Rural Hospital Rescue Bill Ends Medicare Cuts, Permanently Boosts Ambulance Pay, and Scraps the 96-Hour Rule

This legislation, officially titled the “Save America’s Rural Hospitals Act,” is a massive financial and regulatory lifeline for rural healthcare providers teetering on the brink of closure. The core goal is stabilizing these facilities—which Congress notes are the only source of emergency care for millions—by channeling more money into the system and cutting red tape. It does this through four main sections covering everything from Medicare payment rules to new grant programs.

The Financial Lifeline: Stopping the Bleeding

For rural hospitals, this bill is a game-changer for the budget. First, it eliminates Medicare sequestration (those automatic budget cuts) specifically for Critical Access Hospitals (CAHs), Sole Community Hospitals, and other rural facilities (SEC. 101). Think of sequestration as a hidden tax on Medicare payments; getting rid of it means more money stays in the hospital’s operating budget instead of going back to Washington.

Second, it permanently extends the special, higher payment rates for low-volume hospitals and Medicare-Dependent Hospitals (MDHs) (SEC. 103). These payment extensions often have to be renewed year after year, creating budget uncertainty. By making them permanent, these hospitals can finally plan long-term. This bill also increases the amount CAHs and rural hospitals can recover from Medicare for uncollected debt (bad debt), boosting their reimbursement by an extra 15% (SEC. 102). This directly impacts the bottom line of facilities struggling with high uninsured or under-insured patient populations.

Permanent Boosts for Ambulance and Telehealth

It’s not just hospitals getting a permanent raise. The bill makes the current increased Medicare payments for ground ambulance services in rural areas permanent (SEC. 111). If you live in a rural area, this means the local ambulance service, which often operates on thin margins, is more likely to stay in business and reach you when you need it most.

Similarly, the enhanced Medicare payment rates for telehealth services provided by Federally Qualified Health Centers (FQHCs) and Rural Health Clinics (RHCs) are also made permanent (SEC. 112). For patients, this means continued access to virtual doctor visits and specialty care that might otherwise require a two-hour drive, ensuring that convenience doesn't disappear when the current emergency funding expires.

Cutting the Red Tape: The 96-Hour Rule is Out

One of the biggest regulatory burdens for Critical Access Hospitals (CAHs) is the 96-hour average length of stay requirement for inpatient services. This bill eliminates that rule entirely for Medicare billing purposes (SEC. 301). Previously, CAHs had to constantly monitor their patient stays to ensure the average didn't exceed four days, which often led to premature transfers or administrative headaches. Scrapping this rule gives doctors and nurses more flexibility to treat patients as needed, reducing unnecessary transfers to distant facilities.

The bill also removes the requirement for a prior hospital stay before a patient can receive extended care services at certain hospitals (SEC. 302). This streamlines the process for follow-up care, making it easier and faster for patients to get the post-acute services they need without jumping through administrative hoops.

A New Path to Critical Access Status and Equity

For hospitals that are financially underwater but vital to their communities, the bill creates a new, alternative path to gain Critical Access Hospital (CAH) designation (SEC. 113). This is a big deal because CAH status comes with major financial benefits. A state can now certify a struggling hospital (one with two consecutive years of negative operating margins) as essential, even if it doesn't meet the standard distance requirements from another hospital. However, this is capped: only 175 facilities nationwide can use this new path, and no single state can certify more than 10.

Finally, the bill addresses patient costs by equalizing beneficiary copayments for outpatient services at CAHs (SEC. 201). This provision ensures that patients at CAHs pay the same 20% copayment they would at a standard hospital, preventing higher out-of-pocket costs just because they sought care at their local rural facility.

The Future: Transformation Grants

The legislation establishes new Rural Health Transformation Grants (SEC. 401). These five-year grants are designed to help rural providers transition to sustainable new models, such as becoming Rural Emergency Hospitals (REHs), setting up freestanding emergency departments, or integrating behavioral health and telehealth services. This money is aimed at helping facilities evolve their business model to match the modern needs of their communities, ensuring that the stabilization efforts of Title I and III aren't just temporary fixes, but a foundation for long-term survival.