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NewsPolitics & Government

Grassley, Casey Introduce Bill to Provide Rural Hospitals with Financial Stability and Security

Bipartisan proposal extends key Medicare rural hospital programs

Sens. Chuck Grassley (R-Iowa) and Bob Casey (D-Pa.) are continuing their support for rural health care by introducing the Rural Hospital Support Act. Their bipartisan proposal seeks to permanently extend two key Medicare rural hospital programs and establish a new rebasing year – preventing closures that would disrupt access to care for individuals in rural communities. Grassley last led a successful reauthorization of these programs with Sen. Chuck Schumer (D-N.Y.) in the 2018 Bipartisan Budget Act.


“These programs bring a lot of value for rural residents and taxpayers,” Grassley said. “Small, rural hospitals offer good-quality health care at a cost that compares well with urban hospitals’ cost. Congress should extend the programs that help keep the doors open for rural Medicare beneficiaries.”


“Every American deserves reliable access to health care,” Casey said. “Rural hospitals can be the difference between life and death in many parts of the U.S. Often, a rural hospital means not only safe, dependable access to health care and emergency health needs, but economic safety and stability for an entire community. This legislation takes an important step to maintain that lifeline, especially for older adults and lower income Americans. I will continue to work to bring federal funding to rural communities and make sure older Americans have the health care support they need no matter where they live.”


Rural hospitals often provide care to patients who are older and have lower incomes compared to national averages, as well as patients who are more likely to rely on Medicare and Medicaid. In addition to being the main providers of care in their communities, many rural hospitals serve as economic anchors – accounting for around 14 percent of total employment in rural areas. Rural hospitals need predictable and stable resources to ensure that they can continue to serve their communities and provide quality care.


The Rural Hospital Support Act would permanently extend the Medicare-dependent Hospital (MDH) and Low-Volume Hospital (LVH) designations, and it would establish a new rebasing year for Sole Community Hospitals (SCH) and MDHs based on 2016 data.


MDH designations help rural hospitals that otherwise would struggle to maintain financial stability under Medicare’s fee schedule due to their small size and large share of Medicare beneficiaries. There are currently 174 MDHs nationwide, three of which are in Iowa. LVH designations similarly offer a more feasible payment formula to hospitals that treat a low number of beneficiaries. The formula takes into consideration the fixed costs of treating fewer patients relative to the typical payment system that favors high beneficiary volume. There are currently 633 LVHs nationwide, six of which are in Iowa. SCH designations support rural hospitals where Medicare beneficiaries are unable to access another hospital within a reasonable distance and time. There are currently 464 SCHs nationwide, seven of which are in Iowa.


By helping hospitals keep their doors open, MDH and LVH designations are the safety net providers for rural Americans and are extremely important to rural economies. Without an extension, MDH and LVH will expire October 1, 2022.


As part of this legislative effort, Grassley will continue to work to pass his bipartisan False Claims Amendments Act authorized with Sen. Patrick Leahy (D-Vt.) and others, which passed out of the Judiciary Committee last October. The legislation clarifies existing law after courts have determined that obviously fraudulent contracts do not trigger a false claim if the government continues to make payment. Up to 80 percent of all false claim recoveries come from the health care industry. Since the False Claims Act was modernized and strengthened by Grassley in 1986, it has been responsible for more than $70 billion in recoveries of taxpayer money lost to fraud.

This legislation does not change other rural hospital Medicare designations or programs including critical access hospitals (CAH), rural referral centers (RRC) or the new rural emergency hospitals (REH). REH, a Grassley-backed program passed in 2020, is currently being implemented by the Centers for Medicare and Medicaid Services (CMS). The voluntary REH designation offers regulatory flexibility and financial support to struggling rural hospitals that can no longer support inpatient services. These rural programs offer unique flexibility to ensure health care services are accessible in rural America.

“On behalf Ottumwa Regional Health Center, our caregivers, patients, and the communities we serve, thank you for always being a rural healthcare champion. We support making the Low Volume Hospital (LVH) Payment Adjustment and the Medicare-Dependent, Small Rural Hospital (MDH) Designation permanent or extending the programs. As you know, Ottumwa Regional is a LVH designated hospital. Therefore, we would strongly support your sponsorship of the Senate-version of the Rural Hospital Support Act.  Without an extension past October 1, 2022, our hospital would face significant cuts that could impact access to quality care in our rural communities.  I greatly appreciate your support in Making Communities Healthier,” said Dennis Hunger, Chief Executive Officer of Ottumwa Regional Health Center.

“I appreciate Senator Grassley’s steadfast leadership in introducing legislation that will extend the Medicare-Dependent Small Rural Hospital (MDH) and Low-Volume Hospital (LVH) programs. This legislation will support Iowans in rural communities by helping ensure they continue to have access to high quality health care in their local community,” said Clay Holderman, President and CEO of UnityPoint Health.

“The Low-Volume Hospital (LVH) program helps our rural community by providing necessary financial support to help ensure our patients and their families have health care that is accessible and affordable,” said Jenni Friedly, President of UnityPoint Health – Marshalltown.

“There is a continued need for small rural hospitals to help ensure Iowans living in rural communities have access to care locally. The Low-Volume Hospital (LVH) program will help continue to support this need and we appreciate Senator Grassley’s ongoing leadership in securing needed funding,” said Rachel Pohl, Executive Director of UnityPoint Health – Trinity Muscatine.

“Reauthorization of the Medicare-Dependent Small Rural Hospital (MDH) and Low-Volume Hospital (LVH) programs is critical to mid-sized rural hospitals like Spencer Hospital. Rural hospitals have experienced an erosion in reimbursement over the past decade due to changes in federal healthcare programs and the practices of commercial insurance companies. In addition, rural hospitals are increasingly engaging in business arrangements with physician practices to ensure compensation levels are maintained to retain and recruit needed primary care and specialty physicians. This contributes to leaner operating margins through which to invest back into the technology and infrastructure needed to ensure high quality medical services. Of course, the COVID-19 pandemic, labor market challenges and supply chain disruptions have also had an impact on the financial performance of rural hospital over the past two years. The MDH and LVH programs have also allowed Spencer Hospital – the largest rural hospital in northwest Iowa – to support services that are critical to the region.  This includes services such as inpatient behavioral health, cancer treatment and dialysis care.  Loss of MDH and LVH programs would require a reassessment of which services the hospital could maintain into the future. Not all healthcare services are profitable, but that does not make them any less important to the rural families who depend on them. Senator Grassley has been a long supporter of rural healthcare. His ongoing efforts to support the work of the Spencer medical community are much appreciated,” said Bill Bumgarner, President of Spencer Hospital.

“The Medicare Rural Hospital programs have, and continue to be, key to the survival and success of several rural hospitals in Iowa. Having weathered the recent pandemic and more recently a tornado here in our community, the importance of having a rural hospital in our community is even more evident. I want to emphasize how important rural hospitals are in our state, not only for the health and safety of our residents, but also for the significant economic impact they have on our communities,” said Marcia Hendricks, Chief Executive Officer of the Madison County Health Care System.

“MercyOne supports the Rural Hospital Support Act given our system includes hospitals of all different structures and sizes.  For communities like Newton and Clinton, those local community hospitals are responsible for 24/7 coverage and have a critical responsibility to take care of Iowans. This legislation will help us to sustain community care 24/7, and ensure access to care across our state,” said Bob Ritz, President and Chief Executive Officer of MercyOne.

“These extender programs have an enormous financial impact on Iowa hospitals by providing funding for essential services and for hospitals to remain viable. These programs also allow hospitals to contribute to their communities through improvements to access to care, employing members of the community, and using services from community businesses, both in and outside of the healthcare sector. IHA is pleased to see Senator Grassley work on this important issue,” said Chris Mitchell, Iowa Hospital Association (IHA) President and Chief Executive Officer.

“On behalf of the Iowa Rural Health Association (IRHA), I am expressing our support and gratitude for the bipartisan Rural Hospital Support Act you are introducing. IRHA knows this is an issue you’ve worked on for many years and your leadership as it relates to rural health care has been second to none. Making permanent the Medicare-Dependent Hospital program and enhanced low-volume Medicare adjustment for small rural prospective payment system hospitals is critical to a number of rural hospitals in our state. Without it, their very existence is at risk. This legislation will help keep the doors open at rural hospitals and allow them to continue serving their local communities during this time of sustained financial pressure and historic changes in care delivery,” said Kelli Todd, Board President of the Iowa Rural Health Association.

“The National Rural Health Association (NRHA) applauds Senators Chuck Grassley (R-IA) and Bob Casey (D-PA) for their bipartisan proposal to reauthorize the Medicare-Dependent Small Rural Hospital (MDH) and Low-Volume Hospital (LVH) program add-ons beyond October 1, 2022. Both the MDH and LVH designation are critical to providers across the United States. As rural America rebounds from the COVID-19 pandemic, now is not the time to let lifeline programs lapse. Reauthorization is critical to ensuring stability for the rural health safety net,” said Alan Morgan, Chief Executive Officer, National Rural Health Association.


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