With 75 percent of Alabama's hospitals operating in the red, the recent news of a proposed federal rule change to make hospital Medicare payments more equitable is a huge boost for the state.

According to information released by the Centers for Medicare & Medicaid Services (CMS) in its proposed payment rule for fiscal year 2020, Alabama would receive a projected increase in Medicare payments based on a change to the wage index formula. "Our preliminary estimates predict an increase of more than $34 million for Alabama's hospitals for the next fiscal year," said Danne Howard, executive vice president and chief policy officer for the Alabama Hospital Association.

In the proposed rule, all hospitals in the bottom quartile (almost all Alabama hospitals) would experience an increase in Medicare payments starting October 1st of this year. "The wage index factor has a floor and a ceiling, and Alabama hospitals have consistently been at the bottom of the range for years, with the lowest rural payments in the country. Raising the floor brings Alabama payments more in line with hospitals across the country," Howard said.