Congress locks in Medicare payment boost for struggling rural hospitals
H.R. 8109 — Save Struggling Hospitals Act · Filed by David Kustoff (R-TN) · 6 cosponsors · Introduced Mar 26, 2026 · Referred to committee
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What it does
This bill codifies a Medicare payment policy that boosts reimbursement rates for hospitals in low-wage areas. Hospitals whose area wage index falls below the 25th percentile get a payment increase equal to half the gap between their current rate and the 25th percentile benchmark, effective retroactively from October 2019. The increase is budget-neutral—any gains for low-wage hospitals are offset by adjustments elsewhere, but protections ensure hospitals below the 75th percentile don't see cuts and no hospital's rate drops below 95% of its prior year level.
Why we flagged it
The bill's operative mechanism is a targeted adjustment to Medicare's area wage index formula, redistributing reimbursement dollars from higher-wage to lower-wage hospital regions. It is not a subsidy or new spending—it is a reallocation within the existing Medicare payment system.
What the text implies
- Retroactive effective date (October 1, 2019) means the bill codifies a policy already in effect for ~6 years, converting administrative practice into statute—this locks in the policy and makes future changes harder.
- Budget neutrality constraint means the bill does not increase total Medicare spending; gains for low-wage hospitals come directly from reductions to higher-wage hospitals, creating a zero-sum redistribution.
The full analysis lists 4 implications of this text.
Who stands to gain
hospitals in low-wage geographic areas (below 25th percentile area wage index); rural and economically distressed hospital systems