S.502 - Rural Hospital Closure Relief Act of 2025 (119th Congress)
Summary
The Rural Hospital Closure Relief Act of 2025 (S.502) aims to amend Title XVIII of the Social Security Act, restoring state authority to waive the 35-mile rule for designating critical access hospitals (CAHs) under the Medicare program. This would allow certain struggling rural hospitals to qualify for CAH status, providing them with increased Medicare reimbursements and helping to keep them open.
The bill outlines specific criteria for hospitals eligible for this waiver, including sole community hospitals, Medicare-dependent small rural hospitals, and low-volume hospitals located in rural areas or rural census tracts. It also sets limits on the number of facilities that can be designated as CAHs under this provision, with a sunset clause after nine years.
The Act also mandates studies by the GAO and MedPAC on the implementation and payment systems for rural hospitals, respectively, and requires the Secretary to establish a transition mechanism for facilities designated as CAHs under this Act after nine years.
Expected Effects
The likely effect of this bill is to prevent the closure of some rural hospitals by allowing them to qualify for critical access hospital status and receive enhanced Medicare funding.
This could improve healthcare access in underserved rural areas. However, it could also lead to increased Medicare spending and may not address the underlying issues causing financial distress for rural hospitals.
Potential Benefits
- Preservation of Rural Healthcare Access: Prevents hospital closures, ensuring continued access to medical services in rural communities.
- Financial Relief for Struggling Hospitals: Provides increased Medicare reimbursements, improving the financial stability of eligible rural hospitals.
- State Flexibility: Restores state authority to waive the 35-mile rule, allowing states to address the unique needs of their rural populations.
- Targeted Support: Focuses on specific types of rural hospitals facing financial challenges, such as sole community hospitals and low-volume hospitals.
- Service Expansion: Encourages hospitals to open new or expand existing service lines based on community needs assessments.
Potential Disadvantages
- Increased Medicare Spending: Could lead to higher Medicare expenditures due to increased reimbursements for CAHs.
- Limited Scope: The Act has a sunset clause after nine years, potentially creating uncertainty for hospitals relying on this designation.
- Potential for Inefficiency: May not address the root causes of financial distress in rural hospitals, such as declining populations or inefficient management.
- Administrative Burden: Requires hospitals to submit applications and attestations, potentially creating additional administrative burdens.
- Cap on Designations: Limits the number of facilities that can be designated as CAHs under this provision, potentially excluding some eligible hospitals.
Most Disadvantaged Areas:
Constitutional Alignment
The bill appears to align with the Constitution's general welfare clause (Preamble). It aims to promote the health and well-being of citizens in rural areas by ensuring access to healthcare.
Congress has the power to regulate interstate commerce (Article I, Section 8), which includes the provision of healthcare services and the establishment of Medicare.
However, the Tenth Amendment reserves powers not delegated to the federal government to the states, and this Act could be seen as potentially infringing on state authority by setting federal standards for hospital designations, although it also restores some state authority.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).