II
119THCONGRESS
1
STSESSION S. 502
To amend title XVIII of the Social Security Act to restore State authority
to waive for certain facilities the 35–mile rule for designating critical
access hospitals under the Medicare program, and for other purposes.
IN THE SENATE OF THE UNITED STATES
FEBRUARY10, 2025
Mr. D
URBIN(for himself, Mr. LANKFORD, and Ms. SMITH) introduced the
following bill; which was read twice and referred to the Committee on Finance
A BILL
To amend title XVIII of the Social Security Act to restore
State authority to waive for certain facilities the 35–
mile rule for designating critical access hospitals under
the Medicare program, and for other purposes.
Be it enacted by the Senate and House of Representa-1
tives of the United States of America in Congress assembled, 2
SECTION 1. SHORT TITLE. 3
This Act may be cited as the ‘‘Rural Hospital Closure 4
Relief Act of 2025’’. 5
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SEC. 2. RESTORING STATE AUTHORITY TO WAIVE THE 35– 1
MILE RULE FOR CERTAIN MEDICARE CRIT-2
ICAL ACCESS HOSPITAL DESIGNATIONS. 3
(a) I
NGENERAL.—Section 1820 of the Social Secu-4
rity Act (42 U.S.C. 1395i–4) is amended— 5
(1) in subsection (c)(2)— 6
(A) in subparagraph (B)(i)— 7
(i) in subclause (I), by striking ‘‘or’’ 8
at the end; 9
(ii) in subclause (II), by inserting 10
‘‘or’’ at the end; and 11
(iii) by adding at the end the fol-12
lowing new subclause: 13
‘‘(III) subject to subparagraph 14
(G), is a hospital described in sub-15
paragraph (F) and is certified, on or 16
after the date of the enactment of the 17
Rural Hospital Closure Relief Act of 18
2025, and before the date that is 9 19
years after the date of enactment of 20
this subclause, by the State as being 21
a necessary provider of health care 22
services to residents in the area;’’; and 23
(B) by adding at the end the following new 24
subparagraphs: 25
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‘‘(F) HOSPITAL DESCRIBED .—For pur-1
poses of subparagraph (B)(i)(III), a hospital 2
described in this subparagraph is a hospital 3
that— 4
‘‘(i) is a sole community hospital (as 5
defined in section 1886(d)(5)(D)(iii)), a 6
medicare dependent, small rural hospital 7
(as defined in section 1886(d)(5)(G)(iv)), a 8
low-volume hospital that in 2021 receives a 9
payment adjustment under section 10
1886(d)(12), or a subsection (d) hospital 11
(as defined in section 1886(d)(1)(B)); 12
‘‘(ii) is located in a rural area, as de-13
fined in section 1886(d)(2)(D), or a rural 14
census tract of a metropolitan statistical 15
area (as determined under the most recent 16
modification of the Goldsmith Modifica-17
tion, originally published in the Federal 18
Register on February 27, 1992 (57 Fed. 19
Reg. 6725)); 20
‘‘(iii)(I) is located— 21
‘‘(aa) in a county that has a per-22
centage of individuals with income at 23
or below the Federal poverty level in 24
2023 or 2024 that is higher than the 25
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national or statewide average in that 1
year; or 2
‘‘(bb) in a health professional 3
shortage area (as defined in section 4
332(a)(1)(A) of the Public Health 5
Service Act); or 6
‘‘(II) has a percentage of inpatient 7
days of individuals entitled to benefits 8
under part A of this title in 2023 or 2024 9
that is higher than the national or state-10
wide average in that year; 11
‘‘(iv) has attested to the Secretary 12
that the hospital— 13
‘‘(I) was operating as of the date 14
of enactment of this subparagraph; 15
and 16
‘‘(II) had 2 consecutive years of 17
negative operating margins preceding 18
the date of certification described in 19
subparagraph (B)(i)(III), as defined 20
by the Secretary in the regulations or 21
program instruction issued pursuant 22
to section 2(b) of the Rural Hospital 23
Closure Relief Act of 2025; and 24
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‘‘(v) submits to the Secretary, at such 1
time and in such manner as the Secretary 2
may require, an application for certifi-3
cation of the facility as a critical access 4
hospital, including an attestation out-5
lining— 6
‘‘(I) the good governance quali-7
fications and strategic plan for multi- 8
year financial solvency of the hospital; 9
and 10
‘‘(II) the hospital’s commitment 11
to open and maintain, for the dura-12
tion of the hospital’s designation as a 13
critical access hospital under this sec-14
tion, a new service line or expanded 15
service capacity for a service that is in 16
high demand or limited supply in the 17
hospital’s service area (determined 18
based on the hospital’s most recent 19
community health needs assessment 20
under section 501(r)(3) of the Inter-21
nal Revenue Code of 1986 (or other 22
comparable assessment)), such as ob-23
stetrics or behavioral health care serv-24
ices. 25
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‘‘(G) LIMITATION ON CERTAIN DESIGNA -1
TIONS.— 2
‘‘(i) I
N GENERAL.—Subject to clauses 3
(ii) and (iii), the Secretary may not under 4
subsection (e) certify pursuant to a certifi-5
cation by a State under subparagraph 6
(B)(i)(III)— 7
‘‘(I) more than a total of 120 fa-8
cilities as critical access hospitals; and 9
‘‘(II) within any one State, more 10
than 5 facilities as critical access hos-11
pitals. 12
‘‘(ii) P
ROCESS.—The Secretary shall 13
follow the following process in carrying out 14
clause (i) with respect to each year in 15
which the Secretary determines that the 16
limitation under clause (i)(I) has not been 17
reached: 18
‘‘(I) I
NITIAL ASSESSMENT.—The 19
Secretary shall conduct an initial as-20
sessment of the total number of hos-21
pitals described in paragraph (2)(F). 22
‘‘(II) I
NITIAL ALLOCATION.—Of 23
the total number of designations avail-24
able under clause (i), the Secretary 25
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shall allocate 1 for a hospital in each 1
State that the Secretary determines 2
(based on the initial assessment under 3
subclause (I)) has one or more hos-4
pitals described in paragraph (2)(F). 5
‘‘(III) R
EMAINING ALLOCA -6
TION.—Of the total number of des-7
ignations available under clause (i), 8
after application of subclause (II), the 9
Secretary shall allocate the remaining 10
number on a proportional basis based 11
on the total number of hospitals de-12
scribed in paragraph (2)(F) in each 13
State that are eligible (as determined 14
based on the initial assessment under 15
subclause (I)). 16
‘‘(iii) S
UNSET.—Effective beginning 17
on the date that is 9 years after the date 18
of enactment of this subparagraph, the 19
Secretary may not certify a hospital as a 20
critical access hospital pursuant to a cer-21
tification by a State under subparagraph 22
(B)(i)(III). 23
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‘‘(H) INFORMATION SUBMISSION REQUIRE -1
MENTS FOR HOSPITALS CERTIFIED PURSUANT 2
TO RURAL HOSPITAL CLOSURE RELIEF ACT .— 3
‘‘(i) I
N GENERAL.—A critical access 4
hospital that is certified under subsection 5
(e) pursuant to a certification by a State 6
under subparagraph (B)(i)(III) shall sub-7
mit to the Secretary the following at a 8
time, and in a manner, specified by the 9
Secretary: 10
‘‘(I) R
EPORTS.—Reports con-11
taining such information as the Sec-12
retary may specify with respect to 13
items and services furnished as part 14
of the new service line or expanded 15
service capacity for a service as de-16
scribed in the attestation submitted 17
by the critical access hospital under 18
subparagraph (F)(v)(II). To the ex-19
tent practicable, the Secretary shall 20
align such reporting with other report-21
ing requirements applicable to critical 22
access hospitals under this subsection. 23
‘‘(II) N
OTICE.—If the critical ac-24
cess hospital materially changes the 25
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new service line or expanded capacity 1
for a service as so described, notice of 2
such changes along with a plan to sat-3
isfactorily maintain access to care (as 4
determined by the Secretary). 5
‘‘(ii) R
EVOCATION OF CERTIFICATION 6
FOR NONCOMPLIANCE .—If the Secretary 7
determines that a critical access hospital 8
described in clause (i) has failed to submit 9
an annual report required under subclause 10
(I) of such clause or a notice required 11
under subclause (II) of such clause, the 12
Secretary may, as the Secretary deter-13
mines appropriate, revoke the certification 14
of the critical access hospital under sub-15
section (e).’’; and 16
(2) in subsection (e), by inserting ‘‘, subject to 17
subsection (c)(2)(G),’’ after ‘‘The Secretary shall’’. 18
(b) I
MPLEMENTATION.—Not later than 1 year after 19
the date of the enactment of this Act, the Secretary of 20
Health and Human Services shall issue final regulations 21
or program instruction to carry out subsection (a). 22
(c) C
LARIFICATIONREGARDINGFACILITIESTHAT 23
M
EETDISTANCE OROTHERCRITERIA ANDAPPLICATION 24
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OFOTHERCRITERIA.—Nothing in this section shall af-1
fect— 2
(1) the application of criteria for designation as 3
a critical access hospital described in subclause (I) 4
or (II) of section 1820(c)(2)(B)(i) of the Social Se-5
curity Act (42 U.S.C. 1395i–4(c)(2)(B)(i)); or 6
(2) the application of criteria for designation as 7
a critical access hospital described in clauses (ii) 8
through (v) of section 1820(c)(2)(B) of the Social 9
Security Act (42 U.S.C. 1395i–4(c)(2)(B)). 10
(d) GAO S
TUDY ANDREPORT.— 11
(1) S
TUDY.—The Comptroller General of the 12
United States (in this section referred to as the 13
‘‘Comptroller General’’) shall conduct a study on the 14
implementation of the amendments made by sub-15
section (a). To the extent such data are available 16
and reliable, such study shall include— 17
(A) an analysis of— 18
(i) the characteristics of facilities des-19
ignated as critical access hospitals pursu-20
ant to section 1820(c)(2)(B)(i)(III) of the 21
Social Security Act, as added by subsection 22
(a); 23
(ii) an analysis of the financial status 24
and outlook for such facilities based on 25
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their designation as a critical access hos-1
pital pursuant to such section; and 2
(iii) an analysis of any increase in ex-3
penditures under the Medicare program 4
under title XVIII of the Social Security 5
Act (42 U.S.C. 1395 et seq.) as a result of 6
such designation, relative to the expected 7
baseline expenditures under the Medicare 8
program if such facilities had not received 9
such designation; and 10
(B) an assessment of whether the author-11
ity to designate facilities as critical access hos-12
pitals pursuant to such section 13
1820(c)(2)(B)(i)(III) promotes access to care in 14
rural areas. 15
(2) R
EPORT.—Not later than 6 years after the 16
date of the enactment of this Act, the Comptroller 17
General shall submit to Congress a report containing 18
the results of the study conducted under subsection 19
(a), together with recommendations for such legisla-20
tion and administrative action as the Comptroller 21
General determines appropriate. 22
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SEC. 3. MEDPAC STUDY AND REPORT ON PAYMENT SYS-1
TEMS FOR RURAL HOSPITALS. 2
(a) S
TUDY.—The Medicare Payment Advisory Com-3
mission (in this section referred to as the ‘‘Commission’’) 4
shall conduct a study, using data from 2018 through 5
2028, on payment systems for rural hospitals under the 6
Medicare program under title XVIII of the Social Security 7
Act (42 U.S.C. 1395 et seq.). Such study shall include 8
an analysis of— 9
(1) facilities designated as critical access hos-10
pitals pursuant to section 1820(c)(2)(B)(i)(III) of 11
the Social Security Act, as added by section 2(a); 12
(2) features of payment systems for rural hos-13
pitals, including value-based payment systems, that 14
would— 15
(A) ensure financial sustainability for the 16
Medicare program; and 17
(B) preserve access to care for Medicare 18
beneficiaries; and 19
(3) if the Commission recommends any new 20
payment system for rural hospitals under the Medi-21
care program, to the extent feasible, the impacts of 22
transition from existing payment systems to such 23
new payment system. 24
(b) R
EPORT.—Not later than 8 years after the date 25
of enactment of this Act, the Commission shall submit to 26
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Congress a report on the study conducted under sub-1
section (a), together with recommendations for such legis-2
lation and administrative action as the Commission deter-3
mines appropriate. 4
(c) D
EFINITION OFRURALHOSPITAL.—In this sec-5
tion, the term ‘‘rural hospital’’ means— 6
(1) a critical access hospital (as defined in sec-7
tion 1861(mm)(1) of the Social Security Act (42 8
U.S.C. 1395x(mm)(1))); 9
(2) a subsection (d) hospital (as defined in sec-10
tion 1886(d)(1)(B) of the Social Security Act (42 11
U.S.C. 1395ww(d)(1)(B))) that is located in a rural 12
census tract of a metropolitan statistical area (as de-13
termined under the most recent modification of the 14
Goldsmith Modification, originally published in the 15
Federal Register on February 27, 1992 (57 Fed. 16
Reg. 6725)); 17
(3) a sole community hospital (as defined in 18
section 1886(d)(5)(D)(iii)) of the Social Security Act 19
(42 U.S.C. 1395ww(d)(5)(D)(iii))); 20
(4) a medicare dependent, small rural hospital 21
(as defined in section 1886(d)(5)(G)(iv) of the Social 22
Security Act (42 U.S.C. 1395ww(d)(5)(G)(iv))); and 23
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(5) a low-volume hospital (as defined in section 1
1886(d)(12)(C)(i) of the Social Security Act (42 2
U.S.C. 1395ww(d)(12)(C)(i))). 3
SEC. 4. SUNSET. 4
Not later than 9 years after the date of enactment 5
of this Act, the Secretary shall establish a mechanism and 6
provide guidance and technical assistance under which any 7
facility that was designated as a critical access hospital 8
pursuant to a certification by a State under section 9
1820(c)(2)(B)(i)(III) of the Social Security Act, as added 10
by section 2(a), may transition within 1 year to one of 11
the following payment models: 12
(1) Such new model or models recommended by 13
the Medicare Payment Advisory Commission in the 14
report submitted under section 3. 15
(2) The prospective payment model (or models) 16
under which the facility received payment under title 17
XVIII of the Social Security Act (42 U.S.C. 1395 et 18
seq.) prior to being so designated pursuant to such 19
certification. 20
(3) Payment as a rural emergency hospital 21
under section 1834(x) of the Social Security Act (42 22
U.S.C. 1395m(x)). 23
Æ
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