Advocacy Issue: Rural MDH and LVA Programs

The Issue

Medicare pays most acute-care hospitals Medicare pays most acute-care hospitals under the inpatient prospective payment system (IPPS). Some of these hospitals receive additional support from Medicare to help address potential financial challenges associated with being rural, geographically isolated and low volume. These programs are Medicare- dependent Hospitals (MDHs), Low-volume Adjustment (LVA) and Sole Community Hospitals (SCHs).

Without action from Congress, the MDH and enhanced LVA programs will expire Dec. 31, 2024.

Why are these programs important?

The network of providers that serves rural Americans is financially fragile and more dependent on Medicare revenue due to the high percentage of Medicare beneficiaries who live in rural areas. Rural residents also on average tend to be older, have lower incomes and higher rates of chronic illness than urban counterparts. This greater dependence on Medicare may make certain hospitals more financially vulnerable. Indeed, Medicare only pays 82% of hospital costs on average according to our latest analysis. Additionally, nearly 150 rural hospitals have closed or converted to other provider types since 2010. These designations protect the financial viability of small, rural hospitals to ensure they can continue providing patients access to care.

AHA Position

The Rural Hospital Support Act (S. 1110) includes the following important AHA-supported policies to ensure access to care:

Permanently extends the MDH program and adds an additional base year that hospitals may choose for calculating payments.
Permanently extends the enhanced LVA program, which would continue to allow hospitals more than 15 miles from another IPPS hospital and have fewer than 3,800 annual total discharges to be eligible.
Adds a base year that SCHs may select for calculating their payments

The ARCH Act (H.R. 6430) helps rural hospitals continue serving their patients and communities by extending the current MDH and LVA programs by five years.