SOLES Act Mandates Medicare Pay Remote Alaska/Hawaii Hospitals at Least 94% of Outpatient Costs

The “Save our Lone Emergency Services Act,” or SOLES Act, is a targeted fix for how Medicare pays certain hospitals in Alaska and Hawaii. Specifically, it changes the rules for sole community hospitals—those facilities that are the only game in town for a large area. The bill mandates that if Medicare’s standard payment for outpatient services at one of these remote hospitals falls below 94% of the hospital’s actual, reasonable cost to provide that service, Medicare must boost the payment to cover the difference. This is a big deal for keeping critical services running in isolated areas.

The Remote Clinic Lifeline

Think about a small hospital in rural Alaska or Hawaii. They face astronomical costs for everything from shipping supplies to heating the building, making it nearly impossible to turn a profit on standard Medicare rates. This bill directly addresses that reality (SEC. 2. Special Payment Boost for Remote Hospitals). If their true cost for, say, a common outpatient procedure is $1,000, but Medicare only pays $800, the SOLES Act says Medicare has to step in and pay at least $940 (94% of the cost). This ensures these essential facilities aren't losing money every time they treat a Medicare patient for outpatient services, which is key to keeping their doors open.

What This Means for Your Wallet and Your Access

For patients, the good news is that this financial relief for hospitals doesn't translate into higher bills. The legislation explicitly states that patient copayments for these outpatient services will not be affected by this payment increase (SEC. 2. What This Doesn't Change). The real benefit for the community is stability: guaranteeing that the only hospital for hundreds of miles can afford to offer necessary services like diagnostic imaging, lab work, and minor surgeries.

The Budget Neutrality Catch

Here’s where the policy gets interesting—and expensive. Typically, if Medicare increases payments for one group of providers, it has to find that money by cutting payments elsewhere to maintain “budget neutrality.” This bill gives these specific hospitals a pass. The extra payments they receive are explicitly exempt from Medicare’s budget neutrality rules (SEC. 2. Budget Neutrality Exemption). While this is great news for these remote hospitals, it means the cost of this targeted relief is absorbed by the general Medicare program and, ultimately, the taxpayer, without requiring offsetting cuts to other providers. It’s a clean infusion of cash to keep those specific services afloat.

The Road Ahead

The Secretary of Health and Human Services has six months after the bill becomes law to write the official rules for determining what counts as “reasonable cost” and how the payments will be calculated (SEC. 2. Getting It Started). Once those rules are finalized, the higher payments will start applying to services provided on January 1st of the following year. The main uncertainty here lies in how HHS defines that “reasonable cost.” That definition will be the key to whether this act provides the robust relief intended or if administrative hurdles dilute the impact.