WASHINGTON, D.C. – Congressman Dave Taylor (OH-02) and Congresswoman Carol Miller (WV-01) today introduced the Defend Rural Health Act, which will protect the integrity of federal rural health benefits by eliminating the “dually classified” loophole that has allowed urban hospitals to double dip into benefits designed for rural hospitals.
“When it comes to health care, rural Ohioans need someone who will fight for them in Congress,” said Congressman Taylor. “And although there are federal benefits and programs that have been designed to uplift rural hospitals, urban hospitals in big cities like Manhattan, Boston, and San Francisco are taking advantage of a harmful loophole to siphon benefits intended for rural hospitals. I’m proud to right this wrong and protect the integrity of taxpayer dollars, rural hospitals, and rural America.”
“Living in West Virginia, I know that rural hospitals depend on strong federal support to serve their communities. Hundreds of thousands of Americans rely on these facilities for essential health care, yet urban hospitals have been exploiting a loophole to claim both urban and rural status, siphoning resources meant for rural providers. This bill protects rural hospitals by ending that practice and ensuring federal support stays where it is truly intended, serving rural communities,” said Congresswoman Miller.
Background
Prior to 2016, the Centers for Medicare and Medicaid Services (CMS) prevented urban hospitals that reclassified as “rural” from simultaneously receiving Medicare’s urban wage index payments, which are typically higher than rural wage indexes to account for higher operations and living costs in urban areas.
However, in 2015 and 2016, two federal court rulings determined that CMS did not have the authority to deny urban hospitals the ability to dually classify as both urban and rural. This allowed urban hospitals to simultaneously benefit from programs designed to help rural hospitals, essentially dipping into the best of both worlds. This included:
- Urban wage indexes for calculating Medicare reimbursement;
- A lower threshold for eligibility in the 340B program;
- Increased GME funding; and
- Potential eligibility for sole community hospital status, rural referral center status, and Medicare-dependent small rural hospital status.
After these rulings, urban hospitals realized they could dually classify themselves as both urban and rural to maximize the dollars they receive from the federal government. Between 2017 and 2023, the number of dually classified hospitals grew from 3 to 425. By taking advantage of this loophole, urban dually classified hospitals increased total federal health spending and diverted resources away from truly rural providers.
The Defend Rural Health Act would require urban hospitals to meet stricter criteria to reclassify as a rural hospital. Additionally, this bill would prohibit dual reclassifications through the Medicare Geographic Classification Review Board, which is the mechanism through which urban hospitals are currently able to retain their higher Medicare urban wage index payments while simultaneously claiming to be rural for other benefits.
The full bill text is available here.
Editor’s note regarding Congressman Taylor:
Congressman Dave Taylor represents Ohio’s Second Congressional District, which includes Clermont, Clinton, Pike, Adams, Brown, Highland, Ross, Scioto, Pickaway, Hocking, Vinton, Jackson, Lawrence, Gallia, and Meigs counties, as well as part of Fayette County. Taylor serves on the House Committee on Transportation and Infrastructure and the House Agriculture Committee. Prior to serving in Congress, Taylor worked as an assistant prosecutor for Clermont County before joining his family’s concrete business, where he ultimately served as President. Please visit taylor.house.gov for more information.
