjustments in the future without impacting protected groups, potentially shifting the burden to a smaller, unprotected subset of hospitals.
Estimated impact: Ensures that the aggregate amount of Medicare payments to hospitals remains unchanged, while redistributing funds to benefit low-wage hospitals, without significantly disadvantaging a broad swath of other hospitals or causing abrupt year-over-year payment cliffs.