U.S. Sen. Lamar Alexander, R-Tenn., announced on the Senate floor Tuesday that the rule change will help curb the trend of rural hospital closures in Tennessee by updating the formula that determines how much hospitals will be reimbursed by Medicare.
“Last month, Alan Levine, who leads Ballad Health, a health care system in East Tennessee, announced a $10 million investment in pay increases for nurses,” Alexander said. “Alan said this investment was, in part, because of a new rule proposed by the Trump administration in April. 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 hospitals in areas with lower wages."
"Rural hospitals have been struggling under the weight of the wage index,” Levine said. “We're hoping the rule will go into effect as soon as possible, October 1, but we would certainly like to see the administration finalize the rule before then. We're grateful the Trump administration is recognizing the needs of rural communities. We certainly will put those dollars to good use here."
The rule change, Levine said, could bring Ballad Health new income of $20-$50 million annually, although he added the health care provider did not put any of this money in its operating budget for the fiscal year that began July 1.
"Half our hospitals lose money," Levine reiterated. "That puts a huge strain on Johnson City Medical Center and Bristol Regional Medical Center. Holston Valley (Medical Center) has negative operating margins. I will say we've seen Holston Valley's performance this year improve. A lot of the strategies we're deploying are helping to improve that. We're focused on reducing the cost of care."
Alexander added, “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, 12 have closed since 2010. A recent survey by the Robert Wood Johnson Foundation and the Harvard School of Public Health found that one in four Americans in rural areas could not access health care when they needed it."
Alexander, chairman of the Senate Health Committee, said he is working with his colleagues to lower health care costs. His committee approved, by a vote of 20-3, a bipartisan package of 55 proposals from 65 senators that 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 that are not part of a large corporate chain. Another provision in the bill will expand technology-based health care to help Americans in rural areas have access to specialty health care, according to Alexander.