A pair of representatives unveiled legislation that would designate more than 1,000 nationwide hospitals as “essential health systems” under federal statute, a first step the bipartisan lawmakers and hospital industry supporters say would give Congress new targets for funding, health equity initiatives or other efforts.
The Reinforcing Essential Health Systems for Communities Act targets providers that “serve the most vulnerable families in cities and towns across the nation, and … deserve the funding and support necessary to maintain and expand their lifesaving services,” Rep. Lori Trahan, D-Massachusetts, who introduced the bill alongside Rep. David Valadao, R-California, said in a statement.
Under the act (PDF), private nonprofit or nonfederal government hospitals would qualify for the new designation if they fall under one of three criteria.
Specifically, the hospital would need to either have a Medicare disproportionate patient percentage of at least 35% or have a Medicare disproportionate share hospital uncompensated care payment factor of 0.0005 or more, or meet Medicaid’s established requirements for disproportionate share hospital status, according to the bill. In regard to the latter, the legislation would allow for variations in states that do not recognize disproportionate share hospital designations.
In their announcement, the lawmakers noted that the facilities that meet the definition provide, on average, five times the uncompensated care to Medicaid, low-income Medicare or uninsured patients than other hospitals.
However, the safety-net facilities are “historically underfunded and often limited in their ability to maintain and expand the critical health services they offer to patients,” according to Trahan’s office.
The lawmakers’ announcement included applause from hospital industry groups America’s Essential Hospitals (AEH) and the Alliance of Safety-Net Hospitals.
AEH, in its own release, noted that hospitals with a safety net mission have so far lacked the type of statutory definition that has allowed policymakers to protect other codified provider classes, such as critical access hospitals and sole community hospitals.
A separate viewpoint paper (PDF) penned by AEH said that the designation would open up new funding streams for key operating needs (e.g., hiring or emergency preparedness), investments in health equity initiatives or help the government target public health resources like vaccines to safety-net hospitals during a public health emergency.
“We saw during the early days of the pandemic challenges identifying and targeting relief to hospitals serving communities hardest hit by the virus,” Bruce Siegel, M.D., president and CEO of AEH, said in a statement. “This designation would give policymakers a tool for the next public health emergency to ensure support quickly goes where it can do the greatest good.”
AEH and hospital leaders with ties to the organization have vied for some form of essential hospital designation over the last few years. These hospitals typically “operate on much slimmer financial margins that other hospitals” and can have more trouble bouncing back from burdens like the COVID-19 pandemic or the opioid epidemic, AEH said in a September 2022 viewpoint (PDF) that included a request for $7 billion in targeted funding.