H.R. 7727 — Sustaining Rural Healthcare Act

This section establishes an exception under the Critical Access Hospital (CAH) program (i.e., Medicare payments to rural hospitals with 25 or fewer beds based on costs rather than prospective rates) allowing the Secretary to deem a state-designated CAH to continue meeting the distance criterion in SSA 1820(c)(2)(B)(i)(I) (i.e., located more than 35 miles from another hospital, or 15 miles in mountainous terrain or on secondary roads) for up to three years. The exception applies if the CAH met the criterion at designation, would otherwise remain eligible but for this criterion, and loss of designation would reduce access to necessary health care services for individuals in the facility's service area.

This section establishes discretionary authority for the Secretary of Health and Human Services to designate certain rural hospitals as "Critical Access in Character" if they are critical to community access to essential health services and meet specified eligibility criteria. Qualifying hospitals must be in a rural area or census tract (per Goldsmith Modification criteria), a health professional shortage area, serving medically underserved, persistent poverty, Tribal, or frontier communities, with a high proportion of Medicare encounters, and facing significant closure or service reduction risk due to rural-specific challenges such as low volumes or workforce shortages (not mismanagement). Designated hospitals receive Medicare inpatient and outpatient reimbursement at Critical Access Hospital (CAH) payment rates—i.e., cost-based rather than prospective payment system—for up to three years or until financially and operationally stabilized, subject to Secretary-established limits, monitoring, documentation, and renewal for good cause; the Secretary must issue guidance within 12 months of enactment and facilitate no-cost technical assistance via USDA's Community Facilities Program. (Thus, the designation provides temporary payment parity to prevent service disruptions in rural areas without conferring full CAH status under other laws.)