Speeches & Floor Statements

Floor Speech: Medicare Wage Index Rule

Posted on July 16, 2019

Last month, during National Nurses Week, Ballad Health, a health care system in East Tennessee, announced it would be giving several thousand nurses a raise.

Alan Levine, who leads Ballad, announced a $10 million investment in pay increases for nurses.

He said, “Our nurses and those who work with them in the provision of direct patient care are heroes…however, it is also true that… we face significant national shortage of these critical health care providers.”

Alan said this investment was, in part because of a new rule proposed by the Trump Administration in April.

This rule will update the formula that determines how much Medicare will reimburse hospitals for patient care.

This formula takes into account, among other things, the cost of labor in that geographic area – called the area wage index.

This new rule attempts to level the playing field between hospitals in areas that have higher wages, and therefore are reimbursed at a higher rate, and hospitals in areas with lower wages.

Centers for Medicare and Medicaid Services Administrator Seema Verma wrote in a recent op-ed in the Tennessean: “Many stakeholders have raised concerns that the Medicare hospital payment system disadvantages many rural hospitals. Our proposed rule brings payments to rural and other low-wage hospitals closer to their urban neighbors.”

And in recent years, too many rural Americans have seen the local hospital close and their doctors leave town.

Since 2010, 107 rural hospitals have closed across 28 states, and another 637 – about 34 percent of all rural hospitals – are at risk of closing.

In Tennessee alone, twelve have closed since 2010.

A recent survey by the Robert Wood Johnson Foundation and the Harvard School of Public Health found that 1 in 4 Americans in rural areas could not access health care when they needed it.

This new rule will help rural hospitals keep up with the cost of providing care.

Alan from Ballad Health said, “This proposed change indicates that Washington finally understands that rural health systems, like ours, have been historically unable to keep up with the real cost growth of nursing and other direct care providers.”

Craig Becker, who leads the Tennessee Hospital Association, wrote in the Tennessean earlier this month that this rule, “is good news for our state’s hospitals and will provide much-needed relief to many of them, especially those in rural areas,” and that the rule, “finally will address the significant inequities in the Medicare area wage index — the first meaningful effort by any administration to address the flawed system.”

This new rule from CMS  will help ensure  Americans can access health care close to their homes by leveling the playing field between urban and rural hospitals that rely on the Medicare hospital payment system

Last month, the Senate health committee approved, by a vote of 20-3, a bipartisan package of 55 proposals from 65 senators to lower health care costs that will also help rural Americans.

For example, the legislation would ban anti-competitive terms that large hospital chains sometimes use in contracts with employers, such as “all-or-nothing” clauses.  These increase prices for employers and patients, and can block health plans from choosing hospitals based on the care quality, the patient experience, or one hospital’s competitive pricing. Banning “all-or-nothing” clauses will level the playing field for smaller, independent hospitals who are not part of a large corporate chain.

Another provision will expand technology-based health care to help Americans in rural areas have access to specialty health care.

I hope the Trump Administration and CMS Administrator Verma will quickly finishes this rule and give more Americans better health care choices and outcomes at lower costs.