WASHINGTON, D.C. (WSFA) - Alabama lawmakers are praising the finalization of a rule change that should help financially struggling hospitals around the state. Since 2011, a total of 13 hospitals have close their doors, including seven in rural areas.
“Alabama hospitals have suffered the negative effects of the Medicare wage index for over two decades,” said U.S. Senator Richard Shelby, R-Alabama, who praised the change.
Friday, the Centers for Medicare & Medicaid Services, or CMS, finalized a proposed rule that provides relief from the increasing disproportion of reimbursement to hospitals created by the Medicare wage index.
Alabama currently has the lowest wage index in the nation, according to the Alabama Hospital Association. CMS used what lawmakers believe was flawed wage index data, based on regional labor costs, to determine Medicare reimbursement levels for hospitals in a particular area.
The result? While hospitals in other states that are healthier and wealthier took advantage of over-payments, many of Alabama’s urban and rural hospitals saw low reimbursement levels. Many ended up folding as a result, forcing rural residents to travel great distances for any medical services.
“This rule adjustment will bring balance to Medicare reimbursement for Alabama, particularly our rural hospitals, and hospitals across the country,” Shelby stated.
Earlier in 2019, Shelby and the entire Alabama Congressional delegation sent a letter to CMS Administrator Seema Verma encouraging the agency to provide Alabama hospitals relief from the Medicare wage index.
"For two decades, Alabama has been fighting the unfair Medicare reimbursements and today receives a rate that is just 67 percent of the national average,” said U.S. Senator Doug Jones, D-Ala.
Jones, a member of the Senate Health, Education, Labor and Pensions Committee, added “today’s final rule will provide much-needed relief.”
Terri Sewell, Alabama’s only Democratic representative on Capitol Hill, also praised the news.
"With over 88 percent of rural Alabama hospitals operating in the red, it is critical that we do everything we can to help our hospitals provide the services needed to keep Alabamians healthy. Recalculating the way Medicare reimburses Alabama hospitals is a crucial step in achieving that goal.”
She said early estimates indicate the state’s hospitals could gain over $43 million under the new rule in the first year of implementation alone.
While Shelby, Jones, and Sewell praised the rule change, the two Democratic lawmakers also advocated for expansion of Medicaid, saying it could bring billions of dollars into the state and create hundreds of thousands of jobs. It’s a position also held by the Alabama Hospital Association.
The final rule is available here.