Published January 18, 2021

Top Five Things to Know About the New Rural Emergency Hospital Program

Tucked into the 5,600 pages of the Consolidated Appropriations Act (CAA) is a provision likely to have a significant impact on hospital services in rural America. Division CC, Title I, Subtitle A, Section 125 of the CAA establishes Medicare payments for rural emergency hospital services.

The rural emergency hospital (REH) is a new category of hospital that does not provide inpatient services but serves its community’s needs for emergency and outpatient hospital services. Here are five things to know about REHs:

  1. Eligibility – Critical Access Hospitals (CAHs) and rural Prospective Payment System (PPS) hospitals with 50 or fewer beds will be eligible to convert to REHs, provided the facility is in a state that provides for the licensing of such hospitals. The program is not available to previously closed hospitals.
  2. Timing – REH payments will begin on January 1, 2023. That means CMS will move quickly to publish implementing regulations and establish the application process. It also means that states will need to act quickly to establish licensure for REHs. State Medicaid programs and commercial payers also will need to determine payment policies for REHs in short order.
  3. Application – As part of the application process, a hospital must present a detailed transition plan, specifying the services it will offer. The applicant also must have in place a transfer agreement with a Level 1 or Level 2 trauma center.
  4. Staffing – An REH’s emergency department must be staffed 24/7, and a physician, nurse practitioner, clinical nurse specialist, or physician assistant must be available to furnish services in the facility 24/7. REHs are subject to the Emergency Medical Treatment and Labor Act (EMTALA). Implementing regulations will define what a facility must do to meet these requirements.
  5. Reimbursement – REHs will receive 105% of the PPS rate for hospital outpatient department services.  A REH also will receive an additional monthly facility payment, which will be the same amount for all REHs. For 2023, the monthly facility payment will be calculated by (a) subtracting from the total amount paid to all CAHs in 2019 the amount that would have been paid under PPS rates, (b) dividing that number by the total number of CAHS in 2019 (about 1,350), and (c) dividing that number by 12. Each year thereafter, the monthly amount will be increased by the hospital market basket percentage increase. A REH will be required to report on its use of the monthly facility payment.

For a deeper dive into the Rural Emergency Hospital Program, please join PYA’s Kathy Reep and Mike Nichols on Thursday, January 21, noon ET for a 45-minute webinar,Introducing the New Rural Emergency Hospital”. Registration information is available here

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