News: Legislation to extend Rural Community Hospital Demonstration Program introduced

A bill to provide an extension of the Rural Community Hospital Demonstration Program was introduced on April 30. The legislation would grant a five-year extension to a Medicare payment model for rural hospitals.

The current model provides cost-based Medicare reimbursement for hospitals with fewer than 51 beds that do not qualify as critical access hospitals. Under the model, hospitals are reimbursed for service costs rather than fixed Medicare rates that do not account for hospital expenses.

When the program was first announced, officials estimated the average award for 2026 as $200 million, with the fund putting a total of $50 billion into rural health programs over five years. CMS assigns project officers to support each state after states propose how to spend their awards.

Under the program, half of the money is equally distributed to each state. The other half is allocated based on a formula developed by CMS that considered rural population size, the financial health of a state's medical facilities, and health outcomes for a state's population.

The extension of the program was backed by the American Hospital Association (AHA), citing that the Rural Community Hospital Demonstration Extension Act would allow for hospitals to continue providing essential care by supporting the financial stability of the 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,” said Lisa Kidder Hrobsky, AHA senior vice president for advocacy and political affairs.

Editor’s note: To read the full bill, click here. To read additional coverage by the AHA, click here.