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What It Does
This bill amends Medicare and Medicaid payment rules to increase reimbursements for rural hospitals, ambulances, and clinics — aiming to slow or reverse the wave of rural hospital closures.
It removes or reduces several financial penalties that have made rural facilities less viable and adds regulatory flexibility to keep more facilities open. The bill is bipartisan, introduced by Rep. Graves (R-LA) and Rep. Budzinski (D-IL).
Sec. 101: Exempts rural hospitals (critical access hospitals, sole community hospitals, Medicare-dependent small rural hospitals, and rural subsection (d) hospitals) from Medicare sequestration cuts — the across-the-board payment reductions triggered by budget law — beginning 60 days after enactment.
Sec. 102: Restores bad debt reimbursement for rural hospitals and CAHs, reversing prior cuts by reducing the disallowance to 15% (instead of the current higher cut) for rural hospitals.
Sec. 103: Permanently extends enhanced payment rates for Medicare-Dependent Hospitals (MDHs) and low-volume hospitals, which were previously subject to expiration cliffs requiring repeated congressional reauthorization.
Sec. 104: Extends Disproportionate Share Hospital (DSH) payments — extra money for hospitals serving high proportions of low-income patients — to sole community hospitals and MDHs beginning FY2026.
Sec. 105: Updates ('rebases') the cost benchmarks used to calculate payment targets for MDHs and sole community hospitals, using FY2024 data instead of outdated FY2002/FY2006 baselines.
Sec. 106: Sets a floor of 0.85 on the area wage index for all non-frontier-state hospitals (raises payments to hospitals in low-wage markets) and boosts the index for hospitals below the 25th percentile, with budget neutrality requirements that cap high-wage-area payments to offset costs.
Sec. 111: Makes permanent the existing temporary rural ground ambulance Medicare payment increase (previously set to expire October 1, 2025).
Sec. 112: Makes permanent the COVID-era telehealth payment enhancements for Federally Qualified Health Centers (FQHCs) and Rural Health Clinics (RHCs), shifting from pandemic-emergency authority to permanent statute.
Sec. 113: Restores state authority to waive the 35-mile distance rule for CAH designation — capped at 175 total new facilities nationally, no more than 10 per state, and limited to financially distressed rural hospitals meeting specific criteria.
Sec. 201: Equalizes Medicare copayments for CAH outpatient services so patients pay 20% of what they would pay at a regular hospital, not 20% of the often-higher CAH actual charge.
Sec. 301: Eliminates the 96-hour average inpatient stay requirement and physician certification rule for CAHs — a regulatory burden that has threatened CAH status for hospitals with longer-stay patients.
Sec. 302: Allows certain rural 'swing bed' hospitals to provide extended care (skilled nursing-type) services without a prior hospitalization requirement, expanding access to post-acute care in rural areas.
Sec. 401: Expands the Medicare Rural Hospital Flexibility Program grant framework to support transitions to new care models (rural emergency hospitals, telehealth, behavioral health integration), adds technical assistance grants, and creates new 5-year Rural Health Transformation Grants.
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Who Benefits
• Critical Access Hospitals (CAHs): multiple provisions directly raise their reimbursement, reduce regulatory burdens, and expand designation eligibility.
Medicare-Dependent Small Rural Hospitals (MDHs): permanently extended payment rates, rebased cost targets, and new DSH payment eligibility.
Sole Community Hospitals: rebased benchmarks and new DSH payment eligibility, reducing reliance on outdated cost data.
Low-volume rural hospitals: permanently extended payment adjustments that previously required repeated congressional renewal.
Rural ground ambulance services: permanent payment increase instead of continuing to fight for temporary extensions.
FQHCs and Rural Health Clinics: permanent telehealth payment parity, ending uncertainty created by COVID-era temporary authority.
Rural Medicare beneficiaries in low-wage areas: lower out-of-pocket copayments for CAH outpatient services and more stable access to nearby facilities.
Rural patients needing extended/skilled nursing care: access to swing-bed services without a prior hospitalization stay.
Hospitals in low-wage labor markets: area wage index floor of 0.85 increases Medicare payments relative to current levels.
State Offices of Rural Health: new role as grant intermediaries and applicants under the expanded flex grant program.
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Who Gets Hurt
• Hospitals in high-wage areas (largely urban): budget neutrality requirements in Sec.
106 mean a cap ('maximum area wage index') will be set to offset gains for low-wage hospitals — high-wage hospitals likely see reduced payments to fund the floor.
Federal budget/taxpayers: eliminating sequestration for rural hospitals, making temporary payments permanent, and expanding grant programs all increase Medicare and Medicaid outlays, with partial but not full offsets from the wage index budget-neutrality mechanism.
Urban and suburban hospitals competing for grants or policy attention: bill directs resources specifically to rural providers with no corresponding urban benefit.
HHS/CMS administrative capacity: Sec. 113 requires final regulations within 120 days of enactment — an aggressive timeline for a complex new CAH designation pathway.
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Hidden Riders
'And for other purposes' language in the bill title — standard boilerplate but signals provisions beyond the stated rural hospital payment focus; here it covers regulatory changes (96-hour rule, swing beds) and new grant categories that could have been separately titled.
Sec. 302 gives the Secretary broad discretion to determine 'appropriate' duration for extended care services without a prior hospitalization — no defined limit on length of stay is included, which could expand Medicare's skilled nursing benefit significantly beyond current scope through administrative rulemaking rather than future legislation.
Sec. 106 wage index budget neutrality: the bill requires HHS to set a 'maximum area wage index' via rulemaking to offset the floor — the actual payment reduction on high-wage hospitals is delegated entirely to CMS with no statutory ceiling specified, meaning Congress avoids owning the redistributive cut while mandating its effect.
Sec. 113 CAH designation expansion is capped at 175 facilities nationally, but the 120-day rulemaking deadline is mandatory ('shall issue final regulations') with no consequence specified for missing it — creates an unfunded and potentially rushed regulatory obligation.
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Framing Analysis
• Titled the 'Save America's Rural Hospitals Act' — the title is largely accurate; the bill's core provisions address documented rural hospital financial distress and closure trends cited in the findings.
The framing is supported by the substance.
Findings cite 151 closed rural hospitals and 432 on the brink — these figures source from the UNC Sheps Center, a credible nonpartisan research source; the bill's findings are factually grounded, not inflated.
Presented as a bipartisan, non-controversial rural access bill — most provisions are genuine payment stabilization measures, but Sec. 106's wage index floor is a significant redistribution from high-wage (mostly urban) hospitals to low-wage (mostly rural) hospitals; the redistributive mechanism is not prominently advertised in the bill's title or summary.
'Regulatory relief' framing for Title III — eliminating the 96-hour CAH rule and the prior-hospitalization requirement for swing beds are substantive changes that expand Medicare coverage, not merely reduce paperwork; 'relief' undersells the coverage expansion dimension.
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Red Flags
• Sec.
106 budget neutrality cap is undefined in statute — HHS must set a 'maximum area wage index' through rulemaking with no statutory bound, meaning the payment cut imposed on high-wage hospitals is entirely at CMS's discretion and could fluctuate year to year.
⚑Sec. 113 requires final regulations within 120 days — the new CAH designation pathway involves complex eligibility criteria (two consecutive years of negative operating margins, poverty attestations, governance plans, 35-mile waivers); 120 days is an unusually short window for rulemaking of this complexity, risking poorly designed rules.
⚑Sec. 302 extended care services expansion contains no defined length-of-stay limit — the Secretary determines 'appropriate duration' with only the vague constraint that coverage 'does not alter the acute care nature of the benefit,' a standard that is not legally defined and could be interpreted broadly.
⚑Permanently extending temporary payment programs (Secs. 103, 111, 112) removes future congressional leverage to review whether these programs are achieving their goals — once permanent, they are harder to modify or redirect if circumstances change.
⚑Sec. 113's 35-mile waiver cap of 175 total facilities is a national aggregate limit with no expiration — once 175 facilities are certified, the pathway closes with no mechanism for review or expansion short of new legislation.
⚑No explicit cost score or offsets provided in the bill text — the bill eliminates sequestration for an entire category of providers and makes multiple temporary programs permanent; the fiscal impact is substantial and the only offset mechanism (wage index budget neutrality in Sec. 106) applies to only one provision.
⚑Area wage index floor exempts 'frontier states' (defined elsewhere as states where more than 50% of counties have fewer than 6 persons per square mile) — frontier-state hospitals already receive a separate floor, but the interaction between the two floors and the new budget neutrality cap creates a three-tier system whose combined effect on payment accuracy is unclear without CMS modeling.
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Current Status
H.R.
3684 was introduced in the House on June 3, 2025, by Rep. Garret Graves (R-LA) and Rep. Nikki Budzinski (D-IL). It was referred to three committees: Ways and Means, Energy and Commerce, and the Budget Committee. No committee hearings, markups, or votes have been scheduled as of the introduction date; the bill is in early referral stage.
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