Press Releases

WASHINGTON – Congressman French Hill (AR-02) issued the following statement after signing onto the Fair Hospital Payments Act:

“I signed onto this bill to keep the best medical professionals in Arkansas and make sure that Arkansans are receiving the best health care possible and to correct a disparity that is harming Arkansans. For too long, the Medicare reimbursement rate for Arkansas hospitals has been lower than the rest of the country, and this is not only unfair but potentially dangerous to the millions of Arkansans who rely upon our hospitals for the health care services they need.”

Background:

The Centers for Medicare and Medicaid Services (CMS) bases a portion of each hospital’s reimbursement for Medicare services on the Area Wage Index for Hospitals (AWI). The AWI is based upon the relative hospital wage level in the hospital’s geographic area compared to the national average. Many legislative and administrative “fixes” over the past thirty years, along with flaws of the existing formula, have resulted in significant distortions in the AWI system.

In fact, while the AWI was originally designed so that the average AWI is 1.0, there is not a single hospital in any of the following states that is reimbursed based on an AWI of 1.0 or greater: Alabama, Tennessee, Georgia, Ohio, Texas, South Carolina, Louisiana, Kentucky, Arkansas, Iowa, Kansas, Missouri, and Utah.

Under the current system, hospitals that choose to enter rural and underserved areas with lower average wages are slapped with disproportionately lower reimbursement rates and thinner profit margins. By establishing a floor AWI of 0.874 for Medicare reimbursement, the Fair Medicare Hospital Payments Act of 2017 will help address this disparity.