December 22, 2004

LANSING – Governor Jennifer M. Granholm has signed legislation this week that will expand affordable health care opportunities to more Michigan citizens living in rural communities. The new law will protect and expand the rural health care safety net by allowing more Michigan rural hospitals the opportunity to continue or begin receiving increased federal reimbursement for Medicare patients.

"Our citizens who live in rural communities rely on their hospitals not just for emergency services, but for inpatient and outpatient services as well," said Granholm. "These same hospitals are also often part of the community’s economic and employment core. Allowing rural hospitals to draw upon increased federal Medicare dollars will ensure they stay in business, which means they will continue to provide high-quality services and care to their community as well as continue to employ citizens."

The legislation signed by the Governor allows hospitals in Cass, Tuscola, and Oceana counties, and two in Montcalm county, to keep their rural designation status and enhanced Medicare reimbursement. Seven other facilities in Michigan will now qualify to benefit from the rural designation, including hospitals in Allegan, Clinton, and Ionia counties, and two each in Eaton and Van Buren counties.

House Bill 6245, now Public Act 444 of 2004, adds a new section to Michigan’s Public Health Code, which provides that a hospital may qualify as a rural hospital for purposes of federal Medicare guidelines even if it is located within a metropolitan area.

A hospital is considered rural in the new section if it services a city, village, or township with a population of no more than 12,000 and a county with a population of no more than 110,000. Due to a growth in population as reported in the 2000 census, five hospitals in Michigan would have been reclassified as urban, though previously considered rural without the legislation.

Among other criteria, designated rural hospitals qualify – under federal Medicare guidelines – for more favorable, cost-based reimbursement for services to Medicare patients.

House Bill 6245 will preserve approximately $4 million in federal funding for existing hospitals and will add approximately $4 million to Michigan hospitals who qualify for the enhanced Medicare reimbursement.

"This legislation should be considered a victory for many Michigan communities," said Granholm. "Maintaining current rural designated hospitals, and potentially adding more, grants the opportunity for citizens to receive hospital-based care in their community. Providing a needed health care service within a hometown saves patients minutes, miles, and money."

The increase in reimbursement affects the federally run Medicare program.

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