It’s a big win for Alabama’s rural hospitals
Published 12:46 pm Wednesday, May 1, 2019
A handful of stories in Washington generally get about 90 percent of the media’s attention. Don’t get me wrong, many of those stories are important, but much of my time in Washington is also focused on getting things done for Alabama that don’t make the front page.
This week we got a big win on just one of those many issues. Over the last ten years, Alabama has seen a string of hospitals close. Today, 88 percent of our rural Alabama hospitals are operating in the red. This is unsustainable and represents a major challenge.
When a rural hospital closes, it can be devastating for the surrounding area. High paying jobs are lost. Folks must drive much further for their healthcare. And, it makes it harder to attract new jobs and opportunity to our rural communities, one of my major goals.
A significant driver of the hospital closure problem is a broken Medicare formula known as the “Wage Index”. Under the Wage Index, hospitals are paid different amounts for doing the exact same work. Some difference in payment makes sense, but Alabama hospitals are often paid thousands less than similar hospitals as nearby as Georgia or Florida. Some hospitals in areas like California and New York can be paid almost three times as much as Alabama hospitals. This is simply unfair and makes no sense.
For nearly three decades, Alabama hospitals have been facing declining Medicare reimbursement due to this fundamentally flawed reimbursement system. It has put an incredible strain on Alabama hospitals that has culminated in our rural hospital closures over the last decade.
To make it worse, under the Wage Index, the difference grows every year. The more your hospital spends, often the more it gets from Medicare. Only in Washington would we reward hospitals that bloat their costs with more money while punishing those who operate efficiently, but that is exactly how the Wage Index works. It has been a problem for Alabama for almost 30 years.
When President Trump came into office, one of the first things I did was meet with his Centers for Medicare and Medicaid Services (CMS) Administrator Seema Verma about this issue. Administrator Verma promised that she would look into the Wage Index. For nearly two years, my office continued to work with CMS looking for a solution. Representative Terri Sewell and I organized 45 House Members whose districts have this same problem to make suggestions on fixes to the Trump Administration.
Based on that hard work, the Trump Administration put forward an exciting new proposal last week to reform the Wage Index. Under the Administration’s plan, Alabama hospitals are set to receive approximately $34 million more per year from Medicare, with much of that money going to rural hospitals that need it the most. Even better, none of this is new spending. It’s simply redirecting federal funds that Alabama hospitals are owed that have been unfairly going to places like Los Angeles.
This is a huge win for our state and will help with the rural hospital problem. Like I said, you probably won’t hear much about it in the news. It’s not flashy, it’s not something that generates views and clicks, but things like this are critical to my work in Washington to move things forward for Alabama.
For years I have been calling for greater protections for our rural hospitals. It’s about more than just healthcare: it’s about jobs, it’s about growth, and it’s about our communities. Too often, rural America is forgotten in Washington. As long as I am there, I will always advocate for our rural communities here in Alabama.