July 22,2008

Grassley works to improve fiscal health of hospitals in Iowa

WASHINGTON — Iowa hospitals in Spencer, Spirit Lake, Fort Madison, Muscatine,Carroll, Grinnell, Newton and Keokuk would be given better treatment by the Medicare programand be put in a stronger position to provide health care services to people in their communitiesand local areas, thanks to legislation introduced today by Senator Chuck Grassley.

Grassley said these eight hospitals are called “tweener” hospitals in the health policyworld because they are too large to be designated as critical access hospitals but too small to befinancially viable under the Medicare hospital prospective payment system which is designed forlarger operations.

“These hospitals are the backbone of the rural health care system, and there’s nojustification for Medicare not recognizing their unique situation and vital role,” Grassley said.“I’m committed to doing everything I can to make sure they’re treated fairly and not left in aperilous situation with Medicare.”

There are “tweener” hospitals across the country, and changes were made in recentlypassed Medicare legislation to address payment system problems for some but not all of thesehospitals. Grassley said the changes failed to deal with the issues for most of the eight “tweener”hospitals in Iowa.

Most “tweener” hospitals are designated as Medicare Dependent Hospitals and SoleCommunity Hospitals under the Medicare program. The Medicare bill that just became lawimproves payments for Sole Community Hospitals but contained no provisions that benefitMedicare Dependent Hospitals. Grassley’s “Rural Hospital Assistance Act of 2008" wouldbenefit Medicare Dependent Hospitals by not adjusting their payments for area wages unless itwould result in improved payments. It would also improve the existing low-volume add-on forlow-volume rural hospitals, both Medicare Dependent and Sole Community, so that more ruralfacilities with low volumes would receive the assistance they need.

Grassley is the Ranking Member of the Senate Committee on Finance, which isresponsible for Medicare legislation. He is a longtime leader in Congress for rural health careneeds. As Chairman of the Finance Committee in 2003, he shepherded through Congress the billthat created the Medicare Part D prescription drug benefit. The text of Grassley’s floorstatement marking introduction of the new legislation is below.

The Iowa hospitals that would benefit from this legislation are Spencer Hospital, LakesRegional Health Care in Spirit Lake, Fort Madison Community Hospital, Unity Healthcare inMuscatine, St. Anthony Hospital in Carroll, Grinnell Regional Hospital, Skiff Medical Center inNewton and the Keokuk Area Hospital.

Floor Statement of U.S. Senator Chuck Grassley of Iowa
Introduction of the Rural Hospital Assistance Act of 2008
Tuesday, July 22, 2008

Mr. President, I am pleased to introduce the Rural Hospital Assistance Act of 2008.Back in December, I stood before this body explaining that we were only passing asix-month Medicare bill in order to provide the opportunity for us to address a number ofpriorities. One of the biggest priorities I identified was the need to ensure access to ruralhospital services.

The type of rural hospitals that top the priority list are what are known as "tweeners."These hospitals are too large to be critical access hospitals, but too small to be financially viableunder the Medicare hospital prospective payment systems. It is absolutely imperative that thesetweener hospitals get the assistance they need in order to keep their doors open. They are oftennot only the sole provider of health care in rural areas, but are also significant employers andpurchasers in the community. Also, the presence of a hospital is essential for purposes ofeconomic development because businesses check to see if a hospital is in the community inwhich they might set up shop.

While the Medicare bill that Congress just enacted improves the situation for sometweeners, many more are left in financial peril. Mr. President, it is unfortunate thatcomprehensive payment reforms for tweener hospitals were not included in the bill that justpassed. As you know, I have long proposed a number of tweener payment improvements inprevious bills this Congress and they were included in the agreement that Senator Baucus and Ireached for this year's Medicare bill. Unfortunately, the core tweener hospital paymentimprovements were dropped from the bill once the process became partisan.

It is for this reason that I am introducing this bill. We must improve the financial healthof tweener hospitals and ensure that people have access to health care.

Mr. President, most tweener hospital are currently designated as Medicare DependentHospitals and Sole Community Hospitals under the Medicare program. While the bill thatrecently passed Congress improves payments for Sole Community Hospitals, there are noprovisions that benefit Medicare Dependent Hospitals. This bill would benefit MedicareDependent Hospitals by not adjusting their payments for area wages unless it would result inimproved payments.

Also, a major driver of the financial difficulties that tweener hospitals face is the fact thatmany have relatively low volumes of inpatient admissions. Back when we passed the MedicarePrescription Drug, Improvement, and Modernization Act of 2003, I made sure that this lawincluded an add-on payment for low volume rural hospitals. This bill would improve theexisting low-volume add-on payment for hospitals so that more rural facilities, both MedicareDependent Hospitals and Sole Community Hospitals, with low volumes would receive theassistance they desperately need.

And to offset the increases in spending from these tweener hospital paymentimprovements, this bill would address another priority that we wanted to include in a morecomprehensive Medicare bill. Many know my position regarding physician owned hospitals andmy concern about the effect these facilities have on health care access and costs as well aspatient safety. There has been much debate regarding these facilities over the years especiallywith physician owned limited service hospitals. This bill would eliminate the exceptions underthe physician self-referral laws for physician-owned hospitals and provide a limited exceptionfor existing facilities.

Mr. President, as you can see, we still have much to do when it comes to ensuring accessto health care in rural America. I look forward to working with my colleagues on this urgentmatter.

Thank you, Mr. President. I yield the floor.