Hospitals to Congress: Clock ticking to renew key rural hospital pay programs

Congress needs to act by the end of September to renew two programs that advocates say are pivotal to keep rural hospitals afloat. 

The Federation of American Hospitals (FAH) wrote Tuesday to congressional leaders asking for reauthorization of the Medicare-dependent Hospital (MDH) program and the Low-Volume Hospital (LVH) program before they expire at the end of September. Both payment programs are vital as rural hospitals encounter major challenges this year, the hospital group said.

“These are unprecedented times for rural hospitals,” wrote FAH President Chip Kahn in a letter released Tuesday. “Escalating operating costs due to rising inflation and supply chain challenges, among other factors, are adding to the immense financial pressures rural hospitals are already struggling with daily.”

The MDH was created in 1989 to help smaller, rural hospitals that have a high share of Medicare patients. The program gives eligible hospitals an additional payment if their costs are higher than the rates in the Inpatient Prospective Payment System.

The LVH also offers a payment adjustment for hospitals that have a small volume of Medicare patients.

Kahn wrote that both programs have been pivotal to shoring up financial stability for rural hospitals, which have faced a severe crisis of closures in recent years. 

“We are appreciative of past bipartisan congressional support for the MDH and LVH payment programs,” he said. “Yet, the challenges for rural hospitals have only grown over time, and with that, so has the need for these two programs to maintain access to care for rural seniors.”

There is legislation in the House and Senate to reauthorize the programs for another several years. 

The American Hospital Association (AHA) wrote a letter of support on Friday for the House bill called Assistance for Rural Community Hospitals Act, which extends both programs for five years. 

“Your 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,” AHA wrote. 

There are two potential avenues that lawmakers could pursue that are must-pass vehicles that could include legislation to reauthorize the programs.

One is the reauthorization of the Food and Drug Administration’s user fee program, which runs out of money after September. If Congress doesn’t act, the FDA would be forced to lay off staff. 

Congress also must pass a continuing resolution to fund the government before federal money runs out at the end of next month, creating another opportunity to include the reauthorization legislation.