Rural Hospital Support Act

Bill Number

S. 335

Origin Chamber

Senate

Congress

119th Congress, Session 1

Policy Area

Health

Status

Introduced

Latest Action

2025-01-30: Read twice and referred to the Committee on Finance.

Last Updated

2025-07-17T11:03:18Z

AI-Generated Summary

Purpose

The Rural Hospital Support Act (S. 335) aims to provide financial stability to rural hospitals by updating and extending Medicare payment calculations. It focuses on hospitals that serve isolated or underserved areas, ensuring they receive adequate reimbursements under Medicare Part A (which covers inpatient hospital services) to prevent closures and maintain access to care in rural communities.

Key Provisions

• Rebasing for Sole Community Hospitals (SCHs): Starting October 1, 2025, SCHs (hospitals that are the sole acute-care provider for a rural community) can use a "rebased target amount" based on their 2016 cost reporting period instead of older data. This applies only if it results in higher payments. The rebasing includes inflation adjustments for discharges after that date.
• Rebasing for Medicare-Dependent Hospitals (MDHs): Similarly, for discharges on or after October 1, 2025, MDHs (small rural hospitals where Medicare patients make up a significant portion of admissions) can rebase their target amounts to 2016 data, but only if it increases payments.
• Prohibition on Certain Adjustments: The Secretary of Health and Human Services (HHS) cannot apply budget-neutral adjustments to payment classifications or weighting factors (which determine how much Medicare pays for different diagnoses) for these rebased amounts if the adjustments were required before October 1, 2015. This protects hospitals from payment reductions tied to older rules.
• Extension of MDH Program: Removes the April 1, 2025, expiration date for the MDH payment methodology, allowing it to continue indefinitely. Hospitals can also opt out of reclassification to other payment systems in future years.
• Extension of Low-Volume Hospital (LVH) Program: Permanently extends increased payments for LVHs (rural hospitals with low patient discharge numbers), removing temporary end dates from 2025 and beyond. This includes a 25% payment increase for qualifying hospitals starting in fiscal year 2011, with further adjustments for even lower volumes from fiscal year 2019 onward.

Significant Changes to Existing Law

• Introduces new rebasing options under Section 1886(b)(3) of the Social Security Act, shifting the baseline cost period from prior years (often pre-2010) to fiscal year 2016 for SCHs and MDHs, potentially increasing their "target amounts" (the benchmark for allowable inpatient costs).
• Amends conforming language to include these new provisions in existing payment rules, ensuring they integrate without disrupting current operations.
• Eliminates sunset provisions (expiration dates) for the MDH and LVH programs, which were previously set to end in portions of fiscal year 2025, making these supports ongoing rather than temporary.
• Bars retroactive application of certain payment adjustments, preserving higher reimbursement levels established before 2015.

Potential Impacts

• On Government Agencies: The Centers for Medicare & Medicaid Services (CMS, part of HHS) will need to implement new rebasing calculations and monitor eligibility, potentially increasing administrative workload. This could raise overall Medicare spending by billions annually, as rural hospitals receive higher reimbursements without corresponding budget offsets.
• On Citizens: Improves healthcare access in rural areas by helping prevent hospital closures, benefiting Medicare beneficiaries (about 65 million elderly and disabled Americans) who rely on these facilities. Rural residents may face fewer travel burdens for inpatient care.
• On International Relations: No direct impact, as this is a domestic healthcare policy focused on U.S. Medicare.

Main Stakeholders Affected

• Rural Hospitals: SCHs, MDHs, and LVHs are the primary beneficiaries, gaining financial relief to cover operating costs and sustain services.
• Medicare Beneficiaries: Especially those in rural areas, who depend on these hospitals for essential care.
• Taxpayers and Federal Budget: Indirectly affected through higher Medicare expenditures, which could influence broader federal spending priorities.
• Healthcare Providers and Advocates: Rural health organizations and bipartisan lawmakers (the bill has sponsors from both parties) who push for rural equity in healthcare funding.

Notable Legal, Constitutional, or Political Implications

• Legal: Strengthens existing Medicare payment exceptions for rural providers under Title XVIII of the Social Security Act, without altering core eligibility criteria. The rebasing and prohibitions ensure compliance with prior congressional mandates while avoiding arbitrary reductions, potentially reducing future litigation over payment disputes.
• Constitutional: No apparent challenges; it aligns with Congress's authority under the Spending Clause to allocate federal funds for public welfare, particularly for vulnerable populations.
• Political: Bipartisan support (introduced by Sens. Grassley, Welch, and others from both parties) highlights rural healthcare as a non-partisan issue. It could set a precedent for ongoing federal interventions in rural policy amid rising hospital closure rates (over 140 rural hospitals closed since 2010), but may face debate over unfunded costs in budget reconciliation processes.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Sen. Grassley, Chuck [R-IA]

Cosponsors (16)

Sen. Welch, Peter [D-VT], Sen. Capito, Shelley Moore [R-WV], Sen. Kaine, Tim [D-VA], Sen. Wicker, Roger F. [R-MS], Sen. Shaheen, Jeanne [D-NH], Sen. Moran, Jerry [R-KS], Sen. Smith, Tina [D-MN], Sen. Hyde-Smith, Cindy [R-MS], Sen. Fetterman, John [D-PA], Sen. Boozman, John [R-AR], Sen. Kelly, Mark [D-AZ], Sen. Marshall, Roger [R-KS], Sen. Peters, Gary C. [D-MI], Sen. Kennedy, John [R-LA], Sen. Budd, Ted [R-NC], Sen. Warner, Mark R. [D-VA]

Recent Actions

• 2025-01-30: Read twice and referred to the Committee on Finance.
• 2025-01-30: Introduced in Senate

Bill Versions

• Rural Hospital Support Act — issued 2025-01-30 — PDF (8 pages)