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February 17-- U.S. Senator Johnny Isakson, R-Ga., has introduced bipartisan legislation to ensure hospitals are fairly reimbursed for their services by the federal government.

The budget-neutral Fair Medicare Hospital Payments Act of 2017 (S.397) would help hospitals remain open and functioning, especially in underserved and economically struggling regions by correcting a flawed formula that results in disproportionately low Medicare reimbursement payments to hospitals in rural and low-wage areas.

“Too many rural hospitals have been forced to close in recent years, and hospitals in states like Georgia are at a unique disadvantage because of the way these Medicare payments are calculated,” said Sen. Isakson, a member of the Senate Committee on Finance. “This legislation would address the discrepancy in payments, help to prevent future closures of hospitals in medically underserved areas, enable hospitals to boost wages in economically struggling regions, and ensure patients have access to emergency and needed care.”

Specifically, the Fair Medicare Hospital Payments Act would establish a national minimum “area wage index” of 0.874. The area wage index is based on the relative hospital wage level in the hospital’s geographic area compared to the national average. Over the past three decades, legislative and regulatory changes have combined with broader economic trends to create an uneven playing field that has resulted in hospitals losing out on millions of dollars in Medicare payments annually.

In Georgia, there are more than 100 hospitals that would benefit from a minimum area wage index that currently have an index below 0.874. Since 2010, five Georgia hospitals have closed that would have benefitted from Isakson’s legislation. The legislation has been endorsed by the Georgia Hospital Association and the National Rural Health Association.

Along with Isakson, the Fair Medicare Hospital Payments Act was introduced by U.S. Senators Lamar Alexander, R-Tenn., Sherrod Brown, D-Ohio, Mark Warner, D-Va., Tim Kaine, D-Va., and Richard Shelby, R-Ala.

“Tennessee hospitals, like many hospitals across the country, have seen drastic decreases in Medicare payments while other areas of the country get more for the same services because of a flawed reimbursement formula in Medicare,” said Sen. Alexander, chairman of the Senate Health, Education, Labor and Pensions committee. “This legislation will help protect hospitals in Tennessee from these shrinking Medicare reimbursements that make it harder for them to recruit staff, care for patients and stay in business.”

“Ohioans who live in underserved communities should not have their access to healthcare threatened by a broken federal formula,” said Sen. Brown. “Hospitals serving our most vulnerable areas that are economically struggling encounter enough challenges without unfair reimbursement rates further complicating their ability to care for patients. By correcting this discrepancy, we can strengthen healthcare in our rural and underserved communities and help ensure patients continue to receive medical care close to home.”

“Healthcare centers in rural areas already face unique challenges in providing care to underserved communities, and the federal government’s inability to provide a balanced payment system for services provided to Medicare beneficiaries only exacerbates these problems,” said Sen. Warner. “This is particularly true in Virginia, where four of the Commonwealth’s 13 statistical areas would benefit from a change in this payment formula. Our bipartisan legislation provides the funding Virginia’s rural hospitals need and helps them remain financially viable while providing care that is not dependent on cost.”

“Rural hospitals play a vital role in delivering care to Virginians but face too many threats to their long-term viability,” said Sen. Kaine. “By establishing a national minimum ‘area wage index’ for Medicare reimbursement, the bipartisan Fair Medicare Hospital Payments Act will remove one of these threats to the future of rural hospitals and will improve the delivery of care for rural communities in Virginia.”

“I’m proud to support legislation that will help to even the playing field for rural hospitals that are penalized because of the current wage index reimbursement formula,” said Sen. Shelby. “Without a more equitable methodology, hospitals in Alabama and across the nation will be forced to close their doors, negatively impacting patients and the overall quality of care. I am committed to ensuring that Alabama and its rural hospitals receive a more fair calculation compared to the current system that picks clear winners and losers.” 

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