Medicare Bill Gives Booster Shot to Rural Hospitals

Medicare Bill Gives Booster Shot to Rural Hospitals
January 25, 2004

Washington, D.C.- On December 8, 2003, President Bush signed into law the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. This historic bill, which I voted for, has broad bipartisan support and adds the biggest improvements to senior health care in almost 40 years. The Medicare bill represents the most generous package ever to rural health providers. It contains several provisions that enhance health care services in rural areas.

For years, hospital administrators in my district have rightly complained that rural and suburban hospital reimbursement rates have been inadequate, in comparison to their urban cousins. The differential is not justified by cost and has been unfairly hurting rural hospitals, health care providers, and all patients that live in rural areas. I've been working with other members of Congress who represent rural areas to restore the rural funding levels. The new Medicare plan equalizes the reimbursements so that rural hospitals will receive billions in much-needed relief over the next decade.

Another problem rural hospitals face is getting and keeping physicians. To help meet this challenge, the Medicare agreement redistributes resident positions to hospitals that have not met their resident cap. Rural hospitals will be given top priority for receiving these redistributed resident positions. In addition, physicians will be given bonus payments for providing services in newly defined shortage areas. These are just two of several provisions that will increase the number and quality of physicians serving rural communities.

Under the old plan, payments to hospitals for their care of Medicare patients were based on sometimes unrelated outside factors, such as area property costs or wage rates. But these factors often caused payments to be unfair for rural hospitals, which typically have low area property costs and wage rates. The new plan formula places less emphasis on these factors, thus making the payment rates more accurately reflective of the hospitals' true costs.

Rural hospitals typically serve a disproportionate share of low-income and uninsured patients. Hospitals that deal with these patients are given an add-on payment to assist them in offering proper healthcare. The new Medicare agreement increases the cap for the add-on from 5 percent to 12 percent. This will provide more funds for hospitals that have a large number of low-income patients.

The new bill implements another add-on payment that deals with low-volume hospitals. There will be a maximum 25 percent add-on payment to those hospitals that are 25 miles away from another hospital and have less than 800 discharges in a given year. Oklahoma hospitals that meet this criteria will benefit from this additional payment.
President Bush and the members of Congress realized that changes in Medicare were long overdue, and we worked together to make those changes a reality. Giving rural hospitals additional funding and more physicians will give a much-needed boost to health care services in the communities that need them most.