WASHINGTON – Today, U.S. Sens. Mark R. Warner and Tim Kaine (both D-VA) introduced bipartisan, budget-neutral legislation to ensure hospitals are fairly reimbursed for their services by the federal government so they are able to remain open and functioning, especially in underserved and economically struggling regions of Virginia. The Fair Medicare Hospital Payments Act of 2016 would correct a flawed formula that results in disproportionately low Medicare reimbursement payments to hospitals in rural and low-wage areas.

“Rural hospitals are a lifeline to hundreds of thousands of Virginians, and are at the heart of many of our communities. However, hospitals in rural areas face unique challenges, and many struggle to stay afloat – challenges that are exacerbated by the federal government’s skewed payment system for services provided to Medicare beneficiaries at these hospitals,” Sen. Warner said. “The bipartisan Fair Medicare Hospital Payments Act would do much to help keep Virginia’s rural hospitals financially viable, by ensuring that the Medicare funding they receive is reflective of their costs of providing care. Under this bill, hospitals in five of Virginia’s 11 statistical areas would receive fairer reimbursements that more accurately reflect their operating costs.”

“Rural hospitals are vital to the communities they provide care for, but they are faced with difficult financial challenges that affect access to care and long-term viability,” Kaine said. “The bipartisan Fair Medicare Hospital Payments Act aims to reform the way hospitals are reimbursed by Medicare for services by establishing a national standard, as opposed to the status quo which places an undue burden on rural hospitals in economically disadvantaged areas.”

The five Virginia areas receiving reimbursements:

• Kingsport-Bristol-Bristol, TN-VA
• Blacksburg-Christiansburg-Radford, VA
• Staunton-Waynesboro, VA
• Harrisonburg, VA
• Lynchburg, VA

The Fair Medicare Hospital Payments Act of 2016 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.

According to the Virginia Hospital Association, there are 21 hospitals in Virginia that would benefit from a minimum area wage index that currently have an index below 0.874. This legislation has been endorsed by the Virginia Hospital Association and the National Rural Health Association.

List of 21 hospitals: