Last week, several United States Senators including Georgia Senator Johnny Isakson introduced legislation aimed at improving Medicare’s compensation of hospitals, especially hospitals located in rural, underserved, or economically struggling regions. 

Like similar legislation that stalled in 2016, the Fair Medicare Hospital Payments Act of 2017 would alter a Medicare reimbursement formula that results in disproportionately low Medicare payments to hospitals located in rural and low-wage areas. The formula, known as the ‘area wage index,’ is based upon the relative hospital wage level in a hospital’s geographic area compared to the national average.

If passed, the 2017 legislation would create a national minimum ‘area wage index’ of 0.874. Hospitals that currently have an index below 0.874 would benefit from increased Medicare payments by way of this “floor” to the area wage index.   

“Too many rural hospitals have been forced to close in recent years, and hospitals in states like Georgia are at a unique disadvantage because of the way these Medicare payments are calculated,” Sen. Isakson said in a press release. “This legislation would address the discrepancy in payments, help to prevent future closures of hospitals in medically underserved areas, enable hospitals to boost wages in economically struggling regions, and ensure patients have access to emergency and needed care.”

More than than 100 hospitals in Georgia would benefit from this increased Medicare payments, according the press release. The newly introduced legislation has also been embraced by many organizations, including the Georgia Hospital Association and the National Rural Health Association.