[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 502 Introduced in Senate (IS)]
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119th CONGRESS
1st Session
S. 502
To amend title XVIII of the Social Security Act to restore State
authority to waive for certain facilities the 35-mile rule for
designating critical access hospitals under the Medicare program, and
for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
February 10, 2025
Mr. Durbin (for himself, Mr. Lankford, and Ms. Smith) introduced the
following bill; which was read twice and referred to the Committee on
Finance
_______________________________________________________________________
A BILL
To amend title XVIII of the Social Security Act to restore State
authority to waive for certain facilities the 35-mile rule for
designating critical access hospitals under the Medicare program, and
for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Rural Hospital Closure Relief Act of
2025''.
SEC. 2. RESTORING STATE AUTHORITY TO WAIVE THE 35-MILE RULE FOR CERTAIN
MEDICARE CRITICAL ACCESS HOSPITAL DESIGNATIONS.
(a) In General.--Section 1820 of the Social Security Act (42 U.S.C.
1395i-4) is amended--
(1) in subsection (c)(2)--
(A) in subparagraph (B)(i)--
(i) in subclause (I), by striking ``or'' at
the end;
(ii) in subclause (II), by inserting ``or''
at the end; and
(iii) by adding at the end the following
new subclause:
``(III) subject to subparagraph
(G), is a hospital described in
subparagraph (F) and is certified, on
or after the date of the enactment of
the Rural Hospital Closure Relief Act
of 2025, and before the date that is 9
years after the date of enactment of
this subclause, by the State as being a
necessary provider of health care
services to residents in the area;'';
and
(B) by adding at the end the following new
subparagraphs:
``(F) Hospital described.--For purposes of
subparagraph (B)(i)(III), a hospital described in this
subparagraph is a hospital that--
``(i) is a sole community hospital (as
defined in section 1886(d)(5)(D)(iii)), a
medicare dependent, small rural hospital (as
defined in section 1886(d)(5)(G)(iv)), a low-
volume hospital that in 2021 receives a payment
adjustment under section 1886(d)(12), or a
subsection (d) hospital (as defined in section
1886(d)(1)(B));
``(ii) is located in a rural area, as
defined in section 1886(d)(2)(D), or a rural
census tract of a metropolitan statistical area
(as determined under the most recent
modification of the Goldsmith Modification,
originally published in the Federal Register on
February 27, 1992 (57 Fed. Reg. 6725));
``(iii)(I) is located--
``(aa) in a county that has a
percentage of individuals with income
at or below the Federal poverty level
in 2023 or 2024 that is higher than the
national or statewide average in that
year; or
``(bb) in a health professional
shortage area (as defined in section
332(a)(1)(A) of the Public Health
Service Act); or
``(II) has a percentage of inpatient days
of individuals entitled to benefits under part
A of this title in 2023 or 2024 that is higher
than the national or statewide average in that
year;
``(iv) has attested to the Secretary that
the hospital--
``(I) was operating as of the date
of enactment of this subparagraph; and
``(II) had 2 consecutive years of
negative operating margins preceding
the date of certification described in
subparagraph (B)(i)(III), as defined by
the Secretary in the regulations or
program instruction issued pursuant to
section 2(b) of the Rural Hospital
Closure Relief Act of 2025; and
``(v) submits to the Secretary, at such
time and in such manner as the Secretary may
require, an application for certification of
the facility as a critical access hospital,
including an attestation outlining--
``(I) the good governance
qualifications and strategic plan for
multi-year financial solvency of the
hospital; and
``(II) the hospital's commitment to
open and maintain, for the duration of
the hospital's designation as a
critical access hospital under this
section, a new service line or expanded
service capacity for a service that is
in high demand or limited supply in the
hospital's service area (determined
based on the hospital's most recent
community health needs assessment under
section 501(r)(3) of the Internal
Revenue Code of 1986 (or other
comparable assessment)), such as
obstetrics or behavioral health care
services.
``(G) Limitation on certain designations.--
``(i) In general.--Subject to clauses (ii)
and (iii), the Secretary may not under
subsection (e) certify pursuant to a
certification by a State under subparagraph
(B)(i)(III)--
``(I) more than a total of 120
facilities as critical access
hospitals; and
``(II) within any one State, more
than 5 facilities as critical access
hospitals.
``(ii) Process.--The Secretary shall follow
the following process in carrying out clause
(i) with respect to each year in which the
Secretary determines that the limitation under
clause (i)(I) has not been reached:
``(I) Initial assessment.--The
Secretary shall conduct an initial
assessment of the total number of
hospitals described in paragraph
(2)(F).
``(II) Initial allocation.--Of the
total number of designations available
under clause (i), the Secretary shall
allocate 1 for a hospital in each State
that the Secretary determines (based on
the initial assessment under subclause
(I)) has one or more hospitals
described in paragraph (2)(F).
``(III) Remaining allocation.--Of
the total number of designations
available under clause (i), after
application of subclause (II), the
Secretary shall allocate the remaining
number on a proportional basis based on
the total number of hospitals described
in paragraph (2)(F) in each State that
are eligible (as determined based on
the initial assessment under subclause
(I)).
``(iii) Sunset.--Effective beginning on the
date that is 9 years after the date of
enactment of this subparagraph, the Secretary
may not certify a hospital as a critical access
hospital pursuant to a certification by a State
under subparagraph (B)(i)(III).
``(H) Information submission requirements for
hospitals certified pursuant to rural hospital closure
relief act.--
``(i) In general.--A critical access
hospital that is certified under subsection (e)
pursuant to a certification by a State under
subparagraph (B)(i)(III) shall submit to the
Secretary the following at a time, and in a
manner, specified by the Secretary:
``(I) Reports.--Reports containing
such information as the Secretary may
specify with respect to items and
services furnished as part of the new
service line or expanded service
capacity for a service as described in
the attestation submitted by the
critical access hospital under
subparagraph (F)(v)(II). To the extent
practicable, the Secretary shall align
such reporting with other reporting
requirements applicable to critical
access hospitals under this subsection.
``(II) Notice.--If the critical
access hospital materially changes the
new service line or expanded capacity
for a service as so described, notice
of such changes along with a plan to
satisfactorily maintain access to care
(as determined by the Secretary).
``(ii) Revocation of certification for
noncompliance.--If the Secretary determines
that a critical access hospital described in
clause (i) has failed to submit an annual
report required under subclause (I) of such
clause or a notice required under subclause
(II) of such clause, the Secretary may, as the
Secretary determines appropriate, revoke the
certification of the critical access hospital
under subsection (e).''; and
(2) in subsection (e), by inserting ``, subject to
subsection (c)(2)(G),'' after ``The Secretary shall''.
(b) Implementation.--Not later than 1 year after the date of the
enactment of this Act, the Secretary of Health and Human Services shall
issue final regulations or program instruction to carry out subsection
(a).
(c) Clarification Regarding Facilities That Meet Distance or Other
Criteria and Application of Other Criteria.--Nothing in this section
shall affect--
(1) the application of criteria for designation as a
critical access hospital described in subclause (I) or (II) of
section 1820(c)(2)(B)(i) of the Social Security Act (42 U.S.C.
1395i-4(c)(2)(B)(i)); or
(2) the application of criteria for designation as a
critical access hospital described in clauses (ii) through (v)
of section 1820(c)(2)(B) of the Social Security Act (42 U.S.C.
1395i-4(c)(2)(B)).
(d) GAO Study and Report.--
(1) Study.--The Comptroller General of the United States
(in this section referred to as the ``Comptroller General'')
shall conduct a study on the implementation of the amendments
made by subsection (a). To the extent such data are available
and reliable, such study shall include--
(A) an analysis of--
(i) the characteristics of facilities
designated as critical access hospitals
pursuant to section 1820(c)(2)(B)(i)(III) of
the Social Security Act, as added by subsection
(a);
(ii) an analysis of the financial status
and outlook for such facilities based on their
designation as a critical access hospital
pursuant to such section; and
(iii) an analysis of any increase in
expenditures under the Medicare program under
title XVIII of the Social Security Act (42
U.S.C. 1395 et seq.) as a result of such
designation, relative to the expected baseline
expenditures under the Medicare program if such
facilities had not received such designation;
and
(B) an assessment of whether the authority to
designate facilities as critical access hospitals
pursuant to such section 1820(c)(2)(B)(i)(III) promotes
access to care in rural areas.
(2) Report.--Not later than 6 years after the date of the
enactment of this Act, the Comptroller General shall submit to
Congress a report containing the results of the study conducted
under subsection (a), together with recommendations for such
legislation and administrative action as the Comptroller
General determines appropriate.
SEC. 3. MEDPAC STUDY AND REPORT ON PAYMENT SYSTEMS FOR RURAL HOSPITALS.
(a) Study.--The Medicare Payment Advisory Commission (in this
section referred to as the ``Commission'') shall conduct a study, using
data from 2018 through 2028, on payment systems for rural hospitals
under the Medicare program under title XVIII of the Social Security Act
(42 U.S.C. 1395 et seq.). Such study shall include an analysis of--
(1) facilities designated as critical access hospitals
pursuant to section 1820(c)(2)(B)(i)(III) of the Social
Security Act, as added by section 2(a);
(2) features of payment systems for rural hospitals,
including value-based payment systems, that would--
(A) ensure financial sustainability for the
Medicare program; and
(B) preserve access to care for Medicare
beneficiaries; and
(3) if the Commission recommends any new payment system for
rural hospitals under the Medicare program, to the extent
feasible, the impacts of transition from existing payment
systems to such new payment system.
(b) Report.--Not later than 8 years after the date of enactment of
this Act, the Commission shall submit to Congress a report on the study
conducted under subsection (a), together with recommendations for such
legislation and administrative action as the Commission determines
appropriate.
(c) Definition of Rural Hospital.--In this section, the term
``rural hospital'' means--
(1) a critical access hospital (as defined in section
1861(mm)(1) of the Social Security Act (42 U.S.C.
1395x(mm)(1)));
(2) a subsection (d) hospital (as defined in section
1886(d)(1)(B) of the Social Security Act (42 U.S.C.
1395ww(d)(1)(B))) that is located in a rural census tract of a
metropolitan statistical area (as determined under the most
recent modification of the Goldsmith Modification, originally
published in the Federal Register on February 27, 1992 (57 Fed.
Reg. 6725));
(3) a sole community hospital (as defined in section
1886(d)(5)(D)(iii)) of the Social Security Act (42 U.S.C.
1395ww(d)(5)(D)(iii)));
(4) a medicare dependent, small rural hospital (as defined
in section 1886(d)(5)(G)(iv) of the Social Security Act (42
U.S.C. 1395ww(d)(5)(G)(iv))); and
(5) a low-volume hospital (as defined in section
1886(d)(12)(C)(i) of the Social Security Act (42 U.S.C.
1395ww(d)(12)(C)(i))).
SEC. 4. SUNSET.
Not later than 9 years after the date of enactment of this Act, the
Secretary shall establish a mechanism and provide guidance and
technical assistance under which any facility that was designated as a
critical access hospital pursuant to a certification by a State under
section 1820(c)(2)(B)(i)(III) of the Social Security Act, as added by
section 2(a), may transition within 1 year to one of the following
payment models:
(1) Such new model or models recommended by the Medicare
Payment Advisory Commission in the report submitted under
section 3.
(2) The prospective payment model (or models) under which
the facility received payment under title XVIII of the Social
Security Act (42 U.S.C. 1395 et seq.) prior to being so
designated pursuant to such certification.
(3) Payment as a rural emergency hospital under section
1834(x) of the Social Security Act (42 U.S.C. 1395m(x)).
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