Rural Health Payment Reform Act of 1988

Rural Health Payment Reform Act of 1988 - Amends title XVIII (Medicare) of the Social Security Act to guarantee at least a 3.8 percent increase in payments for rural hospital services in FY 1989. Sets such increase for sole community hospitals at the market basket percentage increase. Exempts hospitals that meet the criteria for sole community hospital status, regardless of whether they elect to be paid on that basis, from reductions in Medicare payments for capital costs.

Amends part B (Supplementary Medical Insurance) of the Medicare Program to increase, beginning in FY 1990, the incentive payment for physician services in rural health manpower shortage areas from five to ten percent of the regular payment for such services.

Requires the Secretary of Health and Human Services to enter into agreements with from five to ten hospitals to conduct three-year demonstration projects providing instruction and consultation to physicians in rural areas that are designated as either class one or two health manpower shortage areas under the Public Health Service Act. Directs the Secretary to report to the Congress by July 1, 1990, and March 1, 1992, regarding such projects. Authorizes appropriations for the projects.

Authorizes the Secretary to enter into agreements with States to conduct demonstration projects to improve the access of pregnant women and children who are eligible for Medicaid (title XIX of the Act) benefits to obstetrical and pediatric services. Requires that the Secretary give priority to States that emphasize improving such access in rural communities experiencing a decline in essential services for pregnant women and children. Increases the Federal matching for such demonstration project services by the lesser of ten percent or the percentage necessary to raise such rate to 90 percent. Terminates such projects before 1993. Directs the Secretary to report to the Congress by March 1, 1993, regarding such projects.