Equity for Rural Hospitals Act of 1989

Equity for Rural Hospitals Act of 1989 - Directs the Secretary of Health and Human Services to design a legislative proposal for eliminating the differences in average standardized Medicare payments (under title XVIII of the Social Security Act) to large urban, other urban, and rural hospitals by FY 1995, while recognizing appropriate cost differences among hospitals. Amends the Medicare program to provide additional payments to Medicare-dependent, small rural hospitals up to FY 1992 (when the transition to a single average standardized Medicare payment rate is required to begin), ensuring the coverage of such hospitals' reasonable operating costs for Medicare inpatient hospital services.

Requires the recomputation of Medicare sole community hospital payment rates using the most recent information on hospital-specific costs per case and, if greater, national rather than regional prospective payment rates. Includes, in the Secretary's determination as to whether a hospital is a sole community hospital, consideration of the travel time to the nearest alternative source of inpatient care and the number of patients who seek health services which are unavailable in the hospital's area.

Establishes the Medicare Geographical Classification Review Board to decide on a rural hospital's application for classification as an urban hospital for Medicare payment purposes.

Amends the Omnibus Budget Reconciliation Act of 1987 to alter the Rural Health Care Transition Grant Program to extend and increase authorized appropriations for such program through FY 1992, and permit the Secretary to waive the hospital grant limit. Expands, from four to ten hospitals, a Medicare demonstration program covering additional costs incurred by teaching hospitals in sending their residents to rural hospitals for training.

Requires the Secretary to establish five-year Medicare demonstration programs covering costs incurred by five hospitals in providing clinical training to undergraduate nurses.