Rural Emergency Hospitals: What You Need to Know

Since January 2010, about 139 rural hospitals have closed for a variety of reasons, including, for some hospitals, long-term unprofitability. Patients in these rural communities have had to travel numerous miles to access inpatient care. To combat future rural hospital closures, CMS is in the process of creating a new provider type: Rural Emergency Hospitals (REHs). For some communities, REHs may be a viable option to increase healthcare access in rural areas while striving for hospital profitability. REHs would provide emergency and other outpatient services but would not offer inpatient services.

RURAL EMERGENCY HOSPITALS (REH)

The REH Statute is embedded within the Consolidated Appropriations Act of 2021, Section 125 – Medicare Payment for Rural Emergency Hospital Services. It states that CAH and rural hospitals with no more than 50 beds as of 12/17/20 are eligible for REH status. To be considered a REH, the hospital must:

• Not provide acute care inpatient services
• Not exceed an annual per-patient length of stay of 24 hours
• Have a transfer agreement in place with a Level 1 or 2 trauma center
• Maintain a staffed ED, which entails being staffed by a 24/7 physician, NP, clinical nurse specialist, or PA
• Meet CAH-equivalent conditions of participation for emergency services
• Meet applicable state licensing requirements
• Annually report quality data
• Must establish a quality measurement of reporting
  • CMS is working on the rulemaking process; more information is expected to be released in early 2023

PAYMENT PROVISIONS

REHs that convert from a CAH status would no longer receive cost-based reimbursement. However, REHs would be paid by Medicare at a higher rate than otherwise paid under the Medicare OPPS. The REH payment methodology is based on the following components:

• REHs receive the Medicare Fee-for-Service OPPS rate + 5% add-on to help cover higher REH costs
• Fixed monthly payment
  • Calculated for 2023 based on the 2019 reimbursement for CAHs as compared to CAHs would have received if they were not CAHs
  • Increase anticipated in subsequent years based on the hospital market basket percentage increase
  • Proposed to be $268,294 per month or $3,129,528 annually in 2023

Services not paid under OPPS are subject to the applicable payment rate.

SERVICES – ALLOWED AND DISALLOWED

Based on the new REH provider type, the following services are mandatory, allowed, and disallowed:

• Mandatory
  • Emergency
  • Observation care
• Allowed
  • Outpatient hospital services (on or off campus)
  • Distinct part skilled nursing unit
  • RHC
  • Ambulance services
• Disallowed
  • Acute inpatient services, including swing bed care
  • 340B

COMMITTEE RECOMMENDATIONS

The National Advisory Committee for Rural Health and Human Services are in support of the new REH provider type; however, they are constantly examining the impact, effects, and long-term well-being of rural communities. As we anticipate more information coming in early 2023, the Committee is currently working toward improving the structure of REH facilities to better support patient needs.

• Flexibility
  • Allow flexibility to the 24-hour average length of stay requirement; allow for unexpected service volume surges such as the flu, COVID, accidents, etc.
  • Allow staff to practice across hospital and clinics operations
  • Allow flexible survey processes for REHs that allows for the use of shared spaces, such as waiting rooms, entrances, and so on, to encourage co-location
  • Allow MD or DO to be on-call in person or via telehealth
  • Expand National Health Service Corps, the Nurse Corps, and the State Loan Repayment Program to REHs to help them address rural workforce needs and support a funding request
• Legislative and Regulatory
  • Expand eligibility by including hospitals closed before December 2020
  • Allow REH to return to prior status
  • OP professional billing - allow employed physicians to elect Method 2 billing
  • MC Opioid Treatment program – clarify that REHs can participate
  • Practice supervision – allow by appropriate non-physician practitioner to order and supervise cardiac and pulmonary rehab
  • CRNA Passthrough – payment exemption for REHs that offer OP surgery

NEXT STEPS

When determining whether the REH designation is best for your community, patients, and providers, begin discussions with those involved in the decision-making process. We recommend performing a financial analysis of your facility's expected volumes and reimbursement under both models to allow for more information. While the REH model may not be a solution for all rural communities, it may help certain communities based on their area's health needs.

There are various technical assistance programs available to help providers through this process. REH is an option to potentially increase hospital sustainability and support value-based care. It is important to review the model as an option to see if it is the right fit for your community. If you have any questions, please contact us. You can also read related articles on our healthcare accounting blog.

Sources:

1. National Rural Health Association. Rural Emergency Hospital (REH) Summary. April 15, 2021. Accessed October 11, 2022. https://www.ruralhealth.us/NRHA/media/Emerge_NRHA/Advocacy/Government%20affairs/2021/04-15-21-NRHA-Rural-Emergency-Hospital-overview.pdf

2. Rural Health Value. The Rural Emergency Hospital and Value-Based Care. August 2021. Accessed October 11, 2022. https://ruralhealthvalue.public-health.uiowa.edu/files/REH_Brief.pdf

3. Health Resources & Services Administration - Federal Office of Rural Health Policy. Rural Emergency Hospitals: What’s Happening and What’s Next. NRHA Critical Access Hospital Conference. Kansas City, MO. September 22, 2022.