H.R. 6240 — Rural Hospital Closure Relief Act of 2025

This section amends Medicare critical access hospital (CAH) designation criteria under SSA §1820(c)(2)(B)(i) to authorize states to certify, on or after enactment of the Rural Hospital Closure Relief Act of 2025 and before 9 years thereafter, certain at-risk rural hospitals as necessary providers of health care services, thereby waiving the standard 35-mile distance requirement from another hospital (or 15 miles in mountainous terrain). (As background, CAHs are small rural facilities—generally with 25 or fewer acute care inpatient beds—that receive cost-based reimbursement rather than prospective payments to ensure health care access in underserved rural areas; states currently certify whether a facility is a necessary provider, typically based on distance criteria.) Qualifying hospitals under new subparagraph (F) include sole community hospitals, Medicare-dependent small rural hospitals, low-volume hospitals receiving a 2021 payment adjustment, or other subsection (d) hospitals that (1) are in a rural area or rural census tract of a metropolitan area, (2) serve high-poverty counties or health professional shortage areas or have above-average Medicare inpatient days, (3) attest to being operational with 2 consecutive years of negative operating margins preceding certification, and (4) apply with commitments to good governance, multi-year financial solvency, and a new or expanded high-demand service line (e.g., obstetrics or behavioral health). New subparagraph (G) limits designations to 120 hospitals nationwide (5 per state maximum), with the Secretary allocating one initial slot per qualifying state and remaining slots proportionally; this authority sunsets after 9 years. New subparagraph (H) requires such CAHs to report on new or expanded services and notify the Secretary of material changes, with potential revocation for noncompliance.

This section directs the Medicare Payment Advisory Commission (MedPAC) to conduct a study, using data from 2018 through 2028, on payment systems for rural hospitals under Medicare Part A (i.e., inpatient hospital prospective payment system and related protections). The study must analyze (1) facilities designated as critical access hospitals under new statutory criteria; (2) payment system features, including value-based systems, to ensure Medicare financial sustainability and preserve beneficiary access to care; and (3) transition impacts for any recommended new payment systems. MedPAC must submit a report to Congress, with legislative and administrative recommendations, no later than eight years after enactment of this Act. In this section, rural hospital means (1) a critical access hospital; (2) an inpatient prospective payment system hospital located in a rural census tract of a metropolitan statistical area (per Goldsmith Modification); (3) a sole community hospital; (4) a Medicare-dependent, small rural hospital; or (5) a low-volume hospital.

This section revises Medicare Critical Access Hospital (CAH) designation requirements to remove the 25 acute care inpatient bed limit for facilities in Guam, American Samoa, the Northern Mariana Islands, and the U.S. Virgin Islands—allowing instead a number of beds determined appropriate by the Secretary (with average annual stays not exceeding 96 hours per patient)—while retaining the 25-bed limit for facilities in the 50 states, the District of Columbia, and Puerto Rico, effective October 1, 2025. (As background, CAHs are small rural hospitals eligible for cost-based Medicare reimbursement, rather than prospective payment, to ensure healthcare access in underserved areas; thus, this change enables potentially larger facilities in these territories to qualify.)

This section requires the Secretary, not later than nine years after the date of enactment, to establish a mechanism and provide guidance and technical assistance enabling any facility designated as a critical access hospital pursuant to a state certification under section 1820(c)(2)(B)(i)(III) of the Social Security Act (as added by section 2(a)) to transition within one year to one of the following Medicare payment models: (1) any new model recommended by the Medicare Payment Advisory Commission in its report under section 3; (2) the prospective payment model (or models) under title XVIII of the Social Security Act under which the facility was paid prior to such designation; or (3) payment as a rural emergency hospital under section 1834(x) of the Social Security Act (42 U.S.C. 1395m(x)).