HR3684-119

What This Bill Does

The Save America's Rural Hospitals Act is a broad Medicare payment stabilization bill for rural providers. It begins from findings that more than 60 million rural residents rely on rural hospitals, that 151 rural hospitals had closed by May 1, 2025, and that 432 hospitals were operating at margins similar to recently closed hospitals. The bill exempts Medicare Part A and Part B payments to critical access hospitals, sole community hospitals, Medicare-dependent small rural hospitals, and rural subsection (d) hospitals from sequestration orders effective 60 days after enactment. It reverses bad-debt reimbursement cuts for rural hospitals and critical access hospitals. It permanently extends low-volume hospital and Medicare-dependent hospital payment levels beyond fiscal year 2025, extends disproportionate-share payment treatment for sole community hospitals and Medicare-dependent hospitals beginning in fiscal year 2026, and rebases target amounts using fiscal year 2024 or post-October 2025 cost reporting periods. It increases wage indexes for hospitals below the 25th percentile, creates a 0.85 inpatient area wage index floor and a 0.85 outpatient department wage adjustment floor with budget-neutral maximums, makes rural ground ambulance payment increases permanent, and makes Medicare telehealth service enhancements permanent for federally qualified health centers and rural health clinics. It also restores state authority to certify certain rural hospitals as necessary providers for critical access hospital designation despite the 35-mile rule, with eligibility tied to sole community, Medicare-dependent, low-volume, fewer-than-50-bed, poverty, health professional shortage area, Medicare/Medicaid patient share, negative operating margins, governance, solvency plans, and an application for CAH certification. HHS must issue final regulations within 120 days. The waiver pathway is capped at 175 facilities nationally and 10 per state.

Who Benefits and How

Critical access hospitals benefit from sequestration relief, bad-debt treatment, telehealth support, and possible designation flexibility. Sole community hospitals benefit from permanent payment extensions, disproportionate-share treatment, and rebased target amounts. Medicare-dependent small rural hospitals benefit from permanent payment levels and target amount rebasing. Rural Medicare beneficiaries benefit if hospitals, ambulances, FQHCs, and rural health clinics remain financially viable and close to home. Rural ambulance providers benefit from permanent increased Medicare payments. FQHCs and rural health clinics benefit from permanent Medicare telehealth payment enhancements.

Who Bears the Burden and How

CMS payment staff must implement sequestration exemptions, bad-debt changes, payment extensions, wage-index floors, and CAH designation rules. State health agencies must certify necessary-provider hospitals and assess governance and solvency plans. Federal taxpayers bear higher Medicare spending from rural provider payment increases and exemptions. Hospitals above budget-neutral wage-index maximums may face offsetting adjustments. HHS rulemaking staff must issue final regulations on the 35-mile waiver pathway within 120 days.

Key Provisions

• Exempts rural hospitals from Medicare sequestration.
• Restores rural hospital and critical access hospital bad-debt reimbursement treatment.
• Permanently extends low-volume hospital and Medicare-dependent hospital payment levels.
• Expands disproportionate-share and target-amount rules for sole community and Medicare-dependent hospitals.
• Creates area wage index and outpatient wage adjustment floors of 0.85 with budget-neutral offsets.
• Makes rural ground ambulance add-on payments and FQHC or rural health clinic telehealth enhancements permanent.
• Restores state authority to waive the 35-mile rule for up to 175 critical access hospital designations.