Struggling rural hospitals may get relief

Print More

Legislation being considered by the U.S. Senate could send more federal dollars to Mississippi’s struggling rural hospitals.

Sen. Thad Cochran

Sen. Thad Cochran supports the Fair Medicare Hospital Payments Act, which would revise the Medicare reimbursement formula. According to Cochran’s office, the current formula provides “disproportionately low reimbursement payments” to hospitals in rural parts of the country.

“Sen. Cochran believes this legislation is important to keep Mississippi from continuing to be shortchanged under the current Medicare system,” Cochran spokesman Chris Gallegos said in an email.

Although all of Mississippi’s hospitals would potentially benefit from the legislation, the bill gives the biggest boost to rural hospitals, many of which are struggling to stay afloat amid regulatory changes.

In 2016, the National Rural Healthcare Association found that 79 percent of hospitals in Mississippi were vulnerable to closure, a higher percentage than any other state in the country. Since 2010, five rural hospitals have closed across Mississippi, the fourth-highest number of closures in the country.

“Empowering rural hospitals with the right services to treat patients in their own communities is critical to improving health care access in Mississippi,” Gallegos said.

The current formula uses an area wage index based on area labor costs to determine how much Medicare reimburses hospitals for services. Hospitals in large metropolitan areas, where labor costs are higher, are reimbursed more for the same services provided at a rural hospital.

Members of Mississippi’s health care community say this puts hospitals here at a competitive disadvantage.

“As an institution, we don’t pay less for equipment and supplies. So we should get paid the same for Medicare reimbursements as hospitals that are located in other parts of the country,” said Kevin Cook, the CEO of University of Mississippi Medical Center Health System.

While rural hospitals are the focus of this bill, hospitals in urban Mississippi, such as University of Mississippi Medical Center, would also benefit.  Both Mississippi’s rural and urban wage rates are below the Medicare Area Wage Index floor proposed in the bill.

The legislation would establish a national minimum rate of 0.874 for the Medicare Area Wage Index. Currently, the non-urban area wage index in Mississippi is 0.7500. In Mississippi’s urban areas, the wage index is 0.8144. In comparison, the area wage index for California is 1.3015.

“Basically it just modifies the formula to be a little less extreme than it is right now,” said Ryan Kelly, executive director of the Mississippi Rural Healthcare Association. “If you’re looking at most hospitals, the physician wages in rural Mississippi hospitals versus physician wages in metro New York hospitals, they’re not going to be different enough to justify the formula that’s in place now.”

The bill, which has been referred to the Senate Finance Committee, currently has the backing of five Senate Republicans and three Senate Democrats. It was sponsored by Sen. Johnny Isakson, R-Ga.