Draft Bill Uses Medicaid Funding to Bolster Rural Hospitals, Keep Resources in Local Communities
June 18, 2024 - Washington, D.C. – Senate Finance Committee Chair Ron Wyden, D-Ore., and 15 Senate Democrats on 
Monday released draft legislation to address a rising trend of rural hospitals and hospitals in underserved areas closing their labor and delivery units with significant consequences for expectant parents, families, and their local communities.
“Too many rural communities have become maternity deserts – it’s time to turn the tide and offer some stability to rural hospitals that want to help families give birth in their own communities,” Wyden said. “This legislation will give rural and underserved hospitals the means to keep their labor and delivery units open, and ensures that large hospital chains will not take the money and run.”
Between 2012 and 2022, approximately one quarter of all rural hospitals stopped providing obstetrics services, impacting 267 communities. This trend of closures is caused by several overlapping challenges, including the high fixed operating costs of these units, low volumes of births, and difficulties in attracting and retaining OB-trained clinical staff, all of which is made worse by inadequate reimbursement for labor and delivery services.
The proposal, titled the Keep Obstetrics Local Act (KOLA), would increase Medicaid payment rates for labor and delivery services for eligible rural and high-need urban hospitals, provide “standby” payments to cover the costs of staffing and maintaining an obstetrics unit at low-volume hospitals, create low-volume payment adjustments for labor and delivery services at hospitals with low birth volumes and require all states to provide postpartum coverage for women in Medicaid for 12 months, among other steps. The proposal makes sure that hospitals are required to use these additional resources to invest in the maternal health care needs of the local communities they serve.
The proposal has been endorsed by the American College of Nurse-Midwives, America’s Essential Hospitals, Catholic Hospital Association, Community Catalyst, Families USA, Hospital Association of Oregon, National Partnership for Women & Families, National Rural Health Association, and the Oregon Perinatal Collaborative.
“In rural communities across the nation, the hurdles to accessing care when pregnant can be daunting, and too many rural providers are struggling,” said the Hospital Association of Oregon. “Rural hospitals deliver one in six babies in Oregon but providing this care close to home means confronting three key challenges: workforce shortages, low volume in the number of births, and the low rates of reimbursement for maternity care. The Hospital Association of Oregon commends Sen. Ron Wyden for his Keeping Obstetrics Local Act proposal which takes a hard look at these issues and provides real solutions.”
“The proposal acknowledges the need for emergency staffing options to help rural providers temporarily fill obstetrical positions as needed, the importance of Medicaid coverage for midwives and doulas, and the critical need for a simplified Medicaid enrollment process for out-of-state obstetrical providers,” the association said. “The proposal recognizes the costs involved in maintaining and staffing obstetrical units 24/7. The proposal also reflects the financial challenge for rural providers who are heavily dependent on government payers – in the case of obstetrical care, Medicaid is the dominant payer for rural maternity services. The Hospital Association of Oregon is grateful to Senator Wyden for his leadership on rural health care and we look forward to our continued partnership on these critical issues.”
“Sen. Ron Wyden’s bill is an important step towards protecting access to maternity care in rural Oregon and across the country,” said Daniel Grigg, CEO Wallowa Memorial Hospital. “This bill will support rural families and communities by boosting reimbursement for labor and delivery services and providing payments to hospitals with low-birth volumes. Senator Wyden cares deeply and understands the important role hospitals play in rural maternal health. We are grateful to have his support during this critical time.”
Joining Wyden to release the draft legislation are Senators Debbie Stabenow, D-Mich., Maria Cantwell, D-Wash., Bob Menendez, D-N.J., Tom Carper, D-Del., Ben Cardin, D-Md., Sherrod Brown, D-Ohio, Michael Bennet, D-Colo., Bob Casey Jr., D-Penn., Mark Warner, D-Va., Sheldon Whitehouse, D-R.I., Maggie Hassan, D-N.H., Catherine Cortez Masto, D-Nev., Elizabeth Warren, D-Mass., Tammy Duckworth, D-Ill., and Corey Booker, D-N.J.
A summary and section by section of the draft legislation can be found here. Legislative text can be found here.
Source: Senator Ron Wyden
