Congress quietly exempts rural physician-owned hospitals from federal self-referral rules
S. 1390 — Physician Led and Rural Access to Quality Care Act · Filed by James Lankford (R-OK) · 10 cosponsors · Introduced Apr 9, 2025 · Referred to committee
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What it does
This bill creates a new exemption from federal physician self-referral rules (the Stark Law) for rural hospitals, allowing physician-owners to refer patients to their own hospitals without triggering penalties. It also removes a prior restriction that prevented existing physician-owned hospitals from expanding their bed capacity or service lines.
Why we flagged it
The bill's operative mechanism is a carve-out from federal anti-self-dealing law (Stark Law) for a specific class of providers (rural physician-owned hospitals). It is not a public-health measure but a regulatory exemption benefiting a private provider class.
What the text implies
- Removes federal oversight of referral patterns in rural areas, potentially enabling physicians to refer patients to their own hospitals based on financial incentive rather than medical necessity, increasing healthcare costs for rural Medicare beneficiaries.
- The definition of 'covered rural hospital' ties eligibility to criteria in section 1820(c)(2)(B), which is not quoted in this bill — the actual scope of the exemption depends on unstated statutory language, making the true reach of the carve-out opaque to non-specialists.
The full analysis lists 4 implications of this text.
Who stands to gain
physician-owned hospitals; rural hospital operators with physician ownership; physicians with ownership stakes in rural hospitals