Today, Congresswoman Terri Sewell and Congresswoman Diane Black (R-TN) introduced the Fair Medicare Hospital Payments Act of 2016 (H.R. 4428), a bipartisan bill that increases Medicare reimbursements for rural hospitals in Alabama and other states with large rural populations.

“When rural hospitals struggle, entire communities suffer. In many parts Alabama’s 7th Congressional District, local hospitals are the lifeblood of the community. When confronted with the unique challenges of caring for older, sicker, and low-income populations, these hospitals are struggling to keep their doors open. 

“The Fair Medicare Hospital Payments Act of 2016 would ensure that these hospitals receive their fair share in Medicare reimbursement dollars. The current reimbursement system is skewed in favor of hospitals serving the healthiest and wealthiest parts of our country. Whenever I visit hospitals in the district, hospital administrators cite reimbursement disparities as one of their top concerns. H.R. 4428 would reverse this trend and increase reimbursements for hospitals in 158 Core Based Statistical Areas (CBSAs) nationwide.

“I am proud to work on this very important issue with Rep. Diane Black. The entire Congressional delegations from Alabama, Tennessee, and Arkansas have signed on to this bill and we have also received strong support from members of the Georgia, Kentucky, Texas, and Louisiana delegations. The broad, bipartisan support this bill has garnered in advance of introduction speaks to the urgency of this issue,” said Rep. Sewell.

 Dr. Don Williamson, President of the Alabama Hospital Association expressed the Association’s support for this legislation.

 ”The Alabama Hospital Association would like to thank Congresswoman Sewell for introducing this bill, and we are most appreciative that every member in Alabama’s House delegation has joined as co-sponsors.  Addressing the broken wage index system is long overdue.  It is an inherently unfair system and it is unreasonable for Alabama’s hospitals to be paid dramatically less for the same care as their counterparts in other states.  This issue could not be more critical for the survival of the majority of Alabama’s rural hospitals.” 

The bill also has the support of the National Rural Health Association.

“NRHA applauds the introduction of this important bill to ensure that rural providers’ compensation reflects the plethora of challenges related to retention and recruitment in rural America. The Wage Index unfairly penalizes physicians that practice in underserved communities within rural America and this bill takes an important step to reduce this discrepancy.” 

Background

The bill is strongly supported by a multitude of state hospital associations and the National Rural Health Association (NRHA). The bill’s 31 original cosponsors include the entire Alabama, Tennessee, and Arkansas delegations, as well as members from Georgia, Kentucky, Texas, and Louisiana.

This legislation would establish a national minimum of 0.874 for the Medicare Area Wage Index (AWI) for hospitals. CMS bases a portion of a hospital’s reimbursements for inpatient services based on the AWI, a formula designed to reflect the relative hospital wage level in the geographic area of the hospital compared to the national average. All 13 Core-Based Statistical Areas (CBSAs) in Alabama have among the lowest AWIs in the country, and would benefit significantly from this legislation. Significant distortions over the past three decades have resulted from administrative and legislative actions favoring certain regions over others. Since the formula is calculated on a budget-neutral basis, any increase from one particular state means a decrease for other states. Under the current system, 20 CBSAs in California, Massachusetts, and New York have AWIs ranging from 1.332 to 1.724, while 158 CBSAs in 25 states have AWIs between 0.685 and 0.874. The Fair Medicare Hospital Payments Act of 2016 is designed to level the playing field so hospitals in those 25 states will no longer endure inadequate reimbursements due to gains in other parts of the country.   

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