Grassley, Bennet Lead Legislation to Extend Rural Hospital Program

Grassley, Bennet Lead Legislation to Extend Rural Hospital Program

Rural Community Hospital Demonstration provides lifeline to rural communities

WASHINGTON - Sens. Chuck Grassley (R-Iowa) and Michael Bennet (D-Colo.) introduced the Rural Community Hospital Demonstration Reauthorization Act to extend the Rural Community Hospital Demonstration (RCHD) for another five years. RCHD provides a lifeline to rural hospitals by allowing them to test innovative hospital payment models under Medicare that boost financial sustainability to maintain and improve healthcare access in rural communities.

"The Rural Community Hospital Demonstration program gives rural hospitals a better shot at keeping their doors open to provide care for the community. With a proven track record of more than two decades, this program gives eligible hospitals financial stability to keep healthcare close to home for Iowans. While there's more to be done, our Rural Community Hospital Demonstration Reauthorization Act is a key step to provide continued support for rural health care in America," Grassley said.

"Rural hospitals are the lifeline of rural communities. They keep families healthy, support local economies, and make it possible for people to live and work in rural Colorado. At a time when many rural hospitals are already under significant financial strain, extending the Rural Community Hospital Demonstration program is critical to maintaining access to care. If Congress fails to extend this program, hospitals not only lose a vital source of funding, but rural Coloradans could face longer drives, delayed care, and fewer options close to home. I've heard directly from rural hospitals across Colorado about what's at stake, and I'll keep fighting to protect health care access for every Coloradan," Bennet said.

"The Rural Community Hospital Demonstration has been critical in supporting financial viability for participating Iowa hospitals, as well as preserving access to care for patients in communities with few, or no, nearby care options. The program's structure provides stability hospitals need to plan effectively for the future and continue to serve Medicare patients close to home. Extending the program for another five years will build upon a proven model that benefits rural patients, providers as well as the Medicare program," said Chris Mitchell, Iowa Hospital Association President and CEO.

"The [Rural] Community [Hospital] Demonstration program is essential to the sustainability of our rural hospital. Rural providers are facing increasing pressure from all sides-payers, rising pharmaceutical costs, and escalating supply expenses-while continuing to care for communities with limited resources and greater health needs. This program delivers critical financial stability, enabling us to sustain essential services, invest in our workforce, and ensure patients can access care close to home. Without this support, rural hospitals would face even greater challenges in maintaining timely, high-quality care. We sincerely appreciate Senator Grassley's continued support of this program's reauthorization," said Leah Glasgo, UnityPoint Health - Fort Dodge Market President.

"At UnityPoint Health - Grinnell Regional Medical Center, we are seeing firsthand the strain that rising costs, workforce shortages and growing demand for services like maternity care place on rural hospitals. This legislation represents a critical investment in the stability and future of rural health care. It will help strengthen and sustain essential hospital services, ensuring patients can continue to access safe, reliable care in their own communities. We appreciate the leadership of Senator Chuck Grassley in advancing solutions that recognize the urgency of sustaining rural health care and the communities that depend on it," said David-Paul Cavazos, UnityPoint Health - Grinnell Rural President.

"As MercyOne and the health care industry face many headwinds, we are grateful for Senator Grassley for advancing solutions to help provide support and sustain access for our most vulnerable communities. We look forward to continuing to work with Congress to advance additional policies to ensure access to care," said Dr. Kurt Andersen, Central Iowa Division of MercyOne President.

"The Rural Community Hospital Demonstration (RCHD) program has been critically important to the sustainability of Lakes Regional Healthcare in Spirit Lake, Iowa. Through participation in the RCHD, Lakes Regional Healthcare has been able to maintain financial stability, reinvest in our facility, recruit and retain essential staff, and continue offering high-quality care close to home. The hospital serves as both a critical health care provider and a key economic anchor. Reauthorization of the RCHD is essential to ensuring that hospitals like Lakes Regional Healthcare can continue to meet the growing needs of our Medicare population and the communities we serve," said Jason Harrington, Lakes Regional Healthcare President and CEO.

"Many rural hospitals face financial uncertainty from low patient volumes, sicker patient populations, a challenging payer mix, geographic isolation, and shifts in care delivery. The Rural Community Hospital (RCH) Demonstration Extension Act allows hospitals to continue providing essential care in their communities by supporting the financial stability of participating rural hospitals. Hospitals with 50 beds or less are some of the most vulnerable to closure and the RCH demo offers an important model to maintain access in rural communities around the country. The AHA thanks Senator Grassley and Senator Bennet for their strong leadership to support America's rural hospitals," said Lisa Kidder Hrobsky, American Hospital Association's Senior Vice President for Advocacy and Political Affairs.

"The National Rural Health Association (NRHA) is grateful to see the introduction of the Rural Community Hospital Demonstration (RCHD) Reauthorization Act, led by Senator Grassley and Senator Bennet. This bill would provide a 5-year extension of the RCHD Program, which offers much-needed support for small rural hospitals through enhanced Medicare reimbursement. The RCHD Program has demonstrated improvement in Medicare inpatient margins for participating rural hospitals and has been crucial in helping rural hospital leaders maintain rural hospital viability," said Alan Morgan, CEO, National Rural Health Association.

In addition to Grassley and Bennet, the legislation is cosponsored by Senate Finance Committee Chairman Mike Crapo (R-Idaho) and Ranking Member Ron Wyden (D-Ore.), as well as Sens. Dan Sullivan (R-Alaska), Ben Ray Luján (D-N.M.), Cindy Hyde-Smith (R-Miss.), Peter Welch (D-Vt.), Jerry Moran (R-Kan.), Angus King (I-Maine), Lisa Murkowski (R-Alaska), Jeff Merkley (D-Ore.), Pete Ricketts (R-Neb.), Martin Heinrich (D-N.M.), James Lankford (R-Okla.) and John Hickenlooper (D-Colo.).

Click HERE for text of the legislation.

Background:

As then-chairman of the Senate Finance Committee, Grassley spearheaded efforts to create the RCHD in 2003. The RCHD is specifically designed to boost the viability of rural "tweener" hospitals. RCHD has helped more than 50 rural hospitals keep their doors open for acute inpatient care close to home.

The most recent performance data found new RCHD hospitals significantly improved their Medicare margins and had higher capital investments, resulting in stronger financial conditions and helping with staff retention. Participating hospitals are mostly paid using a reasonable cost-based methodology instead of the inpatient prospective payment system. Today, all 30 spots are being utilized by the Centers for Medicare & Medicaid Services (CMS).

Currently, there are four Iowa hospitals participating in RCHD, three of which Grassley has visited as part of his annual 99 county meetings: Grinnell, Newton and Ft. Dodge. St. Anthony Regional Hospital in Carroll, Iowa, was a part of the RCHD until it recently became a Critical Access Hospital.

Grassley's Continued Advocacy:

Grassley has spent years pushing CMS to open RCHD applications and fill empty slots, citing the program's efficacy and qualifying hospitals' interest. In 2023, Grassley secured a commitment from then-Health and Human Services (HHS) Secretary Xavier Becerra that his agency would "do more" to support struggling rural hospitals. Grassley followed up by urging CMS to open RCHD spots. At Grassley's request, CMS spoke with Iowa facilities looking to participate in the RCHD program.

After months of inaction by the Biden administration, Grassley questioned Secretary Becerra about his failure to fill program openings and penned a letter with Sen. Hyde-Smith reminding CMS it should be wielding every tool available to help rural hospitals. At a Senate Finance Committee nomination hearing in March 2025, Grassley pressed Dr. Mehmet Oz, then-nominee to be CMS Administrator, to protect and support access to rural healthcare, including a specific request to fill RCHD slots.

In May 2025, Grassley welcomed an announcement from CMS that the agency had filled the 10 open spaces in the RCHD.

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