Current Medicare Reimbursement Rates Penalize Hospitals in Rural, Low-Wage Areas

WASHINGTON, D.C. – U.S. Senator Thad Cochran (R-Miss.) today announced his support for legislation to ensure that rural Mississippi hospitals are fairly reimbursed for the services they provide to seniors.

Cochran is cosponsoring the Fair Medicare Hospital Payments Act of 2017 (S.397). This bipartisan, budget-neutral legislation would correct a flawed Medicare formula that pays disproportionately low reimbursement payments to hospitals in rural, low-wage areas.

“Many rural hospitals in Mississippi experience financial hardships that are made worse by an unfair reimbursement formula that favors urban, high-wage areas,” Cochran said. “This legislation would address this disadvantage and help rural hospitals remain open to serve rural Mississippians.”

Medicare reimbursements paid to hospitals are adjusted according to the Medicare Area Wage Index. S.397 would establish a 0.874 national minimum for the area wage index. The change would help rural hospitals in Mississippi where the non-urban area wage index this year is 0.7500. Most designated urban counties in Mississippi also have an index below 0.874. In comparison, the area wage index for California is 1.3015.

The Mississippi Hospital Association, the University of Mississippi Medical Center and Gulfport’s Memorial Hospital support the legislation.

The Senate bill, introduced by Senator Johnny Isakson (R-Ga.), has been referred to the Senate Finance Committee.